THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Saturday, July 13, 1996 TAG: 9607130204
SECTION: LOCAL PAGE: B4 EDITION: FINAL
SOURCE: ASSOCIATED PRESS
DATELINE: NORFOLK LENGTH: 41 lines
A Chesapeake businessman was sentenced Friday to 21 months in prison for defrauding the government in the sale of fuel oil to a military installation.
Lynn Franklin Payne, 48, a former terminal manager at Kenan Transport Co. Inc., also must spend three years under supervised release following his imprisonment, U.S. Attorney Helen F. Fahey said.
Payne was sentenced in U.S. District Court. He pleaded guilty April 1 to charges that he conspired to defraud the Internal Revenue Service and conspired to make false statements to the Defense Department about the delivery of fuel oil to the Yorktown Naval Weapons Station.
According to court documents, Domestic Industries of Virginia had a Defense Department contract from Aug. 1, 1990, through July 31, 1992, to supply heating fuel oil to department customers in Hampton Roads. Beginning in June 1990, William Bartlett Jones, a sales manager at Domestic, arranged through Payne for Kenan to deliver oil, primarily to Yorktown.
Authorities said Payne and Jones substituted lesser-grade fuel oil - including waste oil - for the higher-grade fuel required by the contract, and did not tell the Pentagon.
Authorities also said Jones had Domestic issue nearly $160,000 in checks to a fake company named LF Payne. They said Payne cashed the checks and divided the money with Jones. Payne did not report the money on his federal income tax returns.
Jones was sentenced July 1 to 41 months in prison on charges that he conspired to defraud the IRS and to pay kickbacks to an employee of a Defense Department subcontractor in return for favorable treatment on a government contract. ILLUSTRATION: THE CHARGES
Lynn Franklin Payne pleaded guilty April 1 to charges that he
conspired to defraud the Internal Revenue Service and to make false
statements to the Defense Department about the delivery of fuel oil
to the Yorktown Naval Weapons Station. by CNB