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General Dynamics Trial Set for April 8

December 17, 1985|WILLIAM OVEREND | Times Staff Writer

Arguing that General Dynamics Corp. "literally could be put out of business" by a government fraud prosecution, a lawyer for the giant defense firm asked a Los Angeles federal judge Monday for the earliest possible trial date on charges that the company and four executives conspired to cheat the Defense Department out of $3.2 million on the discarded Sgt. York mobile anti-aircraft gun.

The request came as the company and four of its present and former top officials--including NASA Administrator James M. Beggs, now on a leave of absence from the space agency--entered formal pleas of not guilty to seven counts of conspiring to juggle company financial records to recoup millions of dollars in cost overruns on the abandoned weapons system.

Citing a government freeze on any new contracts or extension of new ones pending a resolution of the case, General Dynamics chief counsel Thomas P. Sullivan of Chicago referred to the firm's stockholders and 100,000 employees as he asked U.S. District Judge Ferdinand Fernandez to move the case as quickly as possible.

'There Is Urgency'

"This company literally could be put out of business because of these proceedings," Sullivan said. "General Dynamics is to be placed on a suspended status. Therefore, there is urgency to have these proceedings resolved as soon as it is feasible to do so."

While Sullivan urged Fernandez to set April 1 as the start of the trial, prosecutors suggested that the judge delay setting any date at all until he could determine how fast both sides could conclude pretrial legal proceedings. In a compromise, Fernandez set an April 8 trial date.

Justice Department fraud specialist Randy I. Bellows, heading a four-member team of prosecutors with Assistant U.S. Atty. J. Stephen Czuleger, revealed the massive nature of the prosecution by informing Fernandez that "one of the complexities of this case is that 2.7 million documents are involved."

Bellows said a special room for processing 2.6 million documents to be requested from General Dynamics already has been equipped with Xerox machines so that company officials can begin turning them over to the government as quickly as possible, but he questioned whether all of the information could be thoroughly reviewed in time for the trial.

2.6 Million Documents

Responding that General Dynamics would speedily provide the government with the 2.6 million documents it wants, Sullivan revealed that 100,000 additional documents already are in the government's possession, and asked that they be made available to the company with equal dispatch.

"We need the 100,000 documents they got from sources other than General Dynamics," Sullivan said, refusing to elaborate outside court on either the nature or the importance of those documents to the government's case.

The arraignment of the defense firm and its four past and present executives came two weeks after a seven-count federal grand jury fraud indictment accusing Beggs of conspiring with Ralph E. Hawes Jr., 54, of Claremont; David L. McPherson, 45, of Alta Loma, and James C. Hansen Jr., 53, of Upland, in the alleged scheme to illegally salvage company losses in the $39-million weapons contract.

The prototype for the tank-mounted anti-aircraft gun was developed at General Dynamic's Pomona Division from 1978 to 1981, while Beggs was the corporate official in charge of the division. He quit his job with General Dynamics in July, 1981, to become the head of the National Aeronautics and Space Administration. He took a leave of absence from that post the day after he was indicted.

Hawes was general manager of the Pomona Division during the same period, and McPherson and Hansen directed the anti-aircraft project during the time of the alleged conspiracy, according to prosecutors. The three officials now have different jobs in the company's Valley Systems Division in Cucamonga.

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