A federal grand jury investigating defense contractor fraud has issued its first known subpoena for records involving a congressman, the Washington Post said on Monday.
It said the records involve a 1984 deal in which a company acquired a financially troubled health club partially owned by Rep. Bill Chappell, a Florida Democrat, canceling much of Chappell's debt in the club.The newspaper said the company was set up by Leonard Killgore, a former Chappell staff aide who also was a representative of Avco, a major defense contractor.
The grand jury subpoenaed records on Killgore's company and Chappell's former health club, the Wind Meadows Racquet Club in Ocala, Fla., from an Ocala lawyer, Edwin Cluster, the newspaper said. It said Cluster represented Chappell's wife in a 1984 divorce in which there was extensive testimony about Chappell's financial holdings.
The newspaper also said Chappell had been living in Killgore's suburban Washington house for five months when he raised questions at a March 1984 hearing about an Army plan that could have cut tens of millions of dollars from Avco's contract to supply engines for the Army's M-1 battle tank.
It said Chappell acknowledged in a separate court case that he lived in Killgore's house for several months without paying rent but said he later paid $200 a month rent retroactively.
At the March 1984 House defense appropriations subcommittee hearing, Chappell raised questions about an Army plan to have a second company help produce the M-1 tank engines, the Post said.
It said Chappell stressed that he believed in contractor competition to cut costs but argued Avco had already produced nearly half the 10,000 engines needed so it was too late for a second company to save money by producing the engines as well.
U.S. Attorney Henry Hudson, who is heading up the investigation of the Pentagon spending, refused to comment on the subpoena.
Chappell was to become chairman of the subcommittee in March 1986.