Pentagon figure enters guilty plea in contract fraud


WASHINGTON -- Former top Navy official Melvyn R. Paisley pleaded guilty yesterday to conspiracy and bribery in connection with the government's three-year investigation of defense contracting fraud.

Paisley was assistant secretary of the Navy in charge of weapons procurement during much of the Reagan administration's defense buildup. He is the most senior former Pentagon official to be convicted or plead guilty in Operation Ill Wind, a federal investigation of bribery and collusion in awarding defense contracts.

His plea may represent the climax of the five-year federal inquiry into defense contracting fraud, Pentagon and Justice Department officials said.

Paisley, who left the Defense Department in 1987 after six years and became a defense consultant, was targeted early in the investigation. He has been the senior defense official implicated in wrongdoing, according to Justice Department filings in the case.

Paisley, who spent much of his career at Boeing Co., pleaded guilty in Alexandria, Va., to three felony charges of bribery, conspiring to defraud the government and theft of government property.

U.S. District Judge Claude M. Hilton set sentencing for Sept. 27; Paisley faces up to 30 years in prison and a fine of up to $750,000. None of the more than 40 people convicted in the investigation has been sentenced to more than 32 months in prison.

"We are very pleased with the plea, and the investigation is continuing," said Assistant U.S. Attorney Joseph J. Aronica, who is supervising the investigation under Henry E. Hudson, the U.S. attorney for the Eastern District of Virginia, whose office is a short subway ride south of the Pentagon.

The investigation, which began amid news coverage and charges that fraud was rampant throughout the defense industry, has probably peaked with Paisley's plea, government officials said.

"There are pockets of irregularity," Mr. Hudson said at a National Aviation Club luncheon last month. "But it is not deep or widespread."

Paisley's attorney, E. Lawrence Barcella Jr., had been negotiating with the government over Paisley's fate for about a year, ever since defense consultant William M. Galvin pleaded guilty to bribing Paisley.

Galvin told the court that he had promised to give Paisley a bribe worth about $500,000 in exchange for awarding a Navy drone contract to an Israeli company Galvin represented.

Mr. Barcella said that Paisley, 66, had agreed to plead guilty because of his poor health -- he has suffered from cancer in recent years -- and to avoid a costly trial.

Paisley acknowledged illegal actions benefiting several major defense contractors, including Martin Marietta Corp., Unisys Corp. and United Technologies Corp.

Operation Ill Wind went public three years ago yesterday as dozens of federal law enforcement officials searched the homes and offices of more than 30 defense contractors, consultants and Pentagon officials.

With Paisley's plea, the investigation has yielded corruption convictions of 41 people and five corporations, as well as more than $40 million in fines and recoveries of overpayments.

Prosecutors are also negotiating a settlement with Unisys, which Pentagon sources said could end up paying as much as $190 million in fines and recoveries of overcharges.

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