FOR IMMEDIATE RELEASE                                         CIV
FRIDAY, MARCH 7, 1997                              (202) 616-2765
                                               TDD (202) 514-1888



     WASHINGTON, D.C. -- SPECO Corporation, a bankrupt
Springfield, Ohio, company, has agreed to an allowed claim by the
United States of $7.2 million to settle allegations it
manufactured faulty transmission parts for Army helicopters, the
Department of Justice announced today. 

     The defective parts caused the crash of two helicopters in
Saudi Arabia and Maryland, the Department said.  There were two
minor injuries.

     Assistant Attorney General Frank W. Hunger, in charge of the
Civil Division, and U.S. Attorney Dale Ann Goldberg of Columbus,
Ohio, said the settlement resolves SPECO's liability to the
government in a qui tam suit filed against SPECO Corporation and
The Boeing Company.  

     SPECO filed for bankruptcy under Chapter 11 in December 1995
and has liquidated its assets.  Under bankruptcy law, creditors
with allowed claims may receive proportional payments from the
assets of the bankrupt company depending upon the classification
of their allowed claim and the amount of money available for
distribution to creditors.  The government expects to receive
about $840,000 for its allowed claim against SPECO.

     The suit alleged that SPECO violated the False Claims Act by
delivering transmission parts which it knew were defective for
use in the Army's CH-47D Chinook helicopter.  The CH-47D Chinook
is the military's medium tactical heavy-lift transport

     The U.S. Bankruptcy Court of Dayton, Ohio, approved the 
settlement on February 24, 1997, and the U.S. District Court in
Cincinnati, Ohio, gave its final approval on March 6, 1997.

     SPECO also agreed to provide the Department of Defense with
inventory and intellectual property to settle government claims
for excess costs relating to unperformed military contracts.  

     SPECO designed, developed and manufactured helicopter rotor
transmissions, aircraft gear drive assemblies, aircraft flight
control systems and accessory gearboxes for commercial and
military aircraft.    
     The government's investigation confirmed that two gears made
by SPECO failed in flight due to defective manufacturing, causing
one CH-47D Chinook helicopter to be destroyed in Saudi Arabia in
January 1991 and another to be damaged at Fort Meade, Maryland,
in 1993.  

     "Aircraft part manufacturers should be aware that they may,
as in this case, be held accountable for the total consequences
of their delivery of defective aircraft parts used by the
military," Hunger said. 

     The qui tam lawsuit was filed in May 1995 in U.S. District
Court in Cincinnati, Ohio, by a former SPECO quality assurance
engineer.  The qui tam provisions of the False Claims Act permit
a private citizen to file a suit on behalf of the federal
government and collect a portion of the money if the government's
action is successful.  

     The government's settlement with SPECO does not resolve the
qui tam lawsuit against Boeing.   

     The Defense Criminal Investigative Service's Dayton, Ohio,
office and the Detroit Fraud Field Office, U.S. Army Criminal 
Investigation Command, Troy, Michigan, conducted the government's