Two employees of major defense contractors were sentenced yesterday in Alexandria federal court to six months each in a community halfway house and $5,000 in fines for conspiring to traffic in sensitive Pentagon budget reports that outlined the long-range weapons plans of each military branch.
Frank J. Caso, 58, a marketing analyst with Hughes Aircraft Co., and John R. Kiely, 65, a former marketing manager with Raytheon Co., were convicted of conspiracy last month in U.S. District Court in Alexandria.
U.S. District Judge Albert V. Bryan Jr., who presided during the four-day trial, sentenced the men to two years, then suspended all but six months. Caso and Kiely will be allowed to enter community facilities near their homes.
The sentencings bring to a conclusion the criminal cases arising from Operation Uncover, a 15-month government investigation into an extensive network of corporate representatives who freely obtained and traded confidential Pentagon reports in the late 1970s and early 1980s.
Michael J. Costello of the Defense Criminal Investigative Service that handled the investigation said the circulation of the documents tainted the procurement process and may indirectly have cost taxpayers millions of dollars.
However, some law enforcement officials said they were frustrated because bureaucratic delays left prosecutors with too little time to pursue a number of industry targets before the statute of limitations expired. The government may still seek some related civil actions, officials said.
All told, six individuals have been sentenced in the cases and fines of $14.9 million were levied against five corporations, including Hughes, a subsidiary of General Motors Corp., and Raytheon. Other corporations that pleaded guilty to trafficking in the documents were Boeing Co., Grumman Corp. and RCA Corp.
The longest sentence resulting from the investigation was a two-year jail term given Richard Lee Fowler, a former Boeing marketing analyst convicted of 39 criminal counts arising from documents he illegally obtained, copied, distributed and destroyed.
Though the prosecution contended that the companies sought the long-range military budget proposals to get a leg up on competitors for huge Pentagon weapons contracts, the government said in most of the plea agreements that it had no evidence the contractors profited from the inside information.
The prosecution was hampered by the fact that most of the document trading occurred more than five years ago, placing the acts beyond the statute of limitations.
Testimony during Fowler's trial last fall showed that many corporate employees stopped participating in the flow of documents in mid-1985 when Bernie E. Zettl, a former GTE Corp. consultant, was indicted for possessing similar reports. Zettl, whose case inspired but was not part of Operation Uncover, is scheduled for trial Aug. 27 in Alexandria.
Marcus Topel, Caso's attorney, said in an interview yesterday that his client "did what he was told by his employer" and that decisions to seek sensitive Pentagon reports were made at the highest level of the corporation. Caso was the only Hughes employee charged.