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Straza Given Prison, Fine for Jet Fraud

October 27, 1987|JENIFER WARREN | Times Staff Writer

George T. Straza, the flamboyant former jet parts manufacturer convicted of defrauding a government contractor by double-dealing in engine components, was sentenced Monday to three years in prison and fined $239,400.

Also sentenced by U.S. District Judge Leland C. Nielsen was Alice Skinner of Lakeside, Straza's former personal secretary at the now-defunct Jet Air Inc. in El Cajon. Skinner, 57, was placed on probation for two years and fined $1,000 by a somewhat reluctant Nielsen, who hinted that he believed Skinner was roped into the conspiracy by Straza.

Appeal Is Planned

Straza, 58, was allowed to remain free on bail pending an appeal. Nielsen gave the Rancho Santa Fe businessman two weeks to post a $1-million personal surety bond backed by property assets.

Last month, a federal court jury convicted Straza on 43 counts of conspiracy, theft of government property, mail fraud and issuing false invoices. The jury also convicted Skinner on 20 similar counts but acquitted Joao Jaime Costa, Jet Air's 50-year-old former vice president and general manager, on 20 fraud counts.

Prosecutors alleged that the trio defrauded Pratt & Whitney, a government contractor, by charging the company for 90 jet engine burner cans that Jet Air in fact sold to Aerospace Innovators Ltd. of Manhattan Beach. They were also accused of mail fraud for allegedly sending Pratt & Whiteny false billings, and of using unauthorized blueprints.

$239,000 in Personal Profit

The scheme netted Straza and his two allies $239,000 in personal profit, prosecutors charged. The ultimate destination of the parts, used in the Navy's A-4 Skyhawk and A-4 Intruder fighter planes, is still under investigation, government officials said.

Straza's indictment in the case came after a 13-month investigation by the Air Force and Defense Department.

Asst. U.S. Atty. George Hardy, the prosecutor in the case, said he was pleased with the sentence, which roughly matched that sought by the government.

"I think it's a significant sentence," Hardy said. "With this kind of sentence, a clear message can be sent to contractors: If they want to commit intentional frauds on the government, they are going to pay the penalty."

Straza's attorney, Howard Weitzman of Los Angeles, said he was disappointed with the judge's decision.

Weitzman, who headed the successful defense of John Z. DeLorean in the erstwhile auto maker's fight against cocaine charges, said his client is innocent because "neither Pratt & Whitney nor the government lost any money nor was there any harm to any of the alleged victims."

During the sentencing hearing, the defense attorney made a motion for a retrial, arguing that it was unfair to subject his client to prison time when officials with larger companies involved in government contract work are fined but rarely imprisoned.

"It just isn't an equitable situation," Weitzman said.

The verdicts last month marked the second time in three years that Straza has been convicted on fraud charges. In May, 1984, he pleaded guilty to making false statements to the National Aeronautics and Space Administration in connection with a $2.4-million contract to manufacture parts for the space shuttle.

Under a plea bargain, Straza agreed to pay $690,000 to NASA and served six months in prison before being placed on five years' probation. The space agency subsequently barred Straza from obtaining further contracts but permitted Jet Air to continue as a contractor if Straza's role was limited to that of consultant.

In another case, Straza and Costa were charged in August, 1986, with making false statements related to the performance of a $250,000 Jet Air contract to refurbish engine air seals on Air Force F-15 and F-16 jets. A hearing in that case is scheduled for Nov. 19 before District Judge William B. Enright.

Enright will also determine whether Straza's most recent conviction constitutes a violation of his probation in the NASA case, a decision that could lead to still more prison time.

Straza, the former owner of Jet Air, sold his assets in the firm in February to New York-based Chromalloy Gas Turbine Corp., a division of Sequa Corp. The firm now operates as Jet Services West Inc., Vice President Bill Marvel said.

Both Straza and his former company have ties to San Diego-area politicians. James R. Mills, former state Senate president pro tem, became Jet Air president in 1985, and his predecessor was former Rep. Bob Wilson of San Diego.

Rep. Bill Lowery (R-San Diego) has rented a Jet Air condominium during visits to the San Diego area, and both Lowery and Rep. Duncan Hunter (R-Coronado) reportedly have interceded on the company's behalf with federal officials in Washington.

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