The Justice Department is considering criminal prosecution of GTE Corp. and one of its former consultants for allegedly violating national security regulations, according to government sources familiar with the case.
For two years, criminal investigators in the Defense Department's Office of the Inspector General have been examining whether officials at the electronics manufacturing firm, which has major defense contracts, received unauthorized classified documents from defense consultant Bernie Zettl, the sources said, confirming a report that first appeared in The Wall Street Journal.
Some of the documents outlined projected spending priorities for some electronic intelligence-gathering equipment and weapons over several years for the Air Force and the Navy, sources said. Disclosure of the documents did not necessarily damage national security, but may have given GTE an unfair competitive advantage in seeking defense contracts, they said.
The DOD investigators have worked with the government procurement fraud unit in the U.S. attorney's office in Alexandria, where a federal grand jury has heard some of the evidence gathered in the probe, according to a lawyer representing some of those questioned.
GTE is aware of the investigation and "we are cooperating with federal investigators," said Thomas Mattausch, a spokesman for the Stamford, Conn.-based company.
The Washington law firm of Williams & Connolly is representing GTE in discussions with senior officials at the Justice Department, sources said.
Justice Department officials and the U.S. attorney's office in Alexandria declined to comment on the investigation or those discussions.
Zettl, a retired Air Force major who now lives in Alexandria, declined comment on the investigation.
Zettl, 62, is a member of the Arlington-based Association of Old Crows, a 21,500-member organization of former military men and defense contracting firms who swap information about the latest gadgetry and trends in the field of electronic warfare. As former military men, many Crows enjoy a close relationship with Pentagon officials, sources said.
The investigation took place against a backdrop of heightened concern within the Reagan administration over leaks of sensitive information to the press and others, as well as increased scrutiny by Congress of defense contractors and the procedures used in winning lucrative government contracts.
The Old Crows group has been told it is not a target of the investigation and "none of the officers of the organization has been interviewed by the Justice Department," according to executive director Gus Slayton. But another Old Crow member interviewed by DOD investigators said he believed that several other members had been contacted.
Zettl's former business activities have come under federal scrutiny previously. A federal indictment released in Cleveland in February did not name Zettl as a defendant but alleged he helped a former National Aeronautics and Space Administration official submit false travel vouchers to the government. The former official also was charged with allegedly failing to report income he received from Zettl.