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Probes Highlights NASA Misconduct

By Ralph Vartabedian
and Ronald J. Ostrow

Los Angeles Times

WASHINGTON

The FBI is conducting a broad-ranging investigation into an alleged fraud and kickback scheme among private contractors and government officials at the National Aeronautics and Space Administration's Houston center, according to government and industry sources.

Some targets of the investigation were drawn into a sting operation, in which the FBI set up a phony company that allegedly paid off a NASA official to help get a kidney-stone smashing machine onto a space shuttle flight.

The sting also drew in employees of major aerospace contractors, as well as consultants, who provide management and technical services for shuttle missions. In addition, a NASA astronaut, whose identity was unknown, has become a potential target in the investigation, according to an industry official with direct knowledge of the case and who asked not to be identified.

Martin Marietta, a major NASA contractor that is a suspect in the case, has fired two employees of the services group it acquired in April from General Electric, a company spokesman said Thursday. The two employees, left unidentified, were "not key executives," he said.

The names of other contractors suspected in the case could not be obtained, but high level industry sources said that some companies have begun conducting internal investigations related to the matter. About a half dozen NASA employees may be implicated and an unknown number of contractor employees, sources close to the case said.

Code-named Operation Lightning Strike, the FBI probe is believed to involve multimillion-dollar damages against the government and has been described by officials familiar with the investigation as the biggest procurement fraud case since the Ill Wind probe, in which 50 defense industry and Pentagon officials have been convicted.

The sting operation was called off Thursday after it was disclosed by Houston news media.

not be determined whether authorities had suspected criminal activity before they set up the sting.

NASA officials acknowledged the existence of the investigation Thursday, but in large measure withheld detailed comment about the case or its potential consequences. The FBI in Houston and the NASA inspector general declined comment.