July 25, 2002

OFFICE OF THE UNITED STATES ATTORNEY
SOUTHERN DISTRICT OF CALIFORNIA
San Diego, California

United States Attorney
Patrick K. O'Toole

For Immediate Release

NEWS RELEASE SUMMARY

Patrick K. O'Toole, United States Attorney for the Southern District of California, announced today the indictment by a Federal Grand Jury in San Diego of four family members for conspiracy to defraud the United States Department of Defense, false statements and claims to the Department of Defense, wire fraud, and filing false tax returns, in connection with their operation of a local company called Supply Depot, Inc. The individuals charged are GERALD DILLON, his wife ROSEMARIE CARLA DILLON, and their sons, JEFFREY DILLON AND GERALD DILLON, JR.

The indictment alleges that Supply Depot, Inc., 2830 Via Orange Way, Spring Valley, California, has been in the business of locating and supplying various commodities needed by the United States Department of Defense, including wire rope and casters. The wire rope is used on missile systems, helicopters, various surface and amphibious vehicles, and aircraft, including the B-1 Bomber, the F-4 Phantom, the B-52 Stratofortress, and the F-14 Tomcat. The wire rope connects flight control systems, such as wing flaps and rudders, to the cockpit flight control systems. The indictment alleges that Supply Depot, Inc. substituted cheaper, inferior wire rope on contracts with the Department of Defense. Similarly the indictment alleges that Supply Deport, Inc. substituted cheaper, inferior casters on contracts with the Department of Defense. Among other things, casters are used to assist in the movement of bombs, other ordinance, and fuel tanks, to and from military aircraft.

The indictment also alleges that GERALD DENNIS DILLON, and his wife ROSEMARIE DILLON, filed false joint income tax returns, failing to report substantial amounts of income. In addition, JEFFREY DILLON, and GERALD DILLON, JR. are charged with filing false income tax returns. According to Denise L. Rubin, Special Agent in Charge of IRS Criminal Investigation in San Diego, the Indictment alleges that the defendants willfully filed fraudulent income tax returns and omitted income totaling over $1.4 million. Rubin said, "Intentionally filling a fraudulent income tax return is a serious crime. IRS Criminal Investigation unraveled the web of transactions in this case and followed the money trail."

United States Attorney Patrick K. O'Toole praised the joint investigation undertaken by the Defense Criminal Investigation Service, the Federal Bureau of Investigation, the Naval Criminal Investigative Service, the Air Force Office of Special Investigations, and the Internal Revenue Service, stating, "working together, particularly in this time of increased military readiness, we can help ensure that our military forces do not become prey to the greedy few who would put their interests above the interests of their country."

The indictment charges violations of Title 18, United States Code, Section 371--Conspiracy to Defraud the United States; Title 18 United States Code, Section 1001--False Statements; Title 18, United States Code, Section 287--False Claims; Title 18, United States Code, Section 1343--Wire Fraud; and Title 26, United States Code, Section 7206(1)--Filing False Tax Returns. All defendants are charged in all counts, except for the tax charges, which are charged according to the person(s) who filed the tax return.

DEFENDANTS

1) Jeffrey Michael Dillon

2) Gerald Dennis Dillon, Jr.

3) Gerald Dennis Dillon
aka "George Capri"

4) Rosemarie Carla Dillon
aka "Rose Fuda"

SUMMARY OF CHARGES

Count 1 - Conspiracy to Defraud the United States - 18 U.S.C. § 371
Maximum Penalty: 5 years, $250,000 fine

Counts 2-36 - False Statements to the United States - 18 U.S.C. § 1001
Maximum Penalty: 5 years, $250,000 fine

Counts 37 - 61 - False Claims to the United States - 18 U.S.C. § 287
Maximum Penalty: 5 years, $1,000,000 fine

Counts 62 - 84 - Wire Fraud - 18 U.S.C. § 1343
Maximum Penalty: 5 years, $250,000 fine

Counts 85 - 90 - False Tax Returns - 26 U.S.C. § 7206(1)
Maximum Penalty: 3 years, $250,000 fine and cost of prosecution

AGENCIES

Defense Criminal Investigative Service
Federal Bureau of Investigation
Internal Revenue Service, Criminal Investigation
Naval Criminal Investigative Service
Air Force, Office of Special Investigations
Army, Criminal Investigation Division

An indictment is not evidence that the defendants committed the crimes charged. They, like all defendants, are presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt.