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Defense Contractor Accused Of Overcharging Government

June 23, 1987

BOSTON (AP) _ A defense contractor was indicted today for allegedly overcharging the Pentagon by $1.5 million, and has agreed to admit the fraud and pay the government $4.6 million in fines and damages, a federal prosecutor said.

A 22-count indictment against Avco Corp. said the company submitted fraudulent claims for more than 140,000 hours of labor at its Avco Systems Division’s plant in Wilmington.

The indictment, filed in U.S. District Court in Boston, said Avco overcharged the Pentagon in monthly statements the company submitted for reimbursements covered under its Defense Department contracts.

Avco, purchased for more than $1 billion in 1985 by Textron Inc. of Providence, R.I., submitted the 22 fraudulent bills between January 1982 and September 1983, the indictment charged.

″Both sides are ready to dispose of the case,″ Assistant U.S. Attorney Richard Stearns said today. A hearing was scheduled for this afternoon for Avco to enter into a plea agreement, Stearns said.

In confirming the plea and fines, Textron spokesman Raymond Caine said, ″This all happened 3 1/2 years ago when Textron did not own Avco. All I can tell you is that the time-keeping reforms have been put in place at the division to make sure that irregularities do not occur again. The investigation has been ongoing for some time and Textron and the Avco division have cooperated fully with the government.″

The $4.6 million Avco agreed to pay amounts to double the $1.5 million in fraudulent bills, $900,000 interest, $500,000 to pay for the Justice Department’s investigation of the case and the maximum $220,0000 fine, Stearns said.

A Justice Department civil case against Avco will be settled as part of the plea agreement, Stearns said.

Avco, which has retained its headquarters in Connecticut despite being purchased by Textron, has numerous Defense Department contracts, including work on the MX missile, anti-armor munitions, and military satellites.

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