Hampstead firm is accused of bilking military Defective parts sold to Pentagon for 12 years

August 05, 1992|By Darren M. Allen | Darren M. Allen,Staff Writer

A Hampstead hardware distribution company for 12 years sold thousands of nuts, bolts and screws used on defense projects -- including fighter jets, submarines and torpedo warheads -- that didn't meet military specifications, the U.S. attorney for Maryland said yesterday.

A two-count criminal information document, filed in U.S. District Court in Baltimore, said Mil-Spec Fasteners Corp. and its Carroll County owners, George Yesulinas Sr. and George Yesulinas Jr., sold sometimes defective fasteners to 13 defense contractors between 1979 and 1991.

"This is a classic case of corporate greed overriding patriotism," said U.S. Attorney Richard D. Bennett, who filed the charges yesterday with Assistant U.S. Attorney Ira L. Oring.

"Mil-Spec was passing off everyday, commercial-grade fasteners as if they met the exacting high standards required by the military," Mr. Bennett said.

One of the concerns in cases such as this is for the safety of people using military equipment built with those fasteners, Mr. Bennett said.

Mil-Spec sold to contractors who have built Air Force ground-based radar systems, armored earth movers of the type used by the Army in the Persian Gulf War, Navy sonar equipment and Air Force rescue equipment.

Other contractors who purchased the fasteners from Mil-Spec over the years have built the Navy's Trident submarine, the Navy Mark 48 torpedo warhead and such routine equipment as Army tire pumps.

A Pentagon official, who asked not be named, said safety problems are the top concern of investigators, but that it would be "nearly impossible" to trace where Mil-Spec fasteners ended up.

Mr. Bennett said no military deaths or injuries have been linked directly to Mil-Spec products. "The extent that any military project has been compromised by these substandard parts is an open question," he said.

George Yesulinas Sr., reached yesterday at his Westminster home, referred all questions to Baltimore attorney Harold I. Glaser. Mr. Glaser could not be reached for comment on the charges.

According to court documents, Mil-Spec would change commercial-grade fasteners so that they would appear to meet military specifications. Many of the nuts, bolts and screws were purchased from foreign firms, and much of the merchandise was considered to be manufacturers' surplus.

Mr. Bennett said the fraud amounted to a "significant amount of money," but declined to give an exact figure. He would not elaborate.

Court records show that Mil-Spec would alter the fasteners by dyeing, spray painting, cutting, reworking and chemically treating them before shipping them to military contractors.

The 22-employee company faces a $1 million fine, and the Yesulinases face fines of $500,000 each and 10 years in jail if they are convicted on the charges of conspiracy and making false statements.

No one would say whether Mil-Spec and its two top officials are cooperating with the U.S. attorney's office in a broader investigation.

The filing of charges in a criminal information document, rather than a formal indictment, usually means that the defendants have agreed to plead guilty to the charges.

The Defense Criminal Investigative Service began looking into Mil-Spec several years ago, when a confidential informant told it of irregularities with the company's products, according to a search warrant affidavit filed in the court.

During the investigation, telephone conversations -- including controlled buys by defense contractors -- were tape-recorded. The affidavit said the company would offer substantially cheaper prices for military contractors that didn't require extensive documentation.

In one instance, a buyer was told that the parts being bought "came out of a box Mil-Spec had on its shelf" and that the company did not know how old the parts were.

Among the defense contractors who purchased goods from Mil-Spec are Westinghouse Electric Corp., Ingersoll Rand Co., Raytheon Co., BMY Combat Systems, Clark Machine Corp., Martin Marietta Corp., Ballies Manufacturing Co. Inc. and Babcock & Wilcox Co.

The defense contractors themselves were not a part of the Mil-Spec investigation, the Pentagon official said. But Defense Department investigations into other fastener companies are under way in the West and Midwest, the official said.

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