Paradyne Corp., facing charges that it violated federal securities laws to win a $115 million Social Security Administration contract, yesterday ended the government's case against it by agreeing to a permanent injunction against future violations.
The Largo, Fla.-based company had been charged by the Securities and Exchange Commission in March 1983 with using fraud and deceit to win the Social Security Administration contract to modernize its data processing equipment. Among other allegations, the SEC charged that Paradyne had presented a competitor's equipment as its own and passed off as an electronic security device an empty box with nothing more than blinking lights.
The company had contested the charges and the case was scheduled for a trial this week in federal court in Tampa, Fla. But late yesterday, Paradyne agreed to the settlement in which, without admitting or denying any allegations, it accepted a permanent injunction from U.S. District Judge William J. Castagna not to violate the anti-fraud and reporting provisions of the securities laws in the future.
There were no other penalties against Paradyne and the settlement will not affect any business the company does with the federal government, an SEC lawyer said.
"We are very pleased to conclude this litigation on terms which the company believes to be quite acceptable," said Robert Wiggins, paradyne's president and chief executive officer, in a statement. "This settlement will enable us to avoid additional expense and, more importantly, to direct all our energies to the company's business at a period which the entire industry finds difficult."
The settlement also will not affect the Social Security Administration's attempt to bar Paradyne from future contracts as a result of the alleged deception over the data processing contract the firm with the agency.
A House Government Operations Committee report last year called the contract to Paradyne "one of the worst cases of contract award and administration," and recommended the firm be debarred, or prevented from bidding for future agency contracts. The panel charged that the Paradyne contract was so botched that it set back by three or four years the agency's attempt to modernize its data processing system.
But no determination on debarment has yet been reached, and the company continues to perform work under the terms of the contract, a company spokesman said.
The spokesman also said the firm has numerous contracts with other federal agencies, including the Department of Defense. These contracts account for about 10 percent of Paradyne's revenue.