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Suspended Navy Official, Teledyne, Plead Guilty in Defense Scandal

March 24, 1989

ALEXANDRIA, Va. (AP) _ A suspended Navy official faces up to 25 years in prison for bribery in the Pentagon purchasing scandal, and a company that profited from his inside information will pay more than $4.3 million in fines.

Stuart E. Berlin admitted on Thursday that he accepted a bribe to provide inside information on a $24 million contract eventually awarded to Teledyne Electronics of Newbury Park, Calif., a division of Teledyne Industries Inc.

Teledyne Industries Inc. pleaded guilty to conspiracy to defraud the United States and two counts of making false statements to the government, and agreed to pay $1.5 million in penalties, $2 million in civil claims and $786,000 to reimburse the government for the cost of the investigation.

In addition, Teledyne agreed to give up its negotiated 13.5 percent profit on the contract that could result in a savings to the government of $4 million over the next three years, the Justice Department said.

Berlin, 51, pleaded guilty to conspiracy to defraud the United States, to commit bribery, wire fraud and filing false statements, as well as receiving a bribe as a government official and wire fraud.

U.S. District Judge Claude Hylton set sentencing for June 2, when Berlin could face up to 25 years in prison and fines of up to $750,000. Berlin made no comment as he left the courtroom.

As part of his plea agreement, Berlin also will cooperate with prosecutors in the continuing ″Ill Wind″ investigation, including the trial of his former co-defendants in the indictment.

Those defendants in the trial scheduled to begin April 3 are defense consultants Fred H. Lackner and William L. Parkin, as well as three Teledyne officials: George H. Kaub, Eugene R. Sullivan and Dale Schnittjer. Parkin was hospitalized last Friday after reportedly taking an overdose of pills.

With Thursday’s action, the more than 2-year-old investigation has resulted in a dozen guilty pleas that have been publicly revealed, said Assistant U.S. Attorney Joseph J. Aronica.

He refused to say whether other people or companies under investigation already have agreed to plead guilty.

Aronica also would not disclose how extensively Berlin’s testimony might be used against other defendants, saying only, ″The total investigation is moving along very quickly.″

As part of the plea agreements, prosecutors dismissed counts of bribery and wire fraud against Berlin and Teledyne. Racketeering charges had been dropped at an earlier court hearing.

Teledyne said in a statement that it decided to enter the plea arrangement primarily due to ″the recognition that a former employee, Michael Savaides, had entered into a corrupt and illegal arrangement with William Parkin, a consultant to Teledyne Electronics, and Fred Lackner, with whom the company had no relationship.″

″Their purpose was to subvert the lawful operation of the government’s procurement process,″ the company said. Savaides has pleaded guilty and is awaiting sentencing.

Berlin had been a supervisory electronics engineer and branch head of the ship systems engineering section at the Space and Naval Warfare Systems Command in Arlington, Va., when the actions occurred.

The Justice Department said Berlin received about $1,000 every few months from Parkin and Lackner in exchange for giving them classified documents. The indictment said the consultants were getting their information from Berlin.

He was reassigned to a non-procurement job in June 1988, when the investigation became public, and he was suspended without pay shortly after he was indicted in January.

The Navy will review his plea agreement before deciding on Berlin’s employment status, said Lt. Bruce Cole, a Navy spokesman.

The Pentagon, meanwhile, is re-evaluating its suspension in January of Teledyne Electronics from new contracts, but had made no decision Thursday.

The $24 million contract at issue was for hand-held electronic testing equipment that checks whether radar transponders are working before military airplanes are allowed to fly. The Mark 12 IFF transponder test set checks the equipment that helps identify whether a plane flying nearby is a friend or foe.

The Army, Navy and Air Force are using the equipment, and the Navy purchased the sets under a master Air Force contract. Since July 1987, when Teledyne was awarded the contract, the Navy has received 105 of the sets, and plans to buy 43 more this year.

The Pentagon’s suspension of Teledyne Electronics did not affect the contract already awarded.

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