Fluor to pay $4M to settle P-card fraud, kickback allegations

Fluor Hanford has agreed to pay the federal government $4 million to resolve allegations it knowingly submitted false claims and paid and received kickbacks, according to the Department of Justice.

Fluor denied it knowingly participated in the schemes. But it agreed to settle because it was in the best interest of the government and taxpayers to resolve the issue as quickly as possible, said Judy Connell, Fluor Hanford spokeswoman.

Between 2003 and 2008, three Fluor employees who were responsible for purchasing materials to perform work for the Department of Energy at the Hanford nuclear reservation made hundreds of fraudulent purchases using government purchase cards, the Department of Justice has alleged.

Former employees Suzie Zuniga and Gregory Detloff have pleaded guilty to wire fraud, and Paul Kempf will go to trial in Eastern Washington Federal District Court.

Purchasers took advantage of weaknesses in Fluor's internal control system to funnel federal money to themselves, the Department of Justice has alleged.

As early as 2001, and repeatedly from then until 2008, internal audits conducted by Fluor alerted it to weaknesses in the control of its program that issued credit cards, called purchase or P-cards at Hanford, according to the Department of Justice. DOE then would reimburse the cost of the purchases.

"Fluor failed to address these weaknesses, allowing these schemes to go undetected for years," according to a Department of Justice statement.

Fluor Hanford does not condone the P-card fraud or kickbacks, Connell said. It identified the issues, brought them to the attention of the DOE inspector general and cooperated fully during the investigation, she said.

"Fluor Hanford regularly conducted internal audits and took immediate corrective actions -- including terminating the employment of individuals -- as we found inappropriate conduct of business and transactions," Connell said. Fluor Hanford's contract at Hanford expired in 2009.

In addition to allegations of P-card fraud, between 2005 and 2008 at least 14 Fluor purchasers solicited, received and accepted kickbacks from Fast Pipe and Supply Co., according to the Department of Justice.

Kickbacks included cash, tickets to sporting events and gift cards, according to the Department of Justice. The company, which no longer is operating, sold more than $3.5 million in material to Fluor.

It was owned by Shane Fast, an unsuccessful Republican challenger to Rep. Doc Hastings, R-Wash., in the 2010 primary.

Fast said he routinely offered tickets to Seattle Mariners and Seahawks games and sometimes gift cards, but not cash, to his best customers. In some cases, Fluor employees called and asked for tickets, he said.

"I thought it was OK," he said.

He has cooperated with Fluor's attorneys and the Office of Inspector General investigation, including offering to take a polygraph test for Fluor, he said.

Seven people were indicted last year on suspicion of fraud related to the use of federally reimbursed P-cards to buy goods and equipment needed for work at Hanford. They included employees of Fluor Hanford and CH2M Hill Hanford Group, the spouse of an employee and a salesman for Kennewick Industrial and Electric.

All but Kempf have pleaded guilty.

Zuniga, a former Fluor emplo-yee, was sentenced to 20 months in prison and ordered to repay $564,000. She used her federal P-card to buy TVs, a refrigerator, a lawnmower and power tools for herself, her boyfriend, who also was a Hanford employee, and the Fluor driver who delivered some of the items to her home.

Kempf's wife, Anita Gust, was sentenced to a year and a day in prison and ordered to repay the federal government $487,000. She was accused of accepting payments on her husband's P-card through her home business, creating false invoices and not delivering the goods on the invoices to Hanford.

Detloff was sentenced to 90 days of home confinement and ordered to repay $150,000, after funneling orders he made at Hanford through his home wholesale supply business.

The government's investigation into the P-card fraud and alleged kickbacks was conducted by the Civil Division of the Department of Justice, the U.S. Attorney's Office for the Eastern District of Washington and the DOE Office of Inspector General.

"The $4 million settlement announced today and the successful outcome of this case reflect our commitment to aggressively pursuing those who defraud the Department of Energy," said Gregory Friedman, DOE inspector general, in a statement Friday.

The resolution to the case demonstrates that corporations "will be held accountable when they turn a blind eye to fraud and self-dealing," said Michael Ormsby, U.S. attorney for the Eastern District of Washington, in a statement.