The Department of Justice has filed a civil lawsuit against a Kennewick Industrial and Electrical Supply vice president, seeking millions of dollars for his alleged part in fraud and kickback schemes for goods ordered for the Hanford nuclear reservation.
It's the latest lawsuit filed related to fraudulent use at Hanford of federal credit cards -- called purchase cards or P-cards -- in a string of filings that began in spring 2010.
"This complaint sends a clear message that we will aggressively pursue all persons responsible for fraud that runs up costs and frustrates the vital mission of cleanup at the Hanford nuclear facility," said Michael Ormsby, U.S. attorney, in a statement.
George Peterson, KIE vice president, is accused of knowing about or recklessly disregarding fraudulent actions by a salesman who earlier pleaded guilty and by other KIE employees alleged to have participated in fraud, according to the complaint filed in Eastern Washington Federal District Court.
Peterson is accused of being involved in two cases already prosecuted. KIE denies Peterson was in any way involved. It previously said that two employees -- neither of them Peterson -- were involved in one of the cases and that neither continues to be employed at KIE.
Former KIE salesman Martin Perez admitted to filling orders made by Gregory Detloff, a former materials coordinator at Hanford, through Detloff Industrial, a company owned by Detloff's wife. Perez would purchase items through Detloff Industrial at an inflated price, then Detloff would purchase those items from KIE using his Hanford P-card, according to the federal complaint.
The exchanges hid the fact that Detloff was purchasing goods with government money through a family business.
Detloff Industrial would mark up the goods an average of more than 50 percent above their purchase price, then Perez would sell the goods to Hanford with an average additional markup of more than 50 percent, according to the federal complaint.
The combined amount of the Detloff Industrial and KIE markups between November 2001 and October 2005 was more than $350,000, according to the court documents. The goods could have been purchased for less than $350,000 from other vendors selling to the public, according to the federal complaint.
The Department of Justice is seeking more than $3.8 million in damages and penalties for Peterson's alleged involvement in the Detloff fraud case. He benefited from profit sharing or the fact that his compensation, including salary and any corporate bonuses, was based in part on KIE's profit, according to the federal complaint.
In the second case, Peterson is accused of being involved in a scheme in which another former Hanford employee, Suzie Zuniga, used her Hanford P-card to purchase items for her own use and others she knew.
The Department of Justice is accusing her of purchasing more than $300,000 in items from KIE that never made it to Hanford. She purchased items not normally sold by the company, including iPods, notebook computers, digital cameras, speakers and amplifiers, DVD players, an electric fondue set and high-end televisions, according to the federal complaint.
Peterson is accused in the federal complaint of directly facilitating particularly high-dollar purchases and sales made through KIE and supervising employees allegedly involved in the fraud.
However, KIE denied it made those sales to Zuniga of items it does not typically sell.
The Department of Justice said Zuniga would frequently obtain the items in the parking lot of the suppliers, such as retail electronics stores, that were allegedly selling the items to KIE. She would occasionally be accompanied by KIE employees or by two other Hanford employees who have pleaded guilty, Pedro Alvarado Jr. and Tommy Honeycutt Jr., the federal complaint alleged.
The Department of Justice is seeking more than $1.3 million from Peterson in damages and penalties in the Zuniga fraud case.
KIE this summer reached a settlement agreement, agreeing to pay the Department of Justice $515,000 after it was accused of violating false claims or anti-kickback acts. The former Hanford contractors who issued the P-cards also have reached settlements with the Department of Justice. Fluor Hanford agreed to pay $4 million and CH2M Hill Hanford Group agreed to pay $1.5 million.
In addition, Perez was sentenced to pay back $8,821 in commissions he made on goods bought by Detloff for use at Hanford. Detloff also pleaded guilty and was ordered to pay $150,000 in restitution and serve 90 days of home confinement.
Zuniga was sentenced to one year and eight months in prison and to pay restitution of $564,000 for personal goods charged to her Hanford P-card. Honeycutt was sentenced to four months home detention and to pay restitution of $12,500. Alvarado was sentenced to four months home detention and to repay $8,500.
-- Annette Cary: 582-1533; firstname.lastname@example.org; more Hanford news at hanfordnews.com.