Northrop Case Ends 17 Years Later

One of the longest-running cases involving defense industry fraud has reached a conclusion, 17 years after the issue landed in federal court.

In a case that made national headlines, Leo Barajas, a blue-collar worker at a Northrop Grumman Corp. plant in El Monte in 1987, blew the whistle on fraudulent testing and defective parts supplied to the Air Force for nuclear-armed cruise missiles. Ultimately, every air-launch cruise missile in the Air Force fleet had to be retrofitted with new guidance systems because of his allegations.

In the last week, Barajas settled the last part of his whistle-blower case and accepted a $1.8-million share of a settlement the government had received earlier from Northrop.

Although the award may seem like a windfall for a blue-collar worker, it will be mostly eaten up by federal taxes and the attorneys’ fees from the long legal battle. Barajas, 61, said he was expecting to net only $100,000 from the settlement. “It is really disturbing,” he said.

Barajas’ job involved running tests on flight data transmitters that Northrop was supplying to the Air Force for the air-launch cruise missile.

The Northrop transmitters would repeatedly fail Air Force-mandated tests that subjected them to temperatures as low as 60 degrees below zero. The problem stemmed from a substandard fluid inside the gyroscopes that would freeze at temperatures well above the level specified in the contract.

The systems needed to operate in cold temperatures as the cruise missiles were designed to be launched at high altitudes near the Arctic Circle at targets in the former Soviet Union.

When the tests failed, Barajas was told by his supervisors to fake the results to show that they actually passed. Northrop’s then vice chairman, Frank Lynch, admitted at a congressional hearing in 1988 that the tests were falsified.

The case left a wide swath of wreckage. Northrop, along with two executives, pleaded guilty to criminal fraud charges. The Los Angeles-based company paid a then-record $17-million criminal fine in 1990 and an additional $8 million the following year to settle civil charges, a small portion of which Barajas also received. The manager of the El Monte plant received a three-year prison sentence in 1990, and Northrop exited the missile guidance business not long after.

Phil Benson, Barajas’ attorney, attributed the delays to the government’s refusal to recognize Barajas as the original source of information about the gyroscope defects. The Justice Department argued that Barajas was not entitled to any of the money recovered for the defects. Barajas argued that the government would never have learned about the defects if he had not come forward.

The $1.8 million represents a share of an administrative agreement between the Air Force and Northrop that required the company to replace the gyroscopes.

Once Northrop learned in 1987 that Barajas was cooperating with the Air Force and FBI, he was fired. He later received a $250,000 settlement for wrongful termination.

Barajas said he was struggling financially, living in Oceanside on less than $20,000 a year from Social Security. Although he held jobs after leaving Northrop, he is now disabled with arthritis and walks with a cane.

Attorney Benson said Barajas and other whistle-blowers from the 1980s and 1990s played a key role in cleaning up abuses in the defense industry.

“Things were out of control in the mid-1980s,” he said. “Now, you see a lot of sophisticated controls at defense plants that you didn’t see before.”

The bulk of fraud suits brought under the False Claims Act no longer are directed at defense companies, but rather at providers of government-paid healthcare, Benson added.

Northrop’s El Monte plant seemed to exemplify poor industrial practices. Employees were observed smoking cigarettes, boiling soup and watching daytime soap operas inside so-called clean rooms, or rooms free of contaminants, workers said in interviews at the time.

The issues raised by Barajas became the subject of repeated congressional hearings and a deluge of suits against the defense industry that came to symbolize rampant waste, fraud and abuse during the Reagan administration’s defense buildup. By the mid-1990s, every major contractor had admitted to either criminal or civil fraud.

The first attorney who represented Barajas, Herbert Hafif, filed papers that accused federal prosecutors of telling “putrid lies.” A federal judge sanctioned Hafif $20,000, but the fine was later reversed by an appeals panel, which concluded that the prosecutors actually had lied and that Hafif was simply engaging “harmless hyperbole.”