Evening star. [volume] (Washington, D.C.) 1854-1972, 1952-06-06
Is Told
OF Huge Slash
In Fraud Claim
Clark Clifford Listed
As Legal Counsel
For Detroit Concern

'ented by Clark Clifford, former
White House legal adviser.
The testimony came from GAO
officials before the House judiciary
subcommittee investigating the
Justice Department. The testi-
nony centered around alleged
Justice Department failure to
fraud payments to
private firms in settling World
War II Government contracts.
Frank H. Weitzel, assistant to
the controller general. testified
hat the department has recovered
only 100000 out of SCI million
earmarked by the GAO as fraudu-
ent payments in the contract
settlements.
Specific Cases Studied.
The $125,000 settlement deal
was brought out as the committee
began a rundown on specific cases
sent out by the GAO to Justice
with recommendations for fraud
prosecution.
Walter S. Sprague, cost auditor
Of the GAGS Detroit Office, said
the GAO in March, 1850, alleged
fraud of $1,313.358.53 against the
School of Trades, Inc. :,
in connection with its contracts
with the Veterans Administration.
He said the GAO was informed
by the Justice Department last
July that settlement of $125, 900
was being made. The Justice De-
partment, he added, said the deal
was agreed to by VA. Later, he
said, the controller general wrote
to the Justice Department urging
that vigorous prosecution would
be more in the interest Of the Gov
eminent"
Under questioning by Commit
tee Counsel Stephen A. Mitchell
and D. G. Kennedy, Mr.. Sprague
said VA was withholding $3.50, 900
from the trade school at the time
the settlement was announced.
$65,0OO Returned to School.
$50. after settlement, about
$65.000 had to be returned to the
SCHOOL,"
That's correct" the witness re-
piled.
Mr.. Sprague said he was told in
1850, by George r. PETER,
former assistant United States at
torney at Detroit. that the school
had retained Clark Clifford at q
fee of about $25, 900. At the same
time, he said, Mr.. PETER told him
that the trade school case had
been taken out Of Mr.. PETERS
hands "by the Justice Department
in Washington"
Mr.. Clifford left the White
House as adviser to President
Truman in January. 1850.
Mr.. Sprague testified also that
in February, 1850, he was present
at a conference on the trade
school case which was attended
by MIR. Clifford's law partner, Ed
win Miller. Asked If any other
legal fees were paid. the witness
said $1,000 fee went to George
F. Fitzgerald, an attorney and
Democratic national committee
man in Detroit. A similar fee
went to another Detroit attorney
John Poole. he said.
Another Case Cited.
In another case. Mr.. Sprague
testified about lack of civil action
on a 1916 claim Of $4,000 against
the Advance Plating Co. of De-
troit. The civil action was
recommended after officials Of the
firm were acquitted on criminal
charges, he said.
Mr.. Sprague said Assistant At
torney General Holmes Baldridge
heading the Justice Department.
Claims Division, advised GAO last
June that the matter was not
being pushed because "some oil
the witnesses in the case were
dead"
(. Asked if he knew of the demist
of any witness in the court cas-
he attended, Mr.. Sprague sale
he did not. II
Mr.. Sprague said the controller
general wrote the Attorney Gen.
eral last August recommending
that every step be taken to re.
cover the amount" The GAO ha.
not heard from the Justice De.
partment on that case since, h.
added.
The subcommittee also heare
testimony on several other case.
involving Midwest and New Yorl
firms.
Under terms of the 1914 Con.
tract Settlement Act, Mr.. Weitze
said, the GAO is not permitted tc
audit the settlements until after
they are made. And, he asserted
the cases can be reopened fol
recovery of money only in the
event fraud is found.
Had Fought Provision.
Mr.. Weitzel said the GAO has
fought this provision since it wal
enacted and that its stand has
been borne out. He declared:
1.-THE act has cost the taxpayers
either through fraud, overpay-
ments or overliberality at least
Ione-half billion dollars-a fright
Iful toll to pay"
Mr.. Weitzel said the Justice De.
|partment has closed some of the
referred cases after its own inves.
|tigation, without informing GAG
|of the details. Other cases still
are pending, he said.
The GAO ofiicial said one sam
pie audit of $3.50 contract settle
ments disclosed that $50 were
induced by fraud. AL were re.
ferred to Justice.