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2 Found Guilty in Pentagon Corruption Investigation

April 13, 1989

ALEXANDRIA, Va. (AP) _ Two former executives of a California defense contractor were convicted of conspiracy and wire fraud Thursday in the first trial arising from the Pentagon corruption scandal.

A federal court jury deliberated nearly 36 hours over four days before returning guilty verdicts against George Kaub and Eugene Sullivan, former vice presidents of Teledyne Electronics of Newbury Park, Calif.

Each was convicted on one count of conspiracy. Kaub was found guilty on five counts of wire fraud and two counts of filing false statements. Sullivan was convicted on three counts of wire fraud.

A third defendant, Dale Schnittjer, was acquitted on conspiracy and wire fraud charges by U.S. District Judge Richard Williams after the jury failed to reach a verdict against him. Schnittjer is also a former vice president of Teledyne Electronics.

All the defendants were found innocent of bribery, a charge stemming from the government’s contention that the former executives knew money was paid to a Navy engineer for inside information about a $24 million contract for hand- held radar test equipment.

Kaub, who faces a maximum sentence of 40 years in jail and a fine of $2 million, hung his head and stared at the defense table after the bailiff read the verdict.

Sullivan could be sentenced to 20 years in jail and fined a maximum of $1 million. He appeared impassive.

Schnittjer had a hint of a smile on his face.

Williams set sentencing for June 7 as attorneys for Kaub and Sullivan said they would appeal the verdict.

Assistant U.S. Attorney Joseph Aronica said he was pleased with the convictions, which he called significant.″This sends a message to corporate America that they cannot wash their hands of this type of activity,″ he said after the four women and eight men returned their verdict.

He said the government’s ″Ill Wind″ investigation into kickbacks, payoffs and fraud in the Defense Department’s $150-billion-a-year purchasing system was ″expanding and continuing.″

The Pentagon procurement investigation began in mid-1986 but was not publicly disclosed until June 1988, when federal agents armed with search warrants descended on defense contractors from coast-to-coast.

The first indictment was handed up in January. Besides the three Teledyne executives, it names private consultants William Parkin and Fred Lackner; Stuart Berlin, a Navy official, and Teledyne Industries, the parent of Teledyne Electronics.

All pleaded guilty in advance of the trial execept for the company officials. Teledyne pleaded guilty to conspiracy and filing false statements. It paid $4.3 million in fines, penalties and damages.

During the trial, Parkin and Lackner testified they had paid bribes to Berlin in exchange for his illegal help on the radar contract Teledyne was awarded in July 1987. Berlin admitted receiving Teledyne’s money passed through the consultants.

Aronica argued that Kaub, Sullivan and Schnittjer had conspired to pay Parkin a total of $160,000 for his help on the radar contract. Most of the money, $150,000, was to be paid after the contract came through, he said.

According to Aronica, the defendants, whom he described as ″smart ... capable ... and very, very careful,″ knew that Parkin and his associates were engaged in illegitimate activites. ″Every step possible was taken to conceal it,″ he said.

Defense attorneys, however, said their clients were the victims of a conspiracy devised by Parkin, Lackner, Berlin and Michael Savaides, another former Teledyne employee who worked in Washington and had pleaded guilty.

″My client was kept in the dark,″ George O’Connell, Sullivan’s lawyer, said in his closing argument.

Much of the evidence in the case came from wire taps that the government placed on Parkin’s telephone. The jury listened to tapes of the conservations between Parkin and the defendants. The wire fraud counts stemmed from those tape-recorded conversations.

Kaub was charged with filing false statements because he authorized notifying the Defense Department that Teledyne had not hired consultants to work on the radar contract.

Schnittjer’s attorney, Stanley Mortenson, said his client came to Teledyne Electronics after the company had been awarded the radar contract.

But Aronica said Schnittjer was the person who paid Parkin more than $18,000 of the $150,000 he was to receive once the Pentagon ordered the equipment from Teledyne.

Parkin, a former Navy official who worked for a variety of defense contractors including Boeing, signed his original contract with Teledyne in November 1985.

Payments stopped once the Ill Wind investigation became public.

The jury found Schnittjer innocent of four wire fraud counts, but it could not reach a unanimous decision on whether Schnittjer was guilty of conspiracy and one count of wire fraud.

Williams, at Mortenson’s request, dismissed those counts.

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