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Justice Department Alleges Racketeering, Bribery in Army Laundry Case

May 17, 1985

WASHINGTON (AP) _ The Justice Department is alleging racketeering and bribery in a $47 million lawsuit that claims the Pentagon was bilked for laundry services at overseas Army bases.

A civil complaint filed in U.S. District Court in Jacksonville, Fla., Thursday names two businessmen, a Jacksonville company and two of its subsidiaries.

It was the first time the government filed suit under provisions of the Racketeer-Influenced Corrupt Organizations Act to recover three times the amount of the alleged overcharges, department officials said.

Named in the triple damages count of the civil complaint was Allied Management Corp. of Jacksonville. Also named were J.E.T.S. Inc. and JETS Services Inc., two Florida corporations that are wholly-owned subsidiaries of Allied.

The individuals named as defendants were Larry D. Barnette, an officer and majority stockholder of Allied, and Thomas F. Gibbs, an officer and minority stockholder of Allied.

The defendants ″engaged in a pattern of racketeering activity that included mail fraud, interstate transportation of stolen property and bribery,″ said Richard K. Willard, acting assistant attorney general in charge of the Civil Division.

He said the complaint charged that ″false or fraudulent cost and pricing data was submitted to the government in obtaining Department of Defense contracts to provide laundry services at Army bases in West Germany from 1977 to 1981.″

The government alleged that the scheme involved ″inflated costs in documents submitted to the Army, false claims for payments, and the bribery of government employees,″ Willard said.

The defendants received about $15.7 million in ″excessive and inflated profits because of their false or fraudulent activities,″ the complaint said. The RICO count seeks to recover three times that amount - or approximately $47.2 million.

The complaint also asked the federal court to bar the company and its subsidiaries from doing busines with the government for a period of time to be set by the court.

An alternative count in the civil complaint, under which the government could retrieve its money in some other fashion or under a different statute, seeks recovery of about $50 million paid under the contracts ″on the grounds that there was bribery or conflict of interest involving government employees responsible for negotiating and administering the contracts,″ the department said.

The department noted in a statement that it is ″a common procedure in federal civil damage cases to include alternative claims under different statutes or legal theories to recover funds or penalties.″

Another individual named as a defendant in the civil complaint, the department said, is Murray Sentner, a former Army contracting officer accused in the complaint of ″acting to the benefit of the defendants and in conflict with his duties to the Army.″

The department said it had brought criminal charges earlier against Larry D. Barnette, Thomas F. Gibbs, Allied Management, J.E.T.S. Inc. and JETS Services Inc. and said they were ″convicted on charges of violating the RICO, bribery, false statements and mail fraud statutes.″

In that earlier case, the department said, Sentner ″pleaded guilty to a conflict of interest charge.″

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