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Northrop Pleads Guilty to Faking Test Data

February 28, 1990

LOS ANGELES (AP) _ Northrop Corp., under investigation for fraud in its stealth bomber program, admitted falsifying test data on parts for two other projects - the cruise missile and Harrier jet - and agreed to a $17 million fine.

The defense contractor Tuesday pleaded guilty to 34 counts of making false statements to the government. In exchange, the government agreed to drop 139 other counts of making false statements and two counts of conspiracy.

″This is a very significant victory in our efforts to combat defense contracting fraud and misconduct,″ Assistant U.S. Attorney William F. Fahey said.

The fine will be ″a tremendous deterrent to corporations who choose to cut corners on certifications of tests on significant military programs,″ he said.

In its defense, Northrop said the military services using the AV-8B Harrier attack jet and the cruise missile had reported that ″both systems have performed satisfactorily in flight operations.″

Charges were dropped against two Northrop executives accused of involvement in a conspiracy to supply defective missile guidance parts.

Joseph Yamron, 62, vice president and general manager of Northrop’s Norwood, Mass.-based Precision Products Division, and Leopold Engler, 60, vice president of instrument operations there, have been on leave since charges were filed last year.

Their lawyers said the men were expected to return to work immediately.

Northrop said it had maintained that Yamron and Engler were innocent of criminal behavior. The company said it has closed the plant where the defective parts were manufactured and fired three of the employees involved.

Earlier in the day, Charles Gonsalves, a former Northrop plant manager, pleaded guilty to falsifying test data. Under a plea bargain, he will get no more than three years in prison and a fine of $1.2 million at sentencing May 1.

The $17 million fine was among the largest paid by defense contractors.

General Electric Co. faces fines of about $50 million after being convicted Feb. 2 of fraud and other charges; Sundstrand Corp. of Rockford, Ill., agreed in 1988 to pay a $115 million fine, the largest fraud settlement in Pentagon history.

Northrop also faces year-old lawsuits over alleged fraud in its B-2 stealth bomber program, which has been threatened by congressional moves to curtail defense spending.

FBI agents on Feb. 15 raided the Los Angeles plant where Northrop builds parts for the bomber, looking for documents related to the probe.

The April 11 indictment charged that the company and five current and former employees conspired over more than a decade to install parts for the cruise missile’s flight data transmitter that failed to meet government specifications.

The transmitter required extensive reliability testing that was not performed, according to the indictment. Prosecutors said three of the defendants supervised false testing and falsification of test results.

The indictment accused the defendants of failing to conduct the required vibration tests of the Harrier’s rate sensor assemblies. The assemblies are part of the flight stabilization system of the jet, which is used by the Marines.

A Northrop quality assurance supervisor was previously placed in a probationlike program under which charges will be dropped if she satisfactorily completes the program, and a Northrop engineer pleaded guilty in May.

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