gaining process, we felt that it was in our best interest never to inform one defense attorney who was representing another potential defendant. By following that procedure we were able to better maintain control over the bargaining process and to avoid a group resistance.

The investigation revealed that in 1976 the store managers became bored with the over-abundance of color televisions and appliances. They demanded and the companies they were dealing with agreed to provide cash. The cash generation schemes by the companies involved were similar. The manager would receive and accept false invoices for double the dollar amount of desired cash. After the false claims had been processed and the company received its checks from the Government, the company officials proceeded to launder the cash. One company simply wrote checks to their officers which were then turned into cash. Hilles, in a more sophisticated scheme, would prepare false invoices from Keegan's Appliances in Washington, D.C., and would then pay those false invoices. It then became Keegan's responsibility to generate the cash through a bank account which he had in Virginia or through the simple cashing of checks at a liquor store or a bank in Westminster, Maryland.

As an interesting sidelight to the desire for cash, two of the store managers along with a third individual apparently defrauded the Hilles company during the term of the scheme. They enrolled an outside vendor who supplied bills to Hilles for goods allegedly purchased by the store managers. In fact no goods were ever purchased by the managers and Hilles simply paid the bills from this retailer without checking. The retailer then turned the checks into cash and the cash was divided by the managers, the retailer and their other supporters. Hilles, of course, billed the Government at its usual rate of cost plus 30% profit for these items.

One of the companies heavily involved was owned by Matthew Smith, an individual who was convicted after a plea of guilty. Smith had become involved with the store managers while employed by the Navy. He retired from the Navy in 1976, set up his own companies and obtained BPA's. What Smith did of interest was to establish three separate companies so that a manager could call him and then write in bids from the three required companies. Smith turned his inside knowledge from friendship with the managers into his own business of providing bribes and stealing from the government. Smith also was involved in theft from the stores. The managers would sell Smith cartons of batteries and Polaroid film which would be fenced by Smith both in Maryland and in New York.

Of the 48 individuals indicted before I left the office on October 1, 1979, 47 have been convicted and one was acquitted. Of those 47, 5 went to trial and the remain

der entered pleas of guilty. In each case only pleas to felonies were accepted. For the most part, individuals were charged with conspiracy to defraud the United State in violation of 18 U.S.C. Sec. 371. The other charges used were filing false claims under 18 U.S.C. Sec. 287 and bribery under 18 U.S.C. Sec. 201. Several individuals were allowed to plead guilty to two-year gratuity bribes rather than the 15-year counts.

The six cases that went to trial produced substantially routine cases. The trials lasted anywhere from three to eight trial days. The only difficulty was that almost all of the cases included several hundred documents. The solution chosen was the use of pre-marked exhibits and exhibit books with the jurors all getting copies of the exhibits. Once the exhibits were admitted into evidence the jurors were permitted to look at them while the witness was testifying about them.

The government went to great lengths to attempt to achieve fairness and uniformity in the sentencing of defendants. As stated earlier, all plea agreements included full, complete and truthful cooperation. Only one defendant did not cooperate truthfully and her plea agreement was revoked with the approval of the Court and she received a substantially greater sentence than the managers who cooperated.

Anticipating that those defendants who went to trial would attempt to get similar sentences to those who cooperated, the government offered, where requested, plea deals which included non-cooperation. In those cases, where the defendants then went to trial, the government after trial recommended exactly what they said they would recommend before the trial for a non cooperating defendant. That totally vitiated the defense argument that the government was seeking to punish the defendant for going to trial. The government was able to legitimately present the view that the defendant was being punished for not cooperating, for hindering the investigation, and for his lack of remorse.

When the first 18 cases were indicted and it was believed that they would all be pleading guilty, the Clerk of the Court suggested assigning all of the cases to one judge. Fortunately, we managed to have the cases assigned to all of the judges and in fact the mathematical rotation was almost perfect. We insisted that all judges be involved because there would be so many subsequent indictments that no one judge could handle the entire investigation. That proved a crucial benefit in providing some uniformity in sentencing. It is our understanding that the judges had conferences prior to the first sentencing to discuss the government's overall recommendations and what the judges

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were likely to do. All plea agreements included provisions that sentences would be postponed awaiting the conclusion of the defendant's cooperation. In order to insure that, as to some of these defendants, the time before sentencing did not become an undue burden, when it was time to sentence most of the defendants, we took the remaining individuals before the grand jury to memorialize their testimony and then we permitted their sentencing. Having their sentences postponed also meant that they would be sentenced in an order convenient to the government and not necessarily convenient to the court. Once the sentences started there were as many as two or three a day over the course of several weeks. The government undertook to produce a sentencing sheet listing all prior sentencings, the sentencing judge, and both the government's recommendation and the sentence received. This sheet was circulated to all of the judges at the end of each day. Further, all defense attorneys were made aware of the prior sentencings of other defendants, and, if there had been sentencings earlier in the day that were not yet on the sheet, the judge who was doing a sentencing was made current during the government's allocution.

Fortunately, the judges generally stayed within a particular range for most defendants. However, there were variances on the basis of particular judges who have their own strongly-felt sentencing beliefs. Of all of the individuals so far sentenced, only two have received probationary terms and in neither case were those individuals G.S.A. employees. Judges in Baltimore made it quite clear that they firmly believed that the way to end corruption in the government was to impose jail terms in order to deter other government employees.

Uncovered by the investigation was an overall view that the management of the G.S.A. Federal Supply Service was abysmal. The managers back in the carlier 70's were encouraged to increase sales in their stores under the mistaken belief that increased sales meant better service to the client government agencies. All that the encouragement did was produce a greater desire by the managers to accept the false invoices and the bribes in return. Several of the bribes were actually billed through the government as exactly what they were, to wit, lawnmowers or bicycles. The G.S.A. when it received the invoices concerned itself only with the bottom-line dollar figure and no one ever bothered to check to see what was being purchased at which stores. The lack of an item inventory made carrying out the entire scheme rather simple.

Many government agencies have a policy of using all of their funds at the end of the fiscal year in order to insure that their budgets are not cut for the following year. The G.S.A. stores were, particularly for the Army, a convenient dumping grounds of extra funds for which credit

was given against future purchases.

The managers were

pleased to do it because rarely did they give back the full amount of monies dumped in and they were then able to use the extra funds on their books to help balance the false invoices.

A further part of the problem was the general government attitude that higher-ups were entitled to get whatever they wanted. The G.S.A. rules required the maximum value of an attache case to be in the vicinity of $25. Under the excuse of providing nice attache cases for "higherups, the managers began to stock $80 and $100 leather briefcases. Since they were not permitted to purchase those goods, the signing of false invoices was a routine practice to cover the purchase of better quality goods. Unfortunately, the entire attitude that the government carries few perquisites and that therefore government employees are entitled to a Cross pen here and there seemed to add dramatically to the problem. Another example of this would be three-ring binders and spiral notebooks. In September when students are going back to school there was a rush on these items at the G.S.A. stores which had little demand for the items

during other times of the year. The amount of petty thievery done by many government employees certainly gave support to the managers' view that what they were doing was the same thing, just on a larger scale.

Unfortunately, prior investigations at G.S.A. had been ineffective, and, therefore, the G.S.A. employees firmly believed they could get away with it. One manager was quoted in the Washington Post as saying that the whole thing would just blow over and that no one would ever go to jail. That manager is now serving four years in jail, but the attitude expressed was pervasive within G.S.A.

We wish to note that regardless of this attitude by the managers and others within G.S.A., the investigations group of the agency gave us their absolute and loyal support. There was never any concern that their interest was other than ours, which was simply to prosecute all the individuals who were involved regardless of title or position.

One criticism leveled at the investigation was that it did not get to the "big fish." Two supervisors were prosecuted but this trail hardly lead us into the White House. Failing to do so, however, is not a result of lack of cooperative witnesses. Everyone was willing to talk but what seemed to be the bottom line was that those individuals in the decision-making process with the power to make the purchases were the individuals who got bribed.

A point that should be looked into is a method by which the government buys their products. Wholesalers

spring up to almost exclusively service the government. This results from the government's requirement that they sign forms stating that the price being given the government is the cheapest price they give to anyone. Companies such as Hilles, Matthew Smith's companies and Art Metals all have one thing in common in addition to their corrupt activities. That one item is that they deal almost exclusively with the government because the goverment cannot get the manufacturers of certain goods to deal directly with it. Quite simply, it appears that there should be a better way.

Finally, having convicted 47 individuals it is hardly our view that we have "cured the problem." Certainly awareness by government employees that their acts will not go unpunished has been raised. Part of the overall problem was one of attitude and that cannot be changed over night. Further, these store managers were running stationery and supply stores on the scale of some of the largest stationery stores in Washington, D.C., or in Baltimore. Unlike the private store managers, however, our managers in many cases barely had high school educations and had often not been tained in how to run a large supply operation. As a result of our investigation the G.S.A. did tighten up many of their Procedures within the G.S.A. stores. The number of items carried by cach store was reduced from approximately 2100 to 100 items per store. Five of the stores in the Region have been closed as a result of lack of business. Most significantly, the billings to other federal agencies by the G.S.A. stores across the country are down $25 million a year as a result of the end of corruption within those stores and as a result of the tightened procedures.