AFTERMATH OF WAR : Prosecutors Continue to Target Arms Fraud

The government has not called a cease-fire in its war against defense waste and fraud, even as the Gulf War draws to a close.

On Thursday:

* McDonnell Douglas agreed to pay a $7.5-million civil fine for allegedly inflating costs on a gun for the Bradley Fighting Vehicle.

* A House committee called a hearing for next week on defects in the B-1 bomber.

* And yet another defendant was brought before a federal judge in Los Angeles.

The performance of U.S. weapons in the Gulf War has raised the defense industry to hero status in many quarters, prompting financial analysts to proclaim that so-called defense contractor bashing is dead.

But prosecutors, who have always taken exception to the idea that they were bashing the defense industry, vowed to fight on.

“We will be unaffected by how well the weapons worked in the war,” said Michael Emmick, a federal prosecutor who is chief of the public corruption and government fraud section of the U.S. Attorney’s Office in Los Angeles. “We plan to maintain a vigorous prosecutorial effort.”

Emmick said defense fraud remains a top priority of the Justice Department, along with savings and loan industry fraud. The federal effort is being pressed with just as many resources as before the war--as is evident from the steady flow of cases in federal courtrooms.

In U.S. District Court on Thursday, for example, Richard Ian Silver--educated at Pennsylvania’s famed Wharton School--appeared on charges that his firm, Canoga Park-based Aerotech, bilked the government out of $1.2 million.

An expert not only at finance but at creating false identities, Silver has also been known as Robert White, Tim Carson and Charles Downs, according to a federal indictment. He legally changed his name to Richard Taylor, but told U.S. District Judge Terry J. Hatter Jr. he prefers his original name, Richard Silver.

By whatever name, he had been living as a fugitive for the last several years, until federal agents found him in Phoenix during the Christmas holidays. When Silver was picked up, he was in possession of $190,000 in counterfeit currency and a book--by an anonymous author--titled, “How to Create a New Identity,” according to law enforcement officials.

The indictment charges Silver with submitting hundreds of phony invoices in 1982 and 1983 under false identities to exploit loopholes in the federal Prompt Payment Act. As he was about to shut down his operation, Silver had armored trucks deliver him $956,000 in cash and negotiable bonds.

Silver, who disappeared in 1983, was in court to plead guilty to three counts of mail fraud under an agreement with prosecutors. But Judge Hatter postponed the proceeding until a “global plea agreement” could be reached incorporating a separate case in Phoenix.

“The war puts these cases in a different perspective,” said Stephen Mansfield, the assistant U.S. attorney prosecuting Silver. “You realize how certain citizens are jeopardizing our nation’s military efforts for their own benefit.”

While Silver was appearing before Hatter, McDonnell Douglas said Thursday that it agreed to pay $7.5 million to settle a dispute over guns for the Bradley Fighting Vehicle, which was used in the Persian Gulf War.

The dispute dates to 1983, when the former Hughes Helicopters Inc. agreed to make 2,466 automatic guns for the Bradley. A subsequent audit found that Hughes had “greatly inflated costs” for many components, the Justice Department said. McDonnell bought Hughes Helicopters in 1984.

And the House Government Operations Committee said Thursday it was calling a hearing next week to look into problems with the B-1 bomber, which has suffered from defective jet engine blades and a troublesome avionics system.

The B-1 fleet, produced at a cost of $28 billion, was one of the most controversial programs of the 1980s. A lengthy grounding of the 97 bombers that began in mid-December was just recently lifted.