4 Are Indicted for Selling Inferior Parts to Government

A federal grand jury in Los Angeles Wednesday indicted four people on charges of selling substandard semiconductors to the federal government and to government contractors, including Boeing Co., Lockheed Martin Corp. and Allied-Signal Aerospace.

The individuals named in the indictment were connected with Solid State Devices Inc. of La Mirada and Unisem International of Santa Fe Springs. The indictment accuses them of passing off standard commercial semiconductors as “high-reliability semiconductors” used in products as wide ranging as space shuttles, FA-18 fighter planes and Titan and Atlas launch vehicles, said Jeff Eglash, one of three assistant U.S. attorneys in Los Angeles who worked on the case.

Named in the indictment are Cynthia Anderson, a quality assurance manager for Solid State Devices who is on a leave of absence due to illness; Philip Henry Cosores, the former division manager of SSDI’s rectifier module division who now serves as purchasing manager; Cory Anderson, a former SSDI manufacturing supervisor who is now production supervisor, and Diane Reeder, who served Unisem as a buyer, manager, quality insurance inspector and testing supervisor. They are scheduled to be arraigned Oct. 20.

Neither Solid State Devices nor Unisem International has been accused of any wrongdoing, but the investigation is continuing, Eglash said.

“It is our belief that the allegations are without factual or legal substance, and we fully intend to defend to the fullest extent any allegation of wrongdoing,” said Donald Etra, a Century City attorney representing Cory Anderson.

“It’s a shame that the government is picking on hard-working people who are doing their job,” said Robert Corbin, a Los Angeles attorney representing Cynthia Anderson. He said she will plead not guilty.

David Wiechert, a Costa Mesa attorney representing Cosores, said he had not read the indictment and had no comment. Reader, who no longer works for Unisem, could not be reached for comment.

SSDI, a privately held 30-year-old firm that employs 140 people, manufactures semiconductors individually and in modular components for electronics systems. Most of those semiconductors end up in military hardware, space projects--such as the International Space Station--and commercial aerospace products, such as telecommunications satellites. Dun & Bradstreet estimates that SSDI recorded $890,000 in sales last year.

The individual semiconductors that account for about two-thirds of the company’s sales are designed for unusual applications and are required to meet very specific standards. The indictment alleges that instead of producing specialized semiconductors for its customers, SSDI officials purchased regular, inexpensive semiconductors from Unisem, which in turn bought them from other companies and from government surplus auctions.

Eglash said Wednesday that in some cases, SSDI said the parts had passed quality tests when, in fact, the parts had never been tested. In other cases, Eglash said, the tests were altered so that the inferior parts would pass. The indictment, which is the result of a 29-month investigation, alleges 23 instances of such activity.

“As far as SSDI knows, it has not failed to perform tests required by the contracts,” said Peter Jones, an Irvine-based attorney who has served SSDI for 15 years.

SSDI customers “are all aware of the investigation and have taken corrective action to determine whether the parts are safe,” Eglash said. “In some cases, the government programs have incurred literally millions of dollars in costs to remove SSDI products.”

Seattle-based Boeing is “in the process of checking on these two suppliers,” said Sherry Nebel, a spokeswoman at the aerospace giant’s Seattle headquarters. “Boeing takes the subject of nonstandard parts very seriously and will take whatever steps necessary to ensure the quality and reliability of our products.”

Sixteen customers were named in the 21-page indictment, including the Federal Aviation Administration, the federal government’s Defense Electronics Supply Center, Honeywell and Westinghouse Electric.

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James S. Granelli in Orange County contributed to this report.