Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, January 11, 1995 TAG: 9501110086
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
SOURCE: Associated Press
DATELINE: LOS ANGELES LENGTH: Medium
During a hearing in U.S. District Court, James Zeigel, general counsel for the company, entered a guilty plea on behalf of the firm to 37 counts of procurement fraud
Afterward, he stopped at the court clerk's office and turned over a certified check for the $18.5 million, or $500,000 per count, one of the largest criminal fines ever paid by a defense contractor.
The plea and payment were both part of a written plea agreement. The company, a subsidiary of Lucas Industries PLC of London, was negotiating the settlement of civil penalties.
The largest penalty on record was $20.65 million in fines and restitution paid last year by Los Angeles-based Teledyne Inc.
Zeigel declined to comment after the hearing.
Lucas spokeswoman Renate Myles said the violations were committed from 1990 to 1993.
She blamed the problems on the company's decision to move the gearbox manufacturing operation from City of Industry, Calif., to Park City, Utah. Many skilled machinists were replaced with untrained employees, she said.
``While the consolidation made good business sense, it was poorly planned and executed,'' she said.
Assistant U.S. Attorney Bryan Daly said false inspection and test records were created at the two plants.
Lucas Western falsely told the Pentagon that required inspections on the parts were completed.
Lucas discovered the irregularities at the plants in 1993 and told the government. The parts included gearboxes for the Navy's FA-18 fighter jet and the Army's Multiple Launch Rocket System.
by CNB