Twelve General Services Administration office supply store managers were indicated yesterday on charges of accepting cash, clothing, color television sets, stereos, home appliances, auto equipment, liquor, guns and airline tickets, among other items, from companies that sell office supplies to GSA.
In return for what they received from the office supply firms, the 12 GSA store managers falsely certified documents so that the firms were paid by GSA for supplies that were never delivered, according to the indictment returned by a federal grand jury in Baltimore.
Four employes of other federal agencies - the departments of Justice, Army and Navy - were charged with aiding the scheme in some instances by falsely signing for office supplies their agencies never received from the GSA stores.
The grand jury also indicted the chairman and vice presidenct of one of the office supply firms, Hilles Associates Inc. of Maryland.
All 18 defendants were charged with conspiring to defraud the federal government, which carries a maximum penalty of five years in jail and a $10,000 fine.
In announcing the indictments in Baltimore yesterday, Russell T. Baker Jr., the U.S. attorney for Maryland, said that more indictments were expected from his office's 16-month investigation into the GSA office supply stores. Other federal grand juries here and in cities around the country are investigating other allegations of widespread corruption in GSA.
GSA Administrator Jay Solomon said yesterday that his agency is moving to suspend without pay the GSA employes who were indicted. Private firms that are indicted also may be suspended from doing business with the government, he added.
"Fraud against the government cannot be tolerated," Solomon said, "and in the interest of the taxpayers, we must consider action which will remove these individuals from the work situation, which may offer continued opportunity for possible criminal activity.
"We at GSA are gratified to see that efforts in the past months are beginning to bear fruit. We applaud the actions of the Justice Department."
The GSA employes indicted yesterday ran GSA office supply stores at the Justice and Navy departments, the Internal Revenue Service, the General Accounting Office and GSA's own headquarters here.
The GSA supply stores resemble large stationery stores where federal employes pick up everything from paper clips and file folders to briefcases for use by their agencies. Payment is made with credit cards that transfer money from the agencies to GSA, which buys the supplies wholesale from private firms.
The grand jury charged that the indicted GSA supply store managers had ordered and certified that they had received from office supply firms tens of thousands of file folders, vinyl binders, report covers and other items that were never delivered to GSA.
Among the many things the GSA store managers received from the office supply firms in return, the indictment charged, were a car, a diamond ring, a riding lawn mower, a sand blaster, an air compressor, luggage, tools, tires, wrist watches, and clothes washers and dryers.
The Baltimore prosecutors have found evidence of pervasive corruption in 27 of the 30 GSA official supply stores in the Washington area and surrounding regions, according to sources. One investigator has estimated that the federal government never receives as much as one-fourth of the $37.6 million in office supplies that GSA pays for each year to distribute through the supply stores.
U.S. Attorney Baker said yesterday that the investigation by his office began when GSA investigators uncovered information about corruption in Baltimore and referred the matter to the FBI.
Baker said he has assigned a second prosecutor to aid Daniel M. Clements, the assistant U.S. attorney who has run the investigation. He said the same team of FBI and GSA investigators who have been working on the case will continue.
Asked if higher-lever GSA officials might be indicted, Baker, apparently referring to past prosecutions of former Maryland Gov. Marvin Mandel and former Vic President Spiro Agnew, said, "I think the reputation of this office is that we have a great fondness for high-level people."
The other advanced major investigation of GSA corruption, being conducted by the U.S. attorney's office here, has found the GSA managers of federal buildings here have taken payments from repair and maintenance contractors in return for allowing the contractors to be paid for work they never did.