First Hanford timecard fraud trial starts in Richland

The defense warned the jury to be wary of listening to liars, cheaters and thieves during opening arguments Thursday in the first of three planned timecard fraud trials in federal court in Richland.

The case against Hanford workers Kenneth Baird, James Michael Hay, Perry "Pat" Howard and Mark Norris Johnson will be built on the testimony of former Hanford workers who have pleaded guilty to charges related to timecard fraud in plea deals that require them to cooperate with prosecutors, defense attorneys said.

"(Most of the) government witnesses are cheaters," said defense attorney Peter Schweda. "They are trying to avoid jail time and not have to pay a lot of money back."

The four defendants on trial face charges of conspiracy to commit wire fraud, major fraud against the United States and two counts of submission of false claims, related to their supervision of Hanford workers.

The prosecution said they were "persons in charge," or PICs, responsible for getting specific pieces of work done at the Hanford tank farms under former contractor CH2M Hill Hanford Group.

"These employees had sole authority over workers in the field," including where workers went, what work was done and when the work was completed, said Sean McLaughlin, an assistant U.S. attorney.

When overtime work was required, eight-hour shifts would be offered to get workers -- whom the defendants would supervise -- to volunteer. Workers would often finish work and leave early, but claim the full eight hours of overtime, according to the prosecution.

It was widely known, but never written down, that if employees would volunteer, they would be allowed to claim a full shift, often at premium overtime rates of $70 or $80 an hour, McLaughlin said.

Defense attorney John Gary Metro countered that the four defendants were not managers for former contractor CH2M Hill Hanford Group. They could not hire anyone and they could not fire anyone. They did not sign any timecards except their own.

They might say in work planning meetings that overtime would be needed, but they did not make the decision to offer overtime and they got whatever workers the union sent to do the job, Schweda said.

The federal government reimbursed CH2M Hill for expenses, including overtime and other labor costs. CH2M Hill then earned incentive pay for getting pieces of work done on time.

But the four defendants had nothing to do with attaining those goals or with the company's profits, Schweda said.

"There is no motive for these gentlemen to cheat," he said.

The government accuses them of giving secret signals to workers and speaking in code to let them know that when overtime jobs were finished early they could go home. The prosecution said supervisors might say "Hey, go do the thing you do" as a signal workers were free to leave Hanford.

But if the timecard fraud were as widespread as the prosecution claimed, no signal would have been needed, Schweda said.

There will be no video, no audio and no wiretap evidence presented to show cooperation in timecard fraud and not one piece of paper evidence with his client's name on it, said attorney John Crowley, defending Baird.

"He is a hardworking guy who has not participated in (fraud)," Crowley said.

The four defendants essentially served as foremen for CH2M Hill when it held the tank farm contract from fall 1999 to fall 2008, and they continue to be employed at Hanford, their attorneys said. That would not be the case if the current contractor believed them to be cheaters and deceivers.

The defendants "are not good workers, they are great workers," Metro said.

The words "lie, cheat and steal" were used repeatedly during opening arguments Thursday, after the prosecution started proceedings by saying it would show that was what the four defendants had done over and over again and helped others do.

McLaughlin said the jury is fully entitled to be skeptical of former workers who pleaded guilty and are testifying for the prosecution -- the people the defense said are the real liars and cheats. But he urged the jury to keep an open mind.

Hourly workers and supervisors at Hanford made "loads of overtime pay," and the company made its deadlines and collected bonuses, but all at the expense of taxpayers, McLaughlin said.

While CH2M Hill was contractor, $20 million to $30 million was paid in overtime, with a substantial portion of that fraudulent, according to the prosecution.

Hay was singled out for collecting $64,000 in overtime pay in addition to his base pay in one year. But Hay's attorney said that was because Hay, the only union worker among those on trial, was willing to perform overtime work when others with similar job responsibilities would not. And when he had maxed out allowable hours for pay, he would work for free, troubleshooting the aging equipment in the tank farms, Schweda said.

The prosecution previously has laid out much of its case in court documents.

But the opening arguments were the first time the four defendants had their attorneys give an in-depth defense against the charges.

"We ask you to find them not guilty," Schweda told the jury. "Because they truly are not."

-- Annette Cary: 509-582-1533; acary@tricityherald.com; Twitter: @HanfordNews