ITT Van Nuys Unit Traded Gifts for Air Force Data : Gilfillan Pleads Guilty in Fraud Case

BOSTON — ITT Corp.’s Gilfillan division, a Van Nuys-based defense contractor, pleaded guilty Monday to a single count of conspiring to defraud the government for treating Air Force aides to liquor, food, golf and entertainment to get secrets used to bid on $230 million in military contracts.

In a plea bargain, federal prosecutors agreed to drop three other felony charges and to recommend that the international conglomerate, which faces a maximum fine of $500,000, be fined just $200,000.

The Times reported early this month that the U.S. attorney’s office in Boston and lawyers for ITT had reached the plea agreement. The case, which had been scheduled to go to trial Monday, was widely regarded as a prototype for Operation Ill Wind, the wide-ranging investigation of Pentagon procurement that is expected to result in indictments within weeks.

ITT admitted Monday that a Gilfillan employee, Edward M. Vicenzi, spent about $15,000 for illegal gifts to Air Force officials at Hanscom Air Force Base in Bedford, Mass., in 1984 and early 1985. In exchange, Gilfillan received copies of internal government documents with confidential procurement information on two Air Force programs that the firm was interested in pursuing.

Federal prosecutors told U.S. District Judge David S. Nelson that several Gilfillan employees tried to cover up Vicenzi’s activities by destroying or concealing the documents after word of an investigation was out. Also, the company said it reimbursed Vicenzi for the illegal gratuities.

Vicenzi, a senior marketing representative, later was fired by Gilfillan. He pleaded guilty in July to the same charge of conspiracy and was expected to testify against his former employer. Vicenzi faces up to 35 years in prison and a $500,000 fine on the charge.

ITT officials said the case involved one employee and was not tied to the Pentagon procurement scandal.

“We pleaded guilty to the fact that the person involved was our employee when he acted improperly,” ITT Chairman Rand V. Araskog said in a statement. “We had no choice because that employee pleaded guilty.”

Two Contracts Involved

However, the firm terminated several other employees. Two filed a lawsuit in Los Angeles alleging that they followed company policy in their dealings with Vicenzi.

According to the indictment, Vicenzi was hired in August, 1983, to pursue two Air Force contracts--an anti-radiation missile decoy system valued at more than $80 million and a mobile air traffic control radar system worth $100 million to $150 million.

Vicenzi’s $60,000-a-year job was to get inside government information on the programs, including Air Force plans, specifications, procurement strategy and projected costs, the indictment said.