updated 6/6/2006 5:34:23 PM ET 2006-06-06T21:34:23

An electronic components manufacturer and its chairman were indicted Tuesday on charges alleging they schemed to defraud the U.S. military of millions of dollars.

Herley Industries Inc. allegedly reaped profits of up to 300 percent on more than $3.9 million in sales of electronic components for which it was the only supplier, according to the grand jury indictment against the Lancaster-based company and its founder and board chairman, Lee N. Blatt.

The indictment alleges that Blatt misrepresented the company’s manufacturing costs and was behind the creation of a fake bid to justify the prices charged to the government.

The company sold an oscillator used in F-16 fighter jet radar systems and a component that prevents power-surge damage on E-2C Hawkeye aircraft.

“Blatt abused his position and used his company’s advantage as a sole supplier to systematically gouge the U.S. military,” U.S. Attorney Pat Meehan said in a statement. “Not only did the Air Force and Navy deserve better, but so did the taxpayers and the company’s shareholders.”

Attorney maintains company's innocence
The indictment includes charges of wire fraud, lying to the government, obstruction, aiding and abetting, and major fraud against the United States.

Blatt’s attorney, Donald J. Goldberg, denied the allegations.

“Lee Blatt would do nothing to sully his reputation or his company’s reputation,” Goldberg said. “He is not guilty of any crime and will say so when called upon to answer any charges.”

If convicted, Blatt, 78, of Vero Beach, Fla., could face jail time and both he and the company could be fined more than $13 million. The company also could be forced to forfeit more than $2.8 million paid under the contracts.

A call seeking comment from Herley President John M. Kelley was not immediately returned.

Herley designs and makes microwave equipment for defense, aerospace and medical use. It employs more than 1,000 people at facilities in Pennsylvania, Massachusetts, New York, Illinois, New Jersey, Florida, Virginia, Israel and England.

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