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Paradyne, Top Officers Indicted for Fraud

December 13, 1985

TAMPA, Fla. (AP) _ An attorney for Paradyne Corp. has described as ″outrageous″ federal charges against the firm, some of its present top and former officials and one Social Security Administration employee in a case involving a lucrative contract to computerize Social Security field offices.

A 14-count indictment returned Thursday alleges conspiracy to defraud, bribery, perjury, false statements and obstruction of justice in landing the $115 million contract for terminals and software five years ago.

It was the largest contract ever awarded by the Social Security Administration.

Prosecutors accused Paradyne of faking a computer demonstration during bidding using equipment that was neither fully developed nor belonged to Paradyne. When Paradyne couldn’t develop the computer in time for the demonstration, it used one manfactured by another company but presented it as its own, the prosecutors said.

″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 communnications manufacturer intended to ″vigorously″ fight the charges.

U.S. Attorney Robert Merkle said the 45-page indictment contends that the company did not have the equipment it said it had, was not in a position to furnish the equipment, caused delays of more than a year and experienced equipment failures after installation.

″It was a significant loss to taxpayers,″ Merkle said. ″The contract was in excess of $100 million.″

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

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

Paradyne still holds a contract with the Social Security Adminnistration for servicing the equipment. Merkle said it was his understanding the equipment had been upgraded and was performing satisfactorily.

The following are those indicted, the specific charges and maximum penalties upon conviction:

--Paradyne, conspiracy, two counts of bribery, four counts of making false statements; 55 years in prison and a $330,000 fine.

--Robert W. Wiggins, 56, of Clearwater, president and chairman of the board at Paradyne; conspiracy, two counts of false statements, obstruction, perjury; 25 years and $285,000.

--Barry, of Danbury, Conn., former director of the Office of Data Communications at Social Security; conspiracy, corruptly agreeing to receive a $500,000 contract; 20 years and $270,000.

--John D. Applegate, 47, of Dallas, a former Paradyne vice president; conspiracy, two counts false statements, two counts bribery, obstruction of justice; 50 years and $325,000.

--Verney L. Brown, 55, Saratoga, Calif., former senior vice president for operations at Paradyne; conspiracy, false statements, obstruction; 15 years and $265,000.

--Frank A. Dolan, 54, of Alexandria, Va., director of federal marketing at Paradyne; conspiracy, two counts false statements; 10 years and $260,000.

--Cletus L. Gardenhour, 46, of Clearwater, senior vice president and general manager of telecommunications division of Paradyne; conspiracy, false statements; 10 years and $260,000.

--George B. Pressly, 54, of Treasure Island, a vice president at Paradyne; conspiriacy, false statements, 10 years and $260,000.

--F. William Siegrist, 50, of Largo, vise president of special products at Paradyne; conspiracy, two counts false statements, two counts perjury; 25 years and $290,000.

--Jorge O. Suarez, 43, of Fort Lauderdale, a former director of advanced development and engineering at Paradyne. conspiracy, two counts false statements; 15 years and $270,000.

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