By Jim Hannah
The Cincinnati Enquirer

COVINGTON - Forged sales order. Bribes to witnesses. And a scheme to conceal it all.

That is what federal Judge William O. Bertelsman said he uncovered while presiding over a million-dollar-plus breach of warranty claim in U.S. District Court here.

Florence-based Mazak Corp. became entangled in a warranty dispute after selling a $1 million lathe to Logic & Precision Inc., a Los Angeles manufacturer of machine parts. The tale has been played out in court for five years.

The case began when Logic & Precision asked Mazak for a discount on the lathe, according to court records. The Los Angeles company said the lathe was delivered late, kept breaking down and cost it business.

The dispute eventually landed in court.

Logic & Precision gave a court in California a sales order containing a clause that said any litigation involving the sale of the lathe could be brought in California. The California court said it couldn't confirm the authenticity of the sales order, and the case was eventually transferred to a federal court in Kentucky.

Bertelsman now says that sales order was a forgery.

Once the case moved into the Kentucky court, Mazak attorneys uncovered that Logic & Precision had been loaning money to two former Mazak salesmen who had the California company's account. Bertelsman said what Logic & Precision characterized as loans to the men for a few thousand dollars were actually a pattern of influence peddling and corruption that involved the payment of tens of thousands of dollars over several years. Some of the payments were made at key times during the dispute over the warranty on the lathe, Bertelsman said.

One of the salesmen who received money had written a memo that was damaging to his employer, Mazak. The memo listed Logic & Precision's claims against Mazak and tended to substantiate them. Bertelsman said the salesman's memo was intended as a "plant" or "smoking gun" to later be found - as if for the first time - in the discovery process.

Bertelsman said Logic & Precision repeatedly and blatantly failed to turn over financial records, court records show. Mazak attorneys wanted Logic & Precision's financial records to further document the payments made to the two salesmen. What Mazak got, according to the judge, were "shell documents" - financial ledgers that were incomplete.

Bertelsman would not allow Logic & Precision to disregard the court's orders.

On May 13, he ordered Logic & Precision to pay for Mazak's attorneys fees since January 2003.

Attorney Michael F. Lawrence of Louisville, who is representing Logic & Precision, referred all questions to his clients. Messages left for Louis Pejlovas Jr., corporate officer for Logic & Precision, were not returned.

Mazak attorney Thomas Prewitt of Fort Mitchell said his client would proceed with its counterclaim against Logic & Precision. Prewitt said Mazak is trying to collect the outstanding balance on the lathe.

"I've never seen a case with these kinds of facts before," said Prewitt. "I have never seen a case where a party so desperately tried to cover up its misdeeds. But this case is an example of justice prevailing in the end."

Bertelsman asked the two sides to confer on a possible settlement of the remaining claims.

E-mail jhannah@enquirer.com