Two computer experts who were convicted of operating a $2 billion bribery, kickback and fraud scheme involving U.S. Postal Service and Small Business Administration procurement contracts were sentenced yesterday to stiff prison terms by a federal judge who said the men lied during their trial testimony.
U.S. District Judge Gerhard A. Gesell said he was imposing the prison terms as punishment and to "deter persons in or out of public places who are tempted to use their friends . . . to corrupt the orderly process" of government procurement.
The men, Ronald J. Perholtz and Franklin W. Jackson, both 38 and former high-ranking Postal Service officials, were convicted last month along with Gregory W. Fletcher, 39, in the largest government procurement fraud case ever prosecuted here. Gesell sentenced Perholtz to 10 years, Jackson to seven years and Fletcher to four years.
The jury ordered Perholtz to forfeit more than $850,000 that it said was money he got illegally through the contract scheme.
"It is clear that you were the primary instigator of these fraud and bribery schemes," Gesell told Perholtz, of 1620 Chester Mill Rd., Silver Spring, noting that Perholtz's "elaborate scheme of concealment and distortion of truth . . . crept into your testimony."
"You must bear the most," said Gesell, sentencing Perholtz to a total of 10 years in prison for his convictions of conspiring to operate and operating a racketeering-influenced criminal organization and 13 mail fraud convictions. Prosecutors said Perholtz's sentence was the longest they could remember being imposed on a white-collar criminal here.
"I do not feel you were an instigator," Gesell said to Jackson, " . . . but you clearly broke the public trust." Jackson, of 10409 Collingham Dr., Fairfax, who was convicted of the same counts as Perholtz, was sentenced to seven years in prison.
Gesell told Fletcher, of Annapolis, that while Fletcher was not involved in the racketeering counts, "I think you knew plenty about what was going on . . . . I think you were enamored of the fast track.
"I was impressed that, unlike the other two defendants, you did not take the stand and lie," Gesell said. Fletcher was convicted on 10 mail fraud counts. A fourth defendant in the case, Lloyd E. Root Jr., 40, of Phoenix, was acquitted of 10 mail fraud counts.
Gesell did not impose any fines on the three convicted men, each of whom is named in the government's civil suit, which seeks more than $2 million in additional damages from Perholtz and Jackson.
Each man will have to serve at least one-third of his sentence before he is eligible for parole. Court officials said they expected that Perholtz and Jackson would serve more than the minimum term because of the nature of their crimes.
All three were ordered to report immediately to the federal penitentiary in Petersburg, Va.
Attorneys for each of the men said they had no comment on the sentences, but they indicated that the convictions probably would be appealed.
U.S. Attorney Joseph E. diGenova, who described the three convicted men as "white-collar thieves of the first order," said he was pleased with the sentences. He said the substantial prison terms, forfeiture and civil suit serve as "punishment and take the profit out of crime."
"That's what we are here for, and that's what the racketeering law is there for," diGenova said. Prosecutors said Perholtz had already forfeited about $280,000.
Perholtz, Jackson and Fletcher each asked for a lenient sentence because of their children.
Assistant U.S. Attorney Joseph B. Valder, who prosecuted the case with Brian M. Murtagh, told Gesell that the men "should have thought long ago about their children" and that to "hide behind" them was "inappropriate."
"The family situation is in every case that comes into the court . . . not only you white-collar offenders," Gesell said. "I simply cannot, in trying to deal equally with all classes and categories of offenders that come before me, give any weight to family."
Valder asked that the men be given lengthy sentences to show that "playing with millions and billions of the public's dollars will not be tolerated."
Saying they were "three CPAs who found out how to play with the risks" of government corruption, Valder said the men's courtroom statements showed they had "nothing more than marketplace morals."
The contracts involved in the case were for three Postal Service employe time and attendance record-keeping systems, a Postal Service project to computerize services such as stamp purchases, a sophisticated Postal Service financial management system and a nationwide computerized financial management system for the SBA.
According to testimony at the trial, the fraud scheme usually used an "inside man" -- someone employed by the Postal Service or SBA and involved in the procurement of computer equipment and programs -- to provide Perholtz, the "outside man," with information about what was needed when the process was beginning.
Perholtz, who had consulting agreements with many firms, would then design the computers and programs needed for the project and negotiate a "marketing contract" with the computer firm for any sales.
The "inside man" would then steer the contract to the company for which Perholtz had designed the technical package, and the payments under the marketing contracts were made, through circuitous routes, to the "inside man," Perholtz and others.
Among those who testified for the government was John Gentile, a former assistant postmaster general who was given immunity from prosecution in exchange for his testimony. Gentile has agreed to repay $40,000.
The fifth man named in the indictment, Conley H. Dillon, pleaded guilty in December to one count of filing false income tax returns. He was sentenced to six months of work-release and agreed to repay $360,000. Prosecutors said he had repaid about $100,000