A Washington accountant, who admitted that he submitted a false and exaggerated proposal to the U.S. Labor Department as part of a sophisticated scheme to win a lucrative government contract, was sentenced yesterday to serve six months in prison.
U.S. District Judge John Garrett Penn's decision yesterday to sentence the accountant, Paul Opalack, 32, to a jail term followed strong arguments by government prosecutors that prison sentences help to deter other white collar crimes.
Opalack, of 2609 O St. NW, pleaded guilty last month to two minor charges of false pretenses involving the proposal and a later attempt to collect more than $827,000 from the Labor Department based on invoices and audit reports that contained false information.
Court sources said it was highly unusual for a prison sentence to be imposed for misdemeanors.
"The imposition of prison sentences for white-collar crimes will generate an awareness in society that white-collar criminals are not given favored treatment and that white-collar crime does not pay," the government said in a memorandum to Penn, signed by U.S. Attorney Charles F.C. Ruff and Assistant U.S. Attorney Stephen R. Spivack.
During a sentencing hearing yesterday, Judge Penn expressed concern that Opalack had committed serious, premeditated offenses.He ordered Opalack to begin serving the prison term within three weeks, to be followed by two years of probation.
According to court records, Opalack made several appearances before a federal grand jury that was hearing evidence in the case. The scheme had been under investigation by law enforcement officials for more than a year.
In its memo to Penn, however, the government said that Opalack "did not acknowledge his guilt and involvement" until prosecutors indicated that the case might be resolved with minor charges.
According to court records, the government contended that Opalack set up a small accounting firm in Washington in June 1976, and then placed advertisements in local newspapers and professional journals seeking resumes from accountants who wanted to do government auditing work.
Some of those resumes, the government said, were used by Opalack to reinforce a voluminous proposal forwarded to the Labor Department in order to compete for the contract.
The government contended that 23 of the 31 accountants listed in the proposal as employes of Opalack & Company never worked there and never gave permission for the use of their names.
Most of those accountants' names were repeatedly used over the next 12 months in contract proposals submitted by Opalack to a variety of other agencies, including the Department of Health, Education and Welfare, the Environmental Protection Agency and the Interior Department. Only one small contract was awarded as a result of those proposals, the government said. s
According to the government's memo, the Labor Department gave "high grades" to the proposal from Opalack & company, which described a "well established and experienced" accounting firm. Government evaluators described the plan as a "tremendous proposal," said that the resumes were "very good" and that the firm had "very extensive experience," the government said.
Of the 119 accounting firms that submitted proposals for a portion of the Labor Department's $1.2 million contract, 11 firms were awarded contracts, and Opalack & Company received the second highest contract, the government said.
About 300 separate audits were included in the contract awarded to Opalack & Company, for which they were to be paid no more than $329,000. Once the work got under way, Opalack collected about $299,000 from the Labor Department, the government said.
An investigation began, however, when Opalack & Company submitted a $827,000 bill for one of the audits, which was supposed to determine whether $57,000 in costs billed by Price Waterhouse Company to the Labor Department were allowable.