Jet Air Owner Faces 17-Count Indictment : Defense Parts Contractor Has Links to Many San Diego Political Figures

For the second time in two years, an El Cajon jet parts manufacturer with extensive ties to San Diego politicians faces charges that he falsified documents in connection with a sensitive federal contract.

George T. Straza, owner of Jet Air Inc., was indicted by a San Diego federal grand jury Thursday on 17 felony counts of conspiracy, making false statements and theft in the company’s performance of a $250,000 contract to refurbish engine air seals on Air Force F-15 and F-16 jets.

The 31-count indictment, issued after a 13-month investigation by the Air Force and Defense Department, alleges that Straza and Jet Air General Manager Joao Jaime Costa ordered employees to cover up the company’s failure to complete required quality inspections of the engine seals. Though Jet Air delivered defective engines to the Air Force, no safety problems have been traced to the company, prosecutors said.

Jet Air, Straza and Costa also are accused of stealing $25,000 worth of gold from the government by failing to return gold sludge removed from the engine seals as part of the refurbishment process.

James R. Mills, the former state Senate president pro tem who became Jet Air president last year, said Thursday that the company denies all allegations of wrongdoing. Mills said the company, with 240 employees and annual revenues exceeding $12 million, has ongoing contracts with the Navy and Air Force.

Straza, a flamboyant 57-year-old businessman, pleaded guilty in May, 1984, to making false statements to the National Aeronautics and Space Administration in connection with a $2.4-million contract to manufacture parts for the space shuttle.

He served six months in prison and agreed to pay $690,000 to NASA under a plea bargain with federal prosecutors. NASA subsequently barred Straza personally from obtaining further contracts, but allowed Jet Air to continue as a contractor--with the understanding that Straza would serve the firm only as a consultant, not an officer.

U.S. Atty. Peter K. Nunez said Thursday that the new charges could result in the revocation of Straza’s probation on the 1984 conviction, which could lead to his imprisonment for 4 1/2 years.

Also, Nunez said NASA was reviewing its dealings with Straza in light of the latest indictment. Mills said the space agency had kept close tabs on whether Straza was abiding by the limits of his agreement with NASA.

If convicted on all the new charges, Straza would face a maximum penalty of 105 years in prison. Costa, named in 31 counts, faces a maximum penalty of 175 years in prison. In addition, the company faces $15.5 million in fines.

A civil lawsuit to recover a portion of the Air Force’s contract payments to Jet Air also is possible, Nunez said.

Straza and Costa are scheduled to surrender this morning for arraignment by U.S. Magistrate Harry R. McCue.

Besides Mills, several other San Diego area politicians have become involved with Jet Air and Straza in recent years. Mills’ predecessor as company president was former Rep. Bob Wilson of San Diego.

Rep. Bill Lowery (R-San Diego) has rented a Jet Air condominium during visits to the San Diego area, Mills confirmed, and both Lowery and Rep. Duncan Hunter (R-Coronado) reportedly have interceded on the company’s behalf with federal officials in Washington. Neither could be reached for comment Thursday.

The investigation of Jet Air turned up no evidence of wrongdoing by any current or former elected official, Nunez said. The illegal acts alleged in the indictment spanned the period from June, 1984, to February, 1985. Mills, who retired from the state Senate in 1982, joined the firm in June, 1985.

Nunez said he had no counsel to offer elected officials about the advisability of maintaining contacts with Jet Air in light of the new allegations. “I’m not in the business of advising politicians on what they should or should not do,” he said.

Mills said he saw nothing questionable in the lawmakers’ activities on behalf of Jet Air. “I think it’s perfectly normal and natural for any congressman to try to get work for people in his district,” Mills said. About 50% of Jet Air’s business consists of government contracts, he said; the remainder is private work for airlines.

Under its contract with the Air Force, Jet Air was obligated to inspect more than 1,000 used engine air seals from Kelly Air Force Base in Texas and to refurbish 517 worn seals. Among the steps in the repair process were washing the seals in an acid solution and inspecting them with a dye under fluorescent light.

The indictment alleges that Straza, Costa and Jet Air kept or sold the gold solder that washed from the seals, which prosecutors say should have been returned to the Air Force. They also are accused of ordering employees to falsify reports to lead Air Force and Defense Department auditors to believe inspections had been completed when they had not.

San Diego attorney Peter Hughes, who will defend Straza, said Thursday that the gold was retrieved by the company from toxic liquid wastes that otherwise would have been discarded. Hughes said his initial review of the questioned inspection reports indicated that the company did not mislead auditors to believe certain tests had been conducted when they had not.

“Our position is going to be that what was supposed to be done was in fact done,” Hughes said.

In the 1984 case, Straza was accused of telling NASA that Jet Air had manufactured shuttle parts--as the company’s pact with primary contractor Rockwell International required--when in fact he had arranged to subcontract the work to a Burbank firm.

Investigators said a former Jet Air employee tipped them off to the falsifications in that case. The same was true in the investigation that led to the new charges, according to Air Force investigator Richard Gwin.