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Firm Fined $500,000 in Bid Scam

Courts: Valentec of Costa Mesa pleads guilty to charges it manipulated ammunition prices.

September 03, 1998| From Associated Press

A Costa Mesa company Wednesday pleaded guilty to a bid-rigging charge involving materials sold to the Milan Army Ammunition Plant from 1988 to 1992.

Valentec International Corp. LLC will pay $500,000 to the government as part of a settlement accepted by the U.S. Justice Department, said Richard Reed, a Justice Department attorney.

In a one-count felony charge filed in U.S. District Court in Jackson, Tenn., the government said Valentec conspired with others to "create the illusion of competition by submitting intentionally high complementary bids" to the western Tennessee plant for materials needed to make ammunition.

A Valentec company official said the charge stemmed from operations when Insilco Corp. was the parent company. Insilco sold Valentec in 1993 to New Jersey-based Safety Components International.

"As part of our purchase agreement, we agreed to assume all liabilities," said Jeffrey Kaplan, executive vice president and chief financial officer for Safety Components.

Valentec was organized under Delaware laws and has its principal operations in Costa Mesa.

The plea was the result of a grand jury investigation in Jackson into procurement practices at the Milan plant, which is operated by Martin Marietta Ordnance Systems Inc. under a contract with the U.S. government.

It is the ninth case to arise out of the continuing investigation.

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