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Defense Contractor, 3 Managers Indicted In Fraud Case

October 28, 1987

SAN JOSE, Calif. (AP) _ GTE Government Systems Inc. and three of its managers have been charged with submitting fraudulent bills totaling $774,604 to the Defense Department.

The indictment by a federal grand jury on Tuesday accuses GTE, a subsidiary of GTE Corp. of Stamford, Conn., of 30 counts of ″making false and fraudulent statements and representations″ from November 1982 to April 1983.

GTE spokesman Frank Arneson declined comment until the company, in suburban Mountain View, has a chance to review the indictment.

U.S. Attorney Joseph Russoniello said his office decided to file criminal charges rather than sue to recover the funds because Defense Department investigators persuaded ″us that the conduct was willful and intentional and clearly calculated to defraud.″

The maximum penalty for conviction on each count is five years in prison and a $10,000 fine.

The company makes electronic gear for the military. It held $81 million in defense contracts in 1986.

The Defense Contract Audit Agency started the investigation in June 1983 when auditors spotted irregularities in GTE’s billing procedures and referred the matter to military investigators, said Thomas W. Sullivan, special agent in charge of the Defense Criminal Investigative Service.

Indicted were Stanley Paul, 57, John A. Stone, 41, and former official Robert M. Silver, 56.

Sullivan said investigators found the company improperly billed expenses on a project called ″TACJAM,″ a system that jams enemy communications , and other projects.

The indictment accused Stone and Silver of using false time cards listing fake hours that employees supposedly worked.

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