GE to Settle With U.S. Over Contract Fraud

PHILADELPHIA — General Electric Co. and the federal government have reached a tentative settlement over GE’s recent $8-million contract-fraud conviction, federal prosecutors said today.

GE agreed not to appeal the conviction in return for the government’s settling six other cases involving dubious accounting by GE on defense contracts, officials said.

GE and Management and Technical Services Co., its King of Prussia, Pa., aerospace subsidiary, were convicted on Feb. 2 after a 14-week trial of defrauding the government of up to $8 million on a contract to supply mobile combat computer systems for the U.S. Army.

The government had charged GE with failing to report cost savings it achieved on the $244.9-million contract. Two GE employees were also convicted in the case.

GE, Matsco and the two employees were scheduled to be sentenced today in the case, but those sentencings have been postponed until July 26, to give GE and the government time to iron out the settlement, prosecutors said.

Assistant U.S. Atty. Nicholas Harbist, who prosecuted the case, said the settlements will not affect the final sentencing of the two GE employees.

Gerald Leo, 52, an officer of Matsco, was convicted of mail fraud and covering up the fraud.

James Badolato, 43, also a Matsco manager, was acquitted of fraud charges but was convicted of participating in the cover-up.