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Paradyne, Top Officers Indicted in Social Security Contract

December 13, 1985

TAMPA, Fla. (AP) _ An attorney for Paradyne Corp. has branded as ″outrageous″ the indictment of the company and some of its officials in a case involving a $115 million Social Security computer contract.

The contract, awarded five years ago, was the largest ever awarded by the Social Security Administration.

The 14-count indictment returned Thursday accuses the company, some current and former officials and a former Social Security employee of conspiracy to defraud, bribery, perjury, making false statements and obstruction of justice in the landing of the contract for terminals and software at Social Security Administration field offices.

″The company regards the charges as outrageous and so lacking in foundation as to be ludicrous,″ said James L. Slattery, a Paradyne vice president and general counsel. He said the Largo-based data communications manufacturer would fight the charges ″vigorously.″

Prosecutors accused Paradyne of faking a computer demonstration when it was bidding for the contract. When Paradyne couldn’t develop a computer in time for the demonstration, they charged, it used one manufactured by another company but presented it as its own.

U.S. Attorney Robert Merkle said the 45-page indictment contends that because the company didn’t have the equipment it said it had, the project was delayed more than a year and there were equipment failures once the computers were finally installed.

″It was a significant loss to taxpayers,″ Merkle said.

Paradyne still holds a contract with the Social Security Administration for servicing the equipment. Merkle said he understood the equipment had been upgraded over the years and is now performing satisfactorily.

The defendants, he said, will be allowed to turn themselves in for arraignment next week. No date was announced.

The former Social Security employee indicted was Kenneth M. Barry, 56, former director of the office of data communications. He was accused of conspiracy and of corruptly agreeing to receive a $500,000 contract for software in return for his influence in other contract awards.

In September, two days before the start of a civil suit brought by the Securities and Exchange Commission on separate fraud charges involving the contract, Paradyne settled out of court.

The SEC had accused the company of lying to get the contract.

In the settlement the company neither admitted nor denied wrongdoing, but pledged to follow all SEC regulations in the future.

In addition to Barry, the individuals indicted were:

- Robert W. Wiggins, 56, president and chairman of the board at Paradyne.

- John D. Applegate, 47, a former Paradyne vice president.

- Verney L. Brown, 55, former senior vice president for operations at Paradyne.

- Frank A. Dolan, 54, director of federal marketing at Paradyne.

- Cletus L. Gardenhour, 46, senior vice president and general manager of telecommunications division of Paradyne.

- George B. Pressly, 54, a vice president at Paradyne.

- F. William Siegrist, 50, vice president of special products at Paradyne.

- Jorge O. Suarez, 43, a former director of advanced development and engineering at Paradyne.

In addition, the Paradyne company itself was indicted on charges of conspiracy, bribery and making false statements.