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Contractor Pleads Guilty To Defense Department Cheating

August 21, 1985

PHILADELPHIA (AP) _ A Defense Department contractor and one of its vice presidents have pleaded guilty to overcharging the government more than $1.5 million for components to the Army’s radar-guided Gatling machine gun.

American Electronic Laboratories of suburban Montgomeryville was fined $20,000 on Tuesday, the maximum penalty in the two-count information, and agreed to pay an additional $2.635 million in restitution.

The restitution covered $1.568 million in overcharges plus penalties allowed under the federal False Claims Act.

U.S. Attorney Edward Dennis Jr., in announcing the civil restitution settlement, said the company changed nearly 25,000 employee time cards in order to shift labor charges illegally from one government contract to another.

Harold Casale, 52, of Lansdale, vice president-administration for AEL’s Emtech Division, also pleaded guilty before U.S. District Judge Daniel Huyett III.

Casale, who will be sentenced Oct. 7, faces up to 10 years in jail and a $20,000 fine.

Casale and Emtech-AEL were charged with one count of making a false statement to a federal department and one count of submitting false labor cost claims from 1976 until April 1980.

The pleas and restitution were part of an agreement reached out of court.

The firm makes electronic parts for fire control units used in the Vulcan Air Defense System, a radar-guided gun used for close proximity defense against ground and low-flying air attack.

″This is one of the largest settlements of a Defense Department fraud in American history,″ said Assistant U.S. Attorney Gerard Egan.

In May the government won guilty pleas from General Electric Co. for overcharging on certain missile contracts and the company was fined around $1.8 million. Four GE employes were indicted.

Leon Riebman, president and chief executive officer of AEL Industries Inc., said the company put additional checks and balances into effect as soon as the overcharging was uncovered and thus will be able to continue bidding on defense contracts.

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