The investigation into the military's $150 billion-a-year purchasing system is "expanding and continuing," a prosecutor said after the first jury convictions in the Pentagon procurement scandal.
Assistant U.S. Attorney Joseph Aronica said Thursday after guilty verdicts were obtained against California businessmen George Kaub and Eugene Sullivan that his office is moving ahead with the investigation into kickbacks and payoffs.Kaub and Sullivan, former vice presidents of Teledyne Electronics of Newbury Park, Calif., were the first people to go trial as a result of the investigation, which began in mid-1986.
About a dozen people and defense contracting firms had pleaded guilty, including three men who were indicted with the Teledyne executives in January. Teledyne Industries, the parent of Teledyne Electronics, had also pleaded guilty to conspiracy and filing false statements in advance of the trial. The company paid about $4.3 million in fines, penalties and damages.
A jury deliberated nearly 36 hours over four days before finding both men guilty of conspiracy and wire fraud in a scheme prosecutors said involved paying a private consultant who in turn bribed a Navy engineer for illegal assistance in helping Teledyne win a lucrative contract.
Kaub was also convicted of filing false statements, a charge that derived from providing documents to the Defense Department which omitted information about private consultants.
The jury failed to reach a verdict on the conspiracy and wire fraud charges against Dale Schnittjer, another former Teledyne executive. U.S. District Judge Richard Williams then dismissed the charges. All the defendants were found innocent of bribery.
Aronica called the convictions "significant" and said they marked only the start of the prosecutorial phase of the Ill Wind investigation. "The investigation is expanding and continuing," he said.
Mark Tuohey, Kaub's attorney, said he would appeal the guilty verdict against his client, who faces a maximum sentence of 40 years in jail and a fine of $2 million for conviction on eight counts. Kaub hung his head and stared at the defense table after the bailiff read the verdict.
Sullivan, whose lawyer, George O'Connell, said he would also appeal, could be sentenced to 20 years in jail and fined a maximum of $1 million.