A former Hanford manager was sentenced to three years and 10 months in prison after a federal judge questioned his truthfulness Wednesday.
Paul Kempf, former operations manager of the Hanford 222-S Laboratory, admitted in a plea agreement that he used a federal credit card issued for government purchases to embezzle $487,000 from September 2000 through September 2005.
But then he told the court in a sentencing document filed later in the Eastern Washington District U.S. Court that there was no evidence to suggest the $487,000 worth of products in question charged to his P-card had not been delivered to Hanford.
"I don't believe you," said Judge Robert Whaley in Richland.
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Kempf is the last of seven defendants accused in spring 2010 of diverting government money with Hanford credit cards to be sentenced, and he received the harshest sentence.
He is accused of using his federal credit card -- called a purchase card or P-card -- to make purchases from his wife's home business that never were delivered.
He admitted in the plea agreement to spending $50,000 of the embezzled money to renovate a 1966 Chevrolet Nova, $63,000 on auto and boat expenses, $105,000 in personal checks made out to his wife and $17,000 on home improvements, among other uses.
When caught, he lied to federal investigators and altered business checks to hide the fact that they were used to divert money from Hanford to his personal use, according to the U.S. Attorneys Office.
Kempf argued in court documents filed after the plea agreement that many products ordered from his wife's home business, AMG Marketing in West Richland, were delivered to the laboratory. Two of his children filed statements with the court saying they had helped deliver products.
"I think he presented to the court a completely inaccurate position, one he knows is false," said assistant U.S. attorney Jill Bolton.
The government does not dispute that items from AMG Marketing were delivered to the Hanford laboratory warehouse, but they were for purchases by lab employees other than Kempf, according to court documents. But Kempf ordered $487,000 in "ghost" purchases that were never delivered, according to court documents.
"The U.S. finds quite troubling the declarations of his own children," Bolton said. "He knew what he delivered. ... Supplying documents from his own kids gives insight to what type of person you are sentencing."
He also tried to cover up the crime after it was discovered, sending investigators on a wild goose chase to verify information, she said.
When AMG Marketing's records were subpoenaed for a grand jury, checks were altered, she said. That included a check that appeared to be made out to Richard Decker of Laboratory Supply Co. in Chalmette, La., about the time of Hurricane Katrina.
The company told investigators its Louisiana office had been destroyed, but records at its company headquarters showed it had never employed a Richard Decker and never done business with AMG Marketing. The invoice number for the purchase was bogus, it said.
Investigators found the check had been cashed by an investment firm in another state.
In another example, a check made out to Pro Tech, a Tri-Cities custom auto fabrication business, had been altered to say "Pro Tech Supply," according to court documents.
The business owner told investigators he had been restoring the Nova for Kempf over three years and that Kempf was paying with business checks from AMG Marketing, which Kempf said was a home-based internet company.
Kempf told the judge that when AMG records were subpoenaed, his only role was helping his wife copy some of them and then delivering them to a legal office.
His wife, Anita Gust, who earlier was sentenced to a year and a day in prison, said then that Kempf was controlling and she avoided confronting him to keep the peace. Her attorney said Gust had no business background, little computer savvy and some reading issues. She did not know how to process a purchase card transaction and did not open the business mail, her attorney said.
When first confronted by investigators, Kempf denied knowing Gust, although investigators later learned they were married and shared a home, according to court documents.
"This is an individual who has no shame presenting information if he thinks it will help him, regardless of the truth," Bolton said. "He will not hesitate to commit fraud in the future."
Bob Thompson, Kempf's attorney, said the conspiracy was not all Kempf's doing.
Statements submitted to the court showed the P-card system under Kempf's two Hanford employers -- former contractors Fluor Hanford and CH2M Hill Hanford Group -- was poorly controlled.
Fluor Hanford since has made a $4 million settlement with the federal government, and CH2M Hill made a $1.5 million settlement, Thompson said.
"So in a way, the federal government has received what is due and owing in a way," he said.
Other defendants have received lesser sentences, including Suzie Zuniga, who was sentenced to 20 months in prison after embezzling $564,000 through P-card fraud, he said.
Kempf tearfully told the judge he loved his wife and has always "worked hard and not asked for anything extra." He volunteers at Water Follies and discounts work for churches and private schools at the flooring company he started after losing his Hanford job.
He requested home detention rather than a prison term so he could continue to support his wife and his youngest child. That would save the government upwards of $100,000, according to court documents.
But Whaley said Kempf's obstruction of justice was troubling. Both that and the fraud charges were serious, he said.
"The things you said do not jibe with the record," he said.
In addition to 46 months incarceration, Whaley sentenced Kempf to three years of probation and ordered to repay $487,000 jointly with Gust. Kempf must turn over 10 percent of his income each month. The federal government already has filed documents to seize the 1966 Nova and any parts.
However, Kempf will not need to start serving the prison term until Gust is released, so one of the parents will be available to care for their teenage daughter.