Two employees of major defense contractors were found guilty by a federal jury in Alexandria yesterday of conspiring over 15 years to traffic in classified government reports that outlined the budgetary wish lists of each military branch.
Frank J. Caso, a marketing analyst with Hughes Aircraft Co. from 1961 until late last year, and John R. Kiely, a former marketing manager with the Raytheon Co., testified that they had scrupulously honored the secrecy of budget reports they received and had been given the documents because the Pentagon wanted industry to get a quick jump on developing new weapon systems.
Caso, 58, and Kiely, 65, each were found guilty of one count of conspiracy for obtaining and trading the budget reports without proper authorization. Hughes and Raytheon pleaded guilty in March to related violations.
The five-day trial resulted from Operation Uncover, an investigation begun in the mid-1980s into the wholesale trading of classified defense documents by representatives from several of the defense industry's largest contractors.
"The coin of the realm was not cash," Assistant U.S. Attorney Randy I. Bellows told the jury. "Classified documents were not sold. They were traded" by employees of companies who competed for billions of dollars in weapons contracts.
Six individuals and five corporations, including Boeing Co., Grumman Corp. and RCA Corp., have been convicted in connection with the investigation, with the contractors agreeing to pay $14.9 million in criminal and civil fines.
Former representatives of companies such as Ford Aerospace Communications Corp. and Martin Marietta Corp. testified during the trial that they participated in a document-trading network that included Caso or Kiely, but added under cross-examination that at the time they had no notion such exchanges violated criminal laws.
The prosecution countered with evidence showing that long-range military budget plans were restricted for use by Pentagon brass and procurement personnel, not private contractors, and that corporate representatives went to remarkable lengths to hide, copy and destroy documents containing classified information.
Caso, described by his attorney Marcus Topel as a "salaried Joe" acting under superiors' orders, testified Wednesday that confidential military budget documents were so easily available that he assumed the government itself distributed them.
Caso testified that he also concluded the Defense Department gave out the documents "to assist industry in the proper allocation of their resources" and speed the appropriations for and delivery of new weapon systems.
Topel attacked the government for writing ambiguous industrial guidelines and effectively sanctioning the distribution of budget reports by assisting and tolerating leaks for years. "The government is guilty of the old saying: Do as I say, not as I do," Topel told the jury.
Joseph Covington, Kiely's attorney, argued that his client's actions were protected by the statute of limitations because they occurred more than five years before his client was indicted.
The trial opened Monday and the jury began deliberation Thursday afternoon, returning its verdict yesterday afternoon. U.S. District Judge Albert V. Bryan Jr. set sentencing for Caso and Kiely for July 27. The two face up to five years in prison.