A witness in the trial of three former Navy officers charged with illegally attempting to induce the Iranian government to sign a contract with a company in which they had an interest testified yesterday that one of the defendants told him to conceal the deal from the Navy.
Charles N. Goodale, a former training specialist with Lulejian and Associates, Inc., the company allegedly involved in the scheme, said that at the request of defendant Malcolm W. Cagle, he helped prepare a report to the Navy without stating that Cagle had intended to suggest to the Iranian government that Lulejian be selected for the contract. The $1.2 million pact was for training 2,000 Iranian naval officers and enlisted men.
The two other defendants besides Cagle, a retired vice admiral, indicted on charges of defrauding the federal government and then concealing the scheme, are James N. Hooper, of Pensacola, Fla., a retired Navy Captain and Cagle's deputy in the Navy and Dominic A. Paolucci of Alexandria, a retired Navy captain and former president of Lulejian.
Goodale testified for hte government in U.S. District Court in Alexandria that Cagle called him and arranged job interviews for him at Lulejian in 1972. After he took the training specialist's job, he, Cagel and Hooper worked closely on the proposals they were planning to present to the chief of the Imperial Iranian Navy. All three agreed that they would try to persuade the Iranians to agree to a "sole source contract," Goodale testified.
A sole source contract is one in which a U.S. government agency, such as the Navy, agrees to do business with a foreign government by contracting with a private U.S. firm without advertising or seeking competitive bids. According to Assistant U.S. Attorney James Hubbard, the Navy later found out that the scheme and the shah of Iran decided to contract for the training directly with the Navy.
Goodale testified that once the Iranians accepted the plan to contract with a private U.S. firm for the training, Cagle and Hooper presented a report to Harry E. Gerhard, director of security assistance for the Navy, without mentioning that the Iraninas, at Cagle's suggestion, had agreed to contract with Lulejian.
After Cagle and Hooper won the contract in Teheran, Iran, in July, 1974, Goodale testified, Paolucci offered Hooper a job with his company and Cagle suggested that he head a board of directors to oversee the work.
Cagle, who retired from the Navy on Aug. 31, 1974, was employed at $200 a day as a consultant for Lulejian from Sept. 20, 1974, to Dec. 24, 1974.Hooper who retired at the same time as Cagle, became general manager of Lulejian from Sept. 30, 1974 to Jan. 1, 1975, according to the indictment. Paolucci since has left the company, which has its headquarters at 5205 Leesburg Pike in Falls Church.
In his opening presentation, Brian Gettings, Cagle's attorney and a former U.S. attorney, told the jury that his client was not looking for a job when he left the Navy because he thought at the time of the contract that he would be named president of the University of West Florida. In addition, Gettings said, Cagle had a $30,000-a-year Navy pension and had received "myriad" job offers in private industry.
Paolucci's attorney, Robert Bennett, argued that his client, even though he was president of Lulejian, did not make the decisions for the company and had not even heard that Cagle had been hired by the firm until August, 1974.
Hooper's attorney, Fred Swersky, told the jury that the evidense will show that Hooper was not looking for a job when he retired from the Navy and that his client did not agree to work for Lulejian until three weeks after Cagle's and Hooper's as a Navy after Cagle's and Hooper's trip to Iran in July 1974.
Swersky said Hooper, as a Navy officer, worked with Lulejian, to prepare the documents to be presented to the Iranian government, but that there was nothing wrong with the arrangement.
Cagle and Hooper are each charged with conspiring to defraud the U.S. government and to corruptly influence the performance of official acts by government employees. They are also charged with three counts of concealing the scheme and conflict of interest. If convicted, Cagle and Hooper could each be sentenced to a maximum of 22 years in prison and fined $50,000.
Paolucci is charged with conspiring to defraud the federal government and to corruptly influence the performance of official acts by government employees and with one count of concealing the scheme. If convicted he faces a maximum penalty of 10 years in prison and a $20,000 fine.