Department of Justice Seal Department of Justice
(202) 514-2007
TDD (202) 514-1888

Former Lockheed Martin Employee Sentenced to 16 Months
for Wire Fraud and Making False Statements

WASHINGTON – The former deputy manager and treasurer for Lockheed Martin Corporation’s political action committee was sentenced today for his embezzlement of more than $160,000 in committee funds, Assistant Attorney General Alice S. Fisher of the Criminal Division announced.

Kenneth D. Phelps III, 38, of Woodbridge, Va., was sentenced by U.S. District Judge Paul L. Friedman of the District of Columbia to 16 months in prison on charges of wire fraud and making false statements to the Federal Election Commission (FEC). Judge Friedman also ordered Phelps to pay more than $163,000 in restitution and to serve three years of supervised release upon the completion of his prison term.

On July 20, 2007, Phelps pleaded guilty to 12 counts of wire fraud and 12 counts of making false statements. Phelps admitted that from in or about January 2002, and continuing to on or about Dec. 5, 2003, while serving as a deputy manager and treasurer for Lockheed Martin Corporation, he developed a scheme whereby he took Lockheed Martin Employees’ Political Action Committee (Lockheed PAC) checks totaling more than $160,000 and wrote the checks to himself instead of to federal political candidates or campaigns. Phelps then forged the signatures of two Lockheed PAC executives who, unlike himself, had signatory authority and deposited those checks into his personal bank account for his personal use.

Phelps admitted that he wrote checks to himself in amounts commonly associated with federal political contributions made by Lockheed PAC in order to evade detection of his theft. He also used Lockheed PAC’s computer system to change the payee information concerning each check that he wrote to himself to make it appear that the check had actually been written to a federal political candidate or campaign. Finally, Phelps concealed the existence of these payments from the FEC by electronically transmitting on behalf of Lockheed PAC and from its office in Arlington, Va., 12 required filings to the FEC’s office in Washington, D.C., that contained false information concerning the true recipient of the checks.

The case was prosecuted by Trial Attorneys Nicholas A. Marsh and Shaun M. Palmer of the Public Integrity Section, headed by Section Chief William M. Welch II. The case was investigated by the Federal Bureau of Investigation, Washington Field Office.