NCD980602163_20010621_Warren County PCB Landfill_SERB C_Midwest Soil Featherling Case-OCR

06/21/2001 14:40 3123600547 LAW OFFICES PAGE 01
11 EAST ADA.~S
SUITE 1100
CHICAGO, ILLINOIS 60603
ARNOLD M. FLANK, LIMITED [phone] Extc:nsion: 320
FAX [phone]
E-MAil.. AMFGOBLllE @AOLCOM
June 21, 2001
FAX TRANSl\1ISSION -NO HARD COPY TO FOLLOW
FAX# {609) 588-6300
Mr. Gary Duke
IT Corporation
200 Horizon Blvd.
Trenton, N.J. 08691
Re: Midwest Soil Remediation Inc. [ .. MSR")
Warren County North Carolina Soil Remediation(the "Project")
Dear Mr. Du~:
I am General Counsel for MSR. a subcontractor of IT Corporation at the Project.
Mr. Richard Howell, of MSR, has forwarded to me your email of June 14, 2001, to which
was attached an email from Pat Backus of the North Carolina Deparonent of Environment and
Natural Resources raising questions about MSR. Mr. Howell has asked me to respond to that email.
which contains a nwnber of factual misunderstandings and errors. I understand that Mr. Howell gave
you certain information by telephone on Thursday, June 14, 2001, which addressed your initial
concerns. This Jetter addresses the various jssues in the email from Ms. Backus, in an attempt to
clarify the issues raised by her, and the email she received.
I. NOTHING PROIDBITS NISR FROM DOING THE REQUIRED WORK
As Mr. Howell told you, MSR is not now, and will not in the future, be suspended or
debarred from performing any on work on Federally funded projects. MSR is able and willing to
do all of the work for which it has contracted with IT Corporation.
Although MSR was suspended for a shon period of time on Nov. 1, 2000 from performing
work on Federal Government contracts, pending a hearing on the facts, the Federal Government
removed that suspension on February 27, 2001. There are no existing prohibitions or limitations on
MSR from performing work on any Federal Government contract, or on its subcontract with your
company.
MSR signed the subcontract with your firm on March 28, 2001. After learning of that North
Carolina received "in kind" contributions from the Federal government for the Project, MSR
contacted the Federal officials who were involved in MSR's suspension, to inquire jf either MSR
and or Tony Fetherling (the former President of MSR) were prohibited from working on this Project.
MSR was informed that there is nothing prohibiting MSR from working on this Project. MSR was
also informed that there was no prohibition against Mr. Fetherling working on the Project, even
though he had been debarred from working on any Federally funded projects for a period of three
years.
.j
06/21/2001 14:40 3123600547
Mr. Gary Duke
LAW Ut-r l U:.!:>
Page Two
June 21, 2001
D. FEDERAL INVESTIGATION OF CORRUPT DMI CONTRACT OFFICER
The email that was foiwarded by Ms. Backus stated that Tony Fetherling "was indicted for
bribery regarding the Ft. Lewis, WA thermal project" and that email made certain statements about
URS's termination of Dustcoating being pan of the charges. A number of these statements are
· incorrect.
In 1999, the U.S. Attorney's office in the Central District of California began an jnvestigation
of a corrupt contract officer employed by the Seattle office of Dames & Moore, Inc. (hereafter
. "DJl.11''). The investigation of that DMI contract officer, Mr. Carl Doug]as Fenstermacher, apparently
detennined that he extoned payments from a various contractors who did work for DMI's Seattle
office.
Mr. Tony Fetherling, the former president of MSR, was contacted as part of that
investigation, because of a soil remediation subcontract MSR had with DMI. for work performed
by MSR between August and December 1996 at Ft. Lewis, Washington. Mr. Fetherling cooperated
with the government in their investigation, and an indictment was returned against the Dl\fl
contracting officer (Fenstermacher) on September 13, 2000. Mr. Fenstermacher, the corrupt DMI
contracting officer. plcd guilry on February 12, 2001 to various charges.
As part of his agreement with the government, Mr. Fetherling agreed to plead guilty to
charges related to the Federal Anti-Kickback statute. Mr. Fetherling was never indicted, but, on
September 25, 2000 he pled guilty to an .. Information .. filed by the U.S. Attorney's office, pursuant
to a negotiated plea agreement. Mr. Fetherling was sentenced on May 21, 2001. Under Federal law,
a person's conviction is not final until sentencing.
After thoroughly evaluating the facts, the government determined that MSR would not be
charged in the case. On May 21. 2001, Mr. Fetherling was given a sentence of probation, and the
Court determined that no restitution would be ordered. Apparently, the government and the Judge
concluded that there was no harm to DMI or the government because of the activhy of Tony
Fetherling, as MSR actually performed the work for D:MI for less money than D:MI would have had
to pay to the subcontractor that MSR replaced.
The guilty plea to the "Information" by Mr. Fetherling was the event which triggered the
suspension, on November 1, 2001. of MSR and Mr. Fetherling from participating in Federal
contracts. As previously discussed in this letter, after a hearing to fully explain all of the relevant
facts, MSR's suspension was lifted on February 27, 2001.
Ill. POSSIBLE CIVIL LITIGATION
The email to Ms. Backus discussed possible civil litigation by Dustcoating against MSR.
This email says that Dustcoating originally won the soil remediation subcontract from URS, and Mr.
Fetherling was charged by the Federal Government with bribing the URS project manager to
canceling the Dustcoating contract. The email to :Ms. Backus alludes to a potential future lawsuit
by Dustcoating against MSR. This is a mjscharacterization of the facts.
06/21/2001 14:40 3123600547
:Mr. Gary Duke
LAW OFFICES
Page Tiu-ee
June 21, 2001
PAGE 03
MSR' s subcontract was with DMI. URS acquired DMI in 1999, several years after the work
at Ft. Lewis was completed. Remtech Inc. was DMI's original subcontractor, not Dustcoating. It
is our understanding that Remtech did not actually own the equipment it proposed to use at Ft.
Lewis, to do the soil remediation, but Remtech may have been leasing the equipmenr from
Dustcoating. If Dustcoating has a c)aim against any entity, it should be against Remtech for a
potential breach of that eguipment lease. However, I cannot express any opinion as to the rights of
Dustcoating against Remtech.
Mr. Fetherling admitted to paying a consulting fee to Fenstermacher, the DMI contracting
officer. The charges to which Mr. Fetherling pled guilty did not include paying a bribe to induce
DMI to tenninate its original subcontract with Remtech. In fact, Mr. Ferherling did not meet with
DMI or DMl employees about MSR 's soil remedation work until after DMI had already tenninated
Remtech.
In 1995, DMI obtained a soil remediation contract from the Army Corps of Engineers, and,
in the same year, hired Remtech, Inc. by subcontract to do the work. D:MI temlinated Remtech's
subcontract on July 13. 1996, because senior DMI executives concluded that Remtech could not
mobili2e its soil remediation equipment in time to finish the work, and to allow DMI to meet its
schedule under its prime contract with the Army.
Remtech later sued DMl in Federal District Coun in the Western District of Washington for
unjust termination of the subcontract. Remtech won a verdict against DMI after convincing the jury
that DMJ's decision to terminate that subcontract was based on the desire of DMI to make more
money by hiring a new subcontractor which would do the work more cheaply than Remetch.
MSR' s lawyers have carefully examined the trial record from the Remtech-DMI trial and
are familiar with evidence presented by both parties. There is no evidence in that trial record to
indicate that either MSR or Mr. Fetherling played any pan in DMI's decision to terminate Remtech.
JV. PRESENT CIVIL LITIGATION
DMJ filed a civil lawsuic against MSR and others in ]ate 2000, in which it seeks to hoJd MSR
responsible for DMI's termination of Remtech. D:MI raised various other issues in this lawsuit.
MSR is vigorously contesting the case. MSR's lawyers have thoroughly investigated DMl's
allegations. have reviewed the extensive trial record from the trial between Remtech and DMI, and
believe that MSR will be successful in its defense of che case, as (i) there is no _evidence that Mr.
Fetherling or MSR had anything to do with DMI's decision to temunate Remtech; (ii) the decision
by D:Mlto terminate Remtech was based on the belief of DMI' s senior managers that Remtech could
noc mobilize in time to finish the Ft. Lewjs work as required by DMI's contract with the Army; and
(iii) MSR did not present its offer to do the work to DMI until three days after Remtech had already
been terminated.
06/21/2001 14:40 3123600547
Mr. Gary Duke
LAW OFFICES
Page Four
June 21, 2001
PAGE 04
I trust that this information will satisfy your concerns. You may forward a copy of this letter
to Ms. Backus. Either of you should feel free co contact me if you need additional information.
Richard Howell
cc\FAX: Midwest Soil Remediation, Inc.
DCIS Press Release http://www.dodig.osd.mil/dcis/feth_518.htm
Defense Criminal Investigative Service
Press Release
The Office of the Inspector General (OIG), Department of
Defense (DoD), announced today that on May 18, 2001, Torr y
FeEher ing, president of Midwest Soil Remediation, Inc.
(MSRI), Elgin, IL, was sentenced in U.S. District Court for
the Central District of California, Santa Ana, CA, to 3 years
probation, $10,000 fine, a $200 special assessment fee, and
280 hours community service. Fetherling was charged in a
criminal information filed on August 15, 2000, charging him
with one count of conspiracy and one count o f receiving
kickbacks. Fetherling pled guilty to the charges on September
25, 2000.
The sentencing was the result of an investigation which
disclosed that in June 1996, Fetherling paid approximately
$105,757 in kickbacks to Carl Douglas Fenstermacher, a
project manager performing work for Dames & Moore,
Incorporated (DMI), on DoD contracts. The investigation
disclosed that DMI had been awarded a contract with the U .S .
Army for environmental remediation of a coal pilot plant
located at Fort Lewis, WA. Fenstermacher solicited Fetherling
for a kickback of one dollar per ton of soil treated.
Fetherling and Fenstermacher devised a scheme whereby
Fetherling agreed to make payments to fictitious companies
set up by Fenstermacher. These costs were passed on to the
DoD through DMI's contract at Fort Lewis.
This investigation was conducted by the Defense Criminal
Investigative Service (the criminal investigative arm of the
OIG, DoD), the U.S. Army Criminal Investigation Command, and
the Internal Revenue Service. The prosecution was handled by
Assistant U.S. Attorney Monica Bachner, Central District o f
California, Santa Ana, CA.
The point o f contact regarding this press release is Chris
Hendrickson, Group Manager (GM), Western Field Office. GM
Hendrickson can be contacted a t [phone], extension
223.
To report suspected fraud, waste and abuse within DoD
programs, contact the Defense Hotline toll-free at (800)
424-9098, e-mail at hotline@do dig .osd .mil or visit them on
the World Wide Web at http ://www .dodig .osd .mil/hotline .
-End-
DCIS Press Releases 2/l/2001-2/15/2001 http://www.dodig.osd.mil/DCIS/2001021.hun
Prosecutive Actions-8
_, An indictment was returned against Linn S. Tompkins in Columbia, SC, charging him
with 2 counts of embezzlement and 17 counts of money laundering. From 1995 to 1997,
Tompkins was an accountant for Enterprise Development, Incorporated (EDI), a
subcontractor to the Department of Energy (DOE) Savannah River Operations Office, Aiken,
SC. During this time, Tompkins allegedly embezzled about $42,000 in U.S. Government
funds. In 1995, Southeastern Environmental Resources (SERA) was established by EDI,
Columbia, SC, via a DOE grant proposal valued at $1 million. Simultaneously, SERA
received a Defense Advanced Research Projects Agency grant, valued at $2.8 million, via a
DOE Savannah River Cooperative Agreement. Tompkins used SERA and the business
names "Business Pro," "TAB Services," and "Parallax," to facilitate his embezzlement
scheme. The grant monies were used to identify and develop a client base of small to
medium manufacturing businesses. From this base, SERA would match a client's
environmental problem with the technical expertise of individuals at the Georgia or South
Carolina Universities or use the expertise of individuals at the DOE Savannah River
Technology Center, Aiken, SC.
~. A superseding indictment was returned against Herbert A. Daniels, M.D, charging him
with additional counts of health care fraud, mail fraud and perjury. Daniels, an ear, nose
and throat specialist practicing in Kansas City, KS, allegedly submitted false claims to
private insurers and to Government funded insurance programs such as TRICARE, Medicare
and Medicaid. During his first trial, Daniels allegedly made false material declarations while
under oath. That trial concluded in a declaration of mistrial due to a hung jury. Daniels
allegedly devised a scheme that included billing for services not rendered, inflating claims,
luring patients into unnecessary surgery that caused injury to patients, and concealing his
fraud by creating false documents .
...., ... Romualdo Nisaya Garcia was arrested in the Republic of the Philippines. He was
indicted in 1999 for allegedly committing mail fraud and submitting false claims to the U.S.
Government. An investigation disclosed that the defendant allegedly submitted false claims
and caused the submission of false claims to the DoD TRICARE health care program.
Wisconsin Physicians Service, Madison, WI, a fiscal intermediary for the TRICARE program,
received the claims and allegedly paid Garcia in excess of $205,847.
_, Nicholas Verger, Beaumont, TX, pied guilty to breach of computer security. An
investigation determined that Verger illegally gained access to a Defense Information
Systems Agency computer in St. Louis, MO. Verger's intrusion specifically targeted a U.S.
Army procurement system and copied and transferred a highly sensitive password file. This
activity caused a costly computer shutdown and subsequent maintenance of the system.
~ Horacio Cuevas-Mosqueda pied guilty in U.S. District Court, Denver, CO, to conspiracy,
inducement of unauthorized aliens, wire fraud, false statements and false claims. Cuevas
was in charge of the Denver office of Construction Personnel, Incorporated (CPI), formerly
known as Service Personnel, Incorporated. The CPI, a labor provider headquartered in
DCIS Press Releases 2/l/2001-2/15/2001 http://www.dodig.osd.mil/DCIS/2001021.htm
Chattanooga, TN, with offices in Denver, CO, and Baton Rouge, LA, specialized in providing
laborers to contractors engaged in asbestos abatement. In order to provide enough
workers for contractors operating in Colorado, Nebraska, Texas and elsewhere, CPI, its
owners and employees knowingly hired unauthorized aliens and provided them, or assisted
them in obtaining, the documents necessary to work in asbestos abatement. These
documents included health certificates, Social Security Cards or Numbers, asbestos training
certificates and licenses. In addition to his position with CPI, Cuevas taught asbestos
abatement related classes in Denver. He recruited unauthorized aliens to take his classes
and then hired them for CPI. One of the job sites for which CPI provided unauthorized
aliens was the Rocky Mountain Arsenal in Denver. Cuevas also made arrangements to send
money via Western Union to Arizona to cover expenses of CPI employees unlawfully
returning to the United States from Mexico after they had been returned to Mexico by the
Immigration and Naturalization Service. This investigation resulted in charges being filed in
three jurisdictions: Baton Rouge, LA; Chattanooga, TN; and Denver, CO. Other defendants
are scheduled for sentencing on April 20, 2001.
~ Calvin D. Treakle, a former Federal Government employee in the Alterations Work
Group (AWG), Washington Headquarters Services, The Pentagon, pied guilty to submitting
false claims to the U.S. Government. Treakle worked as a supply technician for the AWG.
By participating in a scheme to enter false overtime hours into the AWG computerized
time-keeping system, he received $19,668 to which he was not entitled.
►-g Dougla e s e c er former project manager for Dames & Moore, Incorporated
(DMI), Los Angeles, CA, pied guilty to mail fraud and money laundering. From 1996
through 1999, Fenstermacher, as a DMI employee, had oversight of 14 DoD contracts.
During this time, Fenstermacher solicited and received approximately $105,000 in
kickbacks from M@wes oil emecliation, Incorporated, an Elgin, IL company. In addition,
Fenstermacher received approximately $380,000 in kickbacks from <Eert"fied Gleaning
Servjce , a Tacoma, WA company. To conceal and launder the kickback proceeds,
Fenstermacher created two fictitious businesses--Doug's Designs and Aravis Enterprises.
The kickback payments were passed on to the Government through the DoD contracts held
by DMI.
•~• Lawrence Salazar, also known as Larry Carrasco, appeared in U.S. District Court,
District of New Mexico, and pied guilty to knowingly possessing a counterfeit military
discharge paper, DD Form 214. On May 19, 2000, Salazar had given the DD 214 to a DCIS
agent to illustrate he had been an enlisted member of the U.S. Marine Corps as a machine
gunner for approximately 4 years. Salazar subsequently admitted the DD 214 was
counterfeit and that he had never served in any capacity in the USMC or any other Military
Service. Based on the fabrication that he formerly served as an enlisted member of the
USMC, Salazar was hired and served for 3 days as a peace officer in Mountain Air, NM.
Sentences--5
~·. Jerzy Szymczyk, president, Empire State Renovation Corporation, was sentenced to 4
months home confinement, 1 year of probation, restitution of $199,528.80, and a $50 court
assessment. Szymczyk previously pied guilty to one count of making a false statement to
the Government. While performing an exterior renovation contract at the U.S. Military
Academy, West Point, NY, Szymczyk submitted certified payrolls that were falsified to make
it appear the prevailing wage requirements of the Davis-Bacon Act had been satisfied. The
contract had a value of $3 million.
~· Eric M. Bardes, New Orleans, LA, former senior port engineer for Bay Ship
Management, Incorporated (BSM), Englewood Cliffs, NJ, was sentenced to 18 months
incarceration, followed by 3-years probation, ordered to pay a $900 special assessment fee
and $238,583 in restitution to the Military Sealift Command (MSC). Charges were filed
against Bardes in New Orleans, LA; Beaumont, TX; and Jacksonville, FL, for accepting
DCIS Press Releases 2/l/2001-2/15/2001 http:/ /www.dodig.osd.mil/DCIS/2001021.hun
kickbacks in relation to DoD contract work. In a related case, Tore Starnes was sentenced
to 6 months home confinement, fined $10,000, assessed a $100 special assessment and
placed on 3 years of supervised probation. Starnes was a senior account executive for
Unitor Ship Service, Incorporated, Harahan, LA, which was under contract with BSM,
Englewood Cliffs, NJ, to perform a refrigeration conversion project aboard eight U.S. Navy
ships managed by BSM. Starnes conspired with an employee of BSM to inflate the contract
by $250,000. The BSM had multiple contracts, valued in excess of $200 million, with the
MSC to provide management, personnel, operational and technical support to operate and
maintain several MSC ships. These sentences are the result of a 3½-year investigation into
corruption within the maritime industry.
►-c· Rogelio Taaca Rosario, Republic of the Philippines, was sentenced in U.S. District Court,
Madison, WI, to 12 months and 1 day of incarceration, followed by 3-years supervised
release, ordered to pay $183,556 in restitution and a $50 special assessment fee. Rosario
previously pied guilty to making false claims. An investigation disclosed that Rosario, a
retired U.S. Navy veteran, conspired with a doctor in the Republic of the Philippines to
submit approximately 38 false claims to the TRICARE health care program. The fraudulent
claims were for Rosario and his dependents. Wisconsin Physicians Service, Madison, WI, a
TRICARE fiscal intermediary, received the false claims and paid $183,556 to Rosario and/or
the doctor.
~· Ivan G. Beaulieu was sentenced in U.S. District Court, Cleveland, OH, to 51 months
incarceration, followed by 2 years supervised release, and a $300 special assessment.
Beaulieu previously pied guilty to possession of forged securities of the States and private
entities, one count of fraud and related activity in connection with identification documents,
and one count of sale or receipt of stolen vehicles. An investigation was initiated when
information was received that Beaulieu had manufactured and sold counterfeit DoD facility
identifications, as well as Drug Enforcement Administration special agent credentials. When
arrested by the Ohio State Highway Patrol near Cleveland, OH, Beaulieu was in possession
of 370 counterfeit checks drawn on credit unions and banks from numerous states. Also
found were counterfeit motor vehicle titles and fictitious motor vehicle licenses from several
states. Beaulieu was also in a stolen motor vehicle, registered in Connecticut. Because of
risk of flight, Beaulieu has been incarcerated since his arrest.
Civil Settlements Filed--3
►, A $2 million civil settlement was reached with the Genesee Valley Cardiothoracic Group
(GVCG), Rochester, NY. The settlement resolves allegations that GVCG submitted false
claims to Medicare for the services of assistant attending surgeons. An investigation
disclosed that GVCG routinely submitted claims seeking reimbursement for a primary
surgeon and an assistant attending surgeon for cardiothoracic surgeries. The claims were
submitted despite the presence in the operating room of a qualified cardiothoracic resident
to assist the primary attending surgeon. Medicare generally prohibits claims for assistant
attending surgeons at teaching hospitals when qualified residents are present to assist the
primary attending surgeon. This investigation was the result of a qui tam lawsuit filed by
Dr. Richard Feins, who will receive a share of the recovery. These billing issues are
unrelated to the quality of care provided by GVCG.
►:, .. The Regents of the University of California (UC) entered into a $22.5 million settlement
agreement with the Government. This follows a 5-year investigation into allegations the
faculty physicians at the medical schools and medical centers at the UC San Diego, UC
Irvine, UC Los Angeles, and UC Davis improperly billed TRICARE and Medicare. The
questionable billing pertained to services purportedly performed personally by faculty
physicians, or under their direct supervision, when those services were actually performed
by residents acting alone with little or no supervision. Under the Medicare and TRICARE
DCIS Press Releases 2/l/2001-2/15/2001 http://www.dodig.osd.mil/DCIS/2001021.htJn
programs, the United States already pays for a substantial portion of the residents' training
and salaries, and their services cannot be billed to the Medicare or TRICARE programs on a
fee-for-service basis. The responsibility for payment of the settlement will be shared by the
five UC Schools of Medicine as follows: UC Davis -$2.4 million; UC Irvine -$4.1 million;
UCLA -$8.5 million; UC San Diego -$3.7 million; and UC San Francisco -$3.6 million.
~· A $2.3 million settlement agreement was reached between Texas Tech University
Health Sciences Center (TTUHSC) and the U.S. Government. The agreement settles
allegations that TTUHSC overbilled TRICARE, Medicare and Medicaid. The TTUHSC, a
component of the Texas Tech University System, provides health care services from its
teaching facilities in Amarillo, El Paso, Lubbock, and Odessa, TX. A former resident
physician of TTUHSC filed a lawsuit under the qui tam provisions of the False Claims Act.
An investigation was conducted into allegations that TTUHSC submitted claims for services
provided by faculty physicians, while their records failed to demonstrate that the physicians
were personally involved in performing the services. Additional allegations were that the
TTUHSC submitted claims for evaluation and management services provided by faculty
physicians when, in fact, the claims did not accurately reflect the level of services provided.
The lawsuit was later dismissed when the U.S. Supreme Court ruled that relators or
whistleblowers could not sue states under the False Claims Act. However, the Department
of Justice continued its investigation into the alleged false claims. This agreement resolves
those allegations against TTUHSC.
! Return ! •••. ,. •• .,..,..,,.,.,u,,-•, .............. ,.,.,.,.,.,.,.,,},
DCIS Press Releases 8/ 16/00-8/31/00 http://www.dodig.osd.mil/DCIS/2000082.htm
1
Prosecutive Actions-7
._.. .. August 15, 2000 -An information was filed in U.S. District Court, Central District of
California, charging onv. e erling, president of Midwest Soil Remediation, Incorporated,
Elgin, IL, with conspiracy and paying kickbacks. An investigation disclosed that in June
1996, Fetherling allegedly paid about $105,757 in kickbacks to a o glas
~nstermaclie , a project manager performing work for Dames & Moore, Incorporated
(DMI). DMI had been awarded a contract with the United States Army for environmental
remediation of a coal pilot plant at Fort Lewis, WA. During this contract, Fenstermacher
allegedly solicited Fetherling for a kickback of $1 per ton of soil treated. Fetherling and
Fenstermacher allegedly devised a scheme whereby Fetherling agreed to make payments
to fictitious companies set up by Fenstermacher. The kickbacks were subsequently passed
on to the DoD through DMI's contract at Fort Lewis.
• August 22, 2000 - A 78-count indictment was returned in Chattanooga, TN, against
John A. Campa III charging him with allegedly making false statements in connection with
health care, health care fraud and mail fraud. Campa owned and operated Nashville
Neuro-Pain Corporation and was the sole medical practitioner associated with the business.
An investigation determined Campa allegedly submitted false claims for reimbursement to
Federal health care benefits programs and private insurance plans. The questionable claims
were for services not provided or for procedures disguised by using unrelated Current
Physicians Terminology (CPT) codes with higher reimbursement rates.
~• August 29, 2000 -An information was filed against Central Connectors, Incorporated
(Central), Manalapan, NJ; Maureen Ledbetter, president of Central; and Thomas Winfough,
an employee of Central. They are charged with mail fraud regarding the supply of
nonconforming electronic connector parts to the DoD and commercial aviation contractors.
The investigation disclosed that Central allegedly provided numerous substandard,
untested and untraceable system critical electronic connectors to DoD and commercial
aviation contractors. The supplied connectors were purchased for use in items such as
weapon systems of the MH53 helicopter, Los Angeles class submarine, F-15 Eagle aircraft,
and the F/ A-18 Hornet aircraft. The parts were purchased through an undercover operation
by investigating agencies that targeted companies suspected of providing substandard,
untested or untraceable parts.
• August 30, 2000 -Dr. Joel J. Lang, a podiatrist living in Cheverly, MD, pied guilty to
mail fraud relating to the submission of fraudulent health care billings. An investigation
disclosed that Lang and his company, Dr. Joel J. Lang, D.P.M., P.A., submitted claims by
disguising the CPT codes to reflect covered services, when noncovered services were
rendered. The claims were submitted to insurance companies that included the DoD
TRICARE program and Medicare.
Sentences--4
DCIS Press Releases 8/16/00-8/31/00 http://www.dodig.osd.mil/DCIS/2000082.htm .•
I
I ~ August 18, 2000 -Wendel Elza, president of Denham & Lewis Coal Processing, East
Bernstadt, KY, and Dennis Steely, president of Clay Laboratories, Manchester, KY, were
each sentenced to 2 years probation and ordered to pay a $50 special assessment. Elza and
Steely previously pied guilty to one count each of making a false statement. An
investigation disclosed that Elza and Steely made false statements to Government officials
during the supply of coal under contracts awarded by the Government. Elza contracted with
the Defense Energy Support Center (DESC), Fort Belvoir, VA, and two U.S. Department of
Energy (DoE) facilities to mine coal and supply it to various facilities. The coal he supplied
did not meet required contract specifications, in that it possessed insufficient British
Thermal Unit [BTU] output, contained too much sulfur, moisture and ash, and was
excavated from the incorrect mine and/or seam within the mine. Steely received
subcontracts from the DESC and a prime contract from the DoE to test the coal supplied by
Elza for contractual conformance. Steely's tests reflected the coal did not meet the
specifications; however, Steely created false test reports indicating the coal did meet the
required specifications, and those test reports were submitted to Government officials. The
nonconforming coal supplied, which costs less than the coal required by the contract, is
believed to have created operational problems at heating plants where it was used. The
heating plants were designed to burn the contract-specified coal and when lower quality
coal was used, damage to the system occurred. Damage to one DoD heating plant is
estimated to be in excess of $1 million .
...., .. August 18, 2000 -The Arthritis Pain Center, Incorporated (APC), St. Louis, MO, was
sentenced to 2 years probation, fined $10,000, ordered to pay a $400 special assessment,
and ordered to make restitution to Medicare, TRICARE, and private insurance companies in
the amount of $50,000. The company was also ordered to pay $25,000 in investigative
costs. The APC submitted claims for payment to Medicare, TRICARE and private insurance
companies that contained false statements. The claims stated Dr. Rachna Mehra, the owner
and operator of APC, had personally provided services, or that Mehra was present while a
nonphysician provided the services, when, in fact, Mehra was out of town.
_..., August 25, 2000 -Penn Ammunition, Incorporated (Penn Ammo), Demont, PA, was
sentenced to pay $312,727.80 in restitution, a $1,200 special assessment and placed on 3
years probation. A jury convicted Penn Ammo on two counts of wire fraud and four counts
of making false statements. Donald M. Praisner, owner of Penn Ammo, was acquitted of
those charges, but he previously pied guilty to bankruptcy fraud and was sentenced.
Praisner and Penn Ammo allegedly defrauded the DoD and Alliant Techsystems,
Incorporated (Alliant), Brooklyn Park, MN, a DoD prime contractor, by knowingly providing
substandard and nonconforming products under a purchase order valued at approximately
$738,000. Penn Ammo was awarded a purchase order by Alliant to manufacture
approximately 15,400 magazine canisters, each filled with six .9mm tracer cartridges.
These magazines and cartridges were used in Alliant's $30 million contract with the Navy to
manufacture a shoulder launched, multi-purpose assault weapon used by the U.S. Marines.
An investigation determined Praisner and Penn Ammo did not zinc phosphate coat the
magazines in accordance with contract specifications. The zinc phosphate acts as a rust
inhibitor when properly applied. This type of nonconformance could in turn cause the
weapon to become inoperable or malfunction, and inhibit the accuracy of the missile
launched from the assault weapon.
Civil Settlements Filed--2
....,,. August 16, 2000 -Ellis & Watts, an unincorporated division of Dynamics Corporation of
America, recently purchased by the Chicago Telephone Service, Elkhart, IN, entered into a
settlement agreement with the Government and will pay $1.5 million to settle allegations
that Ellis & Watts submitted false claims to the DoD. The Government alleged Ellis & Watts,
Batavia, OH, built nonconforming trailers for the Air Force and Navy and falsely certified
DCIS Press Releases 8/16/00-8/31/00 http://www.dodig.osd.mil/DCIS/2000082.h1m
\ their compliance with contractual requirements. Ellis and Watts constructed 33 nuclear
missile transport trailers for the Air Force in 1992-93. After the trailers were delivered, the
Air Force discovered numerous electrical and mechanical workmanship defects in the
trailers' construction. In 1995, Ellis and Watts built a custom trailer designed to hold
sophisticated electronic equipment for the Naval Surface Warfare Center in Dahlgren, VA.
The company violated a contractual requirement to use new material by using an old,
damaged trailer shell from its inventory in the construction of the Navy trailer.
~. August 17, 2000 -Henry J. Wisdom, D.O.P.C. (Wisdom D.O.P.C.), Kirksville, MO,
pleaded guilty to presenting false claims and statements to the Government to secure a
benefit or payment that Wisdom D.O.P.C. was not authorized to receive. In addition Dr.
Henry J. Wisdom and Wisdom D.O.P.C. agreed to a $300,000 civil settlement with the
Government to settle allegations that Wisdom D.O.P.C. and Solutions Mental Health
Management, Incorporated, presented false claims and statements to the Government.
Wisdom also entered into an integrity agreement with the Department of Health and
Human Services. An investigation disclosed that Wisdom, chief executive officer of
Solutions Mental Health Management, Incorporated, and Wisdom D.O.P.C. had submitted
false claims and statements. Wisdom billed for nursing services delivered without the direct
personal supervision of a physician in residential locations as if they were partial
hospitalization services at a community health center. Wisdom also improperly billed for
physician services that were actually nursing services provided in residential locations. A
number of the nursing services were billed when Wisdom was out of state.
Return !
'/. ... .,,,.,,..,,,..,.,,,.,,..,./..,/.,t:,/;,t;,/'///,1'//.-•,l';I' ..... :-;
DCIS Press Releases 11/16/00-11/30/00 http://www.dodig.osd.mil/DCIS/2000112.htm
Prosecutive Actions-7
• An indictment was returned in the District of Oregon against Arthur J. Bougie, Jr.,
charging him with one count each of Government theft and wire fraud relating to the theft
of military retirement benefits from the Defense Finance and Accounting Service (DFAS).
From February 1997 through May 2000, Bougie obtained $83,560 in DoD retirement
benefits by allegedly posing as his deceased father, Arthur J. Bougie, Sr. These actions
were detected during DFAS Operation Mongoose.
►-c Robert Todd Willis pied guilty to mail fraud. Willis, along with Steven Carl Bradley,
owned and operated Mid-Cities Health Services (Mid-Cities), a telemarketing company
located in Mansfield and Arlington, TX. Employees of Mid-Cities would contact handicapped
individuals and offer them durable medical equipment, such as hospital beds, motorized
vehicles and wheelchairs. The customers were told the medical equipment could be free if
their physician filled out a prescription, their insurance company covered the equipment.
Once the customers identified their physician and insurance, Bradley and Willis allegedly
filed claims with private insurers and the DoD TRICARE program for durable medical
equipment that was not delivered or was inferior to that claimed.
• Thach H. Nguyen, president, and Michael L. Martin, vice president, International
Database Systems, Incorporated, Falls Church, VA, pied guilty to major fraud against the
United States. An investigation revealed that Nguyen and Martin submitted false contract
proposals and employee resumes to the DoD and other Federal agencies. This was done to
win SA set-aside contracts to provide software contract management systems. The falsified
resumes also allowed them to charge the DoD higher labor rates based on the employees'
inflated qualifications.
• Daniel Franklin Stacy, Ph.D., Marriage Family/Child Counselor (MFCC), Coronado, CA,
pied guilty to mail fraud. In addition, in accordance with a negotiated plea agreement,
Stacy will be excluded from the TRICARE program, will not practice as a MFCC in any
setting for a specified period of time, and will resign from his position with the County of
San Diego. An investigation was initiated based on a complaint by a parent of two TRICARE
Management Activity {TMA) beneficiaries. The investigation determined that Stacy allegedly
billed the TMA for hundreds of psychotherapy sessions that never occurred and was paid at
least $144,500 based upon fraudulent claims. Three of the beneficiaries were billed for
services three years after they moved from the San Diego area and had no further contact
with Stacy .
. ►:, .. Gerardo Hernandez pied guilty to one count of making a false statement. An
investigation disclosed that International Jet Repair, Inc. (IJR), Hialeah, FL, a Federal
Aviation Administration Certified Repair Station, improperly repaired Pratt & Whitney
(P&W) Corporation JTSD combustion chambers, which are flight critical aircraft parts.
Specifically, the mount lug bushing on the chambers had not been properly replaced as
required by P&W specifications. The IJR provided falsified certificates of conformance to
Dallas Aerospace, Carrolton, TX, that IJR placed "new" bushings in the chambers. It was
DCIS Press Releases l l/ 16/00-11/30/00 http://www.dodig.osd.mil/DCIS/2000 l 12.h1m
determined that IJR did not use new bushings but reinstalled the used bushings that were
in the chambers without properly repairing them as required by the Original Equipment
Manufacturer. The failure to replace the bushings could have resulted in the catastrophic
failure of the aircraft and resultant loss of life.
~--Robert Long, former Dames & Moore, Inc. (DMI) employee, pied guilty in U.S. District
Court, Santa Ana, CA, to one count each of conspiracy and receiving kickbacks in
connection with DoD contracts. An investigation disclosed that in 1996, Tony Fetherling,
president of Midwest Soil Remediation, Elgin, IL, allegedly paid approximately $105,757 in
kickbacks to Carl Douglas Fenstermacher, a project manager performing work for DMI on a
DoD contract. Fenstermacher allegedly split the kickback proceeds with Long. The DMI was
awarded a contract with the U.S. Army for environmental remediation of a coal pilot plant
at Fort Lewis, WA. During the contract, Fenstermacher and Long allegedly solicited a
kickback of $1 per ton of soil treated by Fetherling. Fetherling, Fenstermacher, and Long
devised a scheme whereby Fetherling agreed to make payments to fictitious companies set
up by Fenstermacher. After Fenstermacher received the kickback payments from
Fetherling, he shared the proceeds with Long. Fenstermacher paid Long approximately
$55,757. These costs are believed to have been passed on to the Government through
DMI's contract at Fort Lewis.
Sentences--4
►-United States Army Sergeant First Class Don M. Damron, stationed at Fort Lee, VA, was
sentenced to 5 years probation, ordered to pay $14,833 in restitution and a $100 special
assessment fee. Damron previously pied guilty to stealing cases of Meals Ready to Eat
(MRE) from Fort Lee. An investigation revealed that Damron stole approximately 500 cases
of MREs from Fort Lee valued at approximately $25,000. The MREs are packaged individual
meals used when military members are on field activities away from dining facilities.
-~• Dr. Joel J. Lang, a retired podiatrist from Cheverly, MD, was sentenced to 2 years
probation, including 6 months home confinement, a $3,000 fine and a $100 special
assessment fee for committing mail fraud. Lang previously signed a civil settlement in the
amount of $301,000. An investigation disclosed that Lang and his company submitted
claims for noncovered services by disguising the physicians Current Procedural Terminology
codes to reflect covered services. Those insurers included Medicare and TRICARE.
-~ Rafael Alexander McLean was sentenced to 115 months imprisonment, 3 years
supervised probation, a $10,000 fine and a $100 special assessment. McLean previously
pied guilty to one count of being a convicted felon in possession of a firearm. During an
investigation it was determined that McLean had in his possession a stolen U.S.
Government Beretta 9mm pistol. The pistol was missing from the Norfolk Naval Base,
Norfolk, VA.
►.:,, Jefferson Peede Salmon was sentenced to 15 months incarceration, 3 years supervised
probation, a $5,000 fine and a $100 special assessment fee. Salmon was previously found
guilty of one count of bankruptcy fraud. An investigation disclosed that Sa lmon diverted a
number of assets from the U.S. Bankruptcy Court. In addition, Salmon was allegedly
involved in the theft of over $1 million worth of DoD property while operating Sundance
Trucking Transporter, a company contracted to transport DoD property from various
installations around the United States to the port of Wilmington, NC.
Civil Settlements Filed--4
~ .. A combined $1.23 million civil settlement was reached with the following defendants:
DCIS Press Releases 11/16/00-11/30/00 http://www.dodig.osd.mil/DCIS/2000112.htm
O'Gara Hess & Eisenhardt Armoring Company (O'Gara), Fairfield, OH; L-T Enterprises,
Incorporated (LTEI), West Chester, OH; Complete Metalworks Technology, Incorporated
(CMTI), Cincinnati, OH; and Martec, Incorporated (Martec), Batavia, OH. The defendants
allegedly submitted, or caused to be submitted, false claims to the U.S. Army. The
agreement calls for the defendants to pay the U.S. Treasury as follows: O'Gara -$1.1
million; LTEI -$15,000; CMTI -$40,259; and Martec -$75,000. It was alleged that O'Gara
provided non-conforming armored vehicle shells to the U.S. Army under a $186 million
contract to armor-plate High Mobility Multipurpose Wheeled Vehicles (HMMWV). During the
alleged misconduct, O'Gara produced over 1,500 armored HMMWV shells. The allegations
indicated that several of O'Gara's suppliers, including LTEI, CMTI and Martec did not
produce parts in accordance with the design requirements. One such requirement was that
certified welders weld the armored parts. Some of the parts produced by LTEI, CMTI and
Martec were not welded by certified welders and resulted in parts that did not conform to
the requirements. Improper welding degrades the strength of the armor. It was als9
alleged that O'Gara did not exercise adequate oversight of its subcontractors, including
performing the required audits and inspections. A former employee of LTEI and CMTI who
filed the lawsuit under provisions of the False Claims Act will receive a portion of the
settlement.
! Return J.
,:,:,:..-...-.............. ...:,.-: .. .-:.-/.,: .. .,.--,,:,.,_..._.,.,._...,,_.,j
DCIS Press Releases 9/16/00-9/30/00 http://www.dodig.osd.mil/DCIS/2000092.h1m
Prosecutive Actions-17
~· Subsequent to a 14-count indictment, u as ens er ch , former project
manager for Dames & Moore, Incorporated, Los Angeles, CA, was rested on alleged
charges of kickbacks, mail fraud, conspiracy, money laundering and aiding and abetting.
From 1996 through 1999, Fenstermacher had oversight of 14 DoD contracts. During this
time, he allegedly solicited and received approximately $105,000 in kickbacks from
Midwest Soil Remediation, Incorporated, Elgin, IL, and approximately $380,000 in
kickbacks from Certified Cleaning Services, Tacoma, WA. To conceal and launder the
kickback proceeds, Fenstermacher allegedly created two fictitious businesses--Doug's
Designs and Aravis Enterprises--to funnel and conceal the moneys obtained through his
activities. It is believed the kickback payments were passed on to the Government through
Dames & Moore's DoD contracts.
~ Additional indictments were returned as a result of the 4-year undercover investigation
--Operation Knotdock --into the maritime industry. Charged were:
• Krishan Mohan Verma, former port engineer for Keystone Shipping Company,
Beaumont, TX -five counts of providing false claims and conspiracy to provide false
claims to the U.S. Government. Verma allegedly provided proprietary bid information
to a U.S. Government subcontractor. As a result, the subcontractor was awarded four
subcontracts at inflated costs that were ultimately passed on to the Government.
• Francis Peter O'Connell, supervisory marine surveyor for the U.S. Maritime
Administration, Department of Transportation (DOT), Beaumont, TX -four counts of
receiving unauthorized compensation as a Government employee and providing false
statements to the U.S. Government. O'Connell allegedly received compensation from
BGI Enterprise, Inc. (BGI), a Government contractor, for assisting BGI in preparing a
bid package for submission to the U.S. Coast Guard for a contract to remove sunken
barges along the Intracoastal Waterway in Texas. O'Connell allegedly failed to
disclose this compensation on an annual financial disclosure form signed by
Government employees and mandated by Federal law.
Operation Knotdock identified widespread corruption in the repair and maintenance of
Government ships in the DoD Military Sealift Command fleet and the DOT Maritime
Administration. These fleets operate and maintain several hundred ships that are used in
case of war or National emergency.
►:,:.· An 18-count indictment was returned against Michael A. Taylor and Benjamin G. Taylor,
Jr., Columbus, OH, charging them with aiding and abetting, conspiracy, mail fraud, wire
fraud and making false statements on a tax return. Michael Taylor, a Defense Supply
Center Columbus (DSCC) employee, was president of Worldwide Marketing, Incorporated
(Worldwide), an illegal pyramid scheme. Michael Taylor and his brother, Benjamin Taylor
allegedly operated the pyramid scheme on the premises of the DSCC, the Defense Finance
and Accounting Service Center-Columbus and throughout the Columbus, OH metropolitan
DCIS Press Releases 9/16/00-9/30/00 http://www.dodig.osd.mil/DCIS/2000092.htm
area from September 1997 through March 1998. Worldwide was disguised as a multi-level
marketing company that sold travel certificates to DoD employees and other individuals.
Investigation determined those certificates had a wholesale cost of approximately $69 and
were not valid. Although the amount paid by each individual varied, the majority of
participants each purchased $500 increments of travel certificates. Each $500 purchase
secured a spot in a "bonus pool" that eventually paid a bonus of $3,500 per spot when and
if each participant's purchase number moved to the top of the pyramid. At that point, the
pyramid had generated $50,000 of income; $35,000 was to be paid out to the top levels of
the pyramid and Worldwide kept a $15,000 profit. Only a select few of the participants ever
received their "bonus money."
►-c Subsequent to a criminal complaint, Miguel A. Garcia, a DoD police officer assigned to
Fort Monmouth, NJ, was arrested. He is charged with allegedly possessing numerous
parking placards bearing the seals and insignias of various U.S. departments and agencies
(including the DoD), possession of equipment and materials for manufacturing and
laminating parking placards, selling two U.S. Marshals Service shields, and making false
statements on two occasions concerning that sale.
~' A two-count information was filed against Staff Sergeants Raymer Lee Shaw and Jack
Charles Satterfield, members of the Arizona National Guard (AZNG), Marana, AZ. Each was
charged with fraud and related unauthorized activity with a U.S. Government computer
device and malicious activity involving a U.S. Government communication line, station or
system. The charges stemmed from computer intrusion activity initiated against the AZNG
computer network in December 1999, that was discovered by AZNG Headquarters
personnel in March 2000. An investigation determined that Shaw and Satterfield, both
assigned to the Medical Clinic, AZNG Western Army Aviation Training Facility, Marana,
allegedly changed the legitimate name of an AZNG computer workstation to mask their
downloading of unauthorized software. They then loaded the unauthorized software, which
was designed to capture computer passwords, onto an AZNG network computer and used
the software to identify the passwords of AZNG computer users. The alleged computer
intrusions did not impact classified or personal information.
► A nine-count criminal information was filed against Chutchai Gary Khanijao, Nashau,
NH, and KKP Corporation, Incorporated (KKP), Nashua, NH, charging them with conspiracy
to defraud the United States, mail fraud, aiding and abetting, and conspiracy to obstruct
justice. Khanijao is the owner and president of KKP, a Small Business Administration
certified 8(a) business. KKP has technical and labor service contracts with the General
Services Administration (GSA) for the United States Air Force, as well as providing
computer hardware to the Air Force through GSA contracts. Beginning sometime prior to
June 1997 until about February 2000, Khanijao conspired with others to allegedly receive
and distribute kickbacks from a company that was supplying computer-related equipment
to KKP on GSA contracts. Co-conspirators of Khanijao directed and facilitated the purchase
by the Air Force through contracts with the GSA of over 1,000 computer storage devices
from KKP. KKP purchased the computer storage devices from a New Jersey corporation that
added $500 to the cost of each storage device sold to KKP. Khanijao and his
co-conspirators then issued invoices to the New Jersey corporation for the additional $500
per device sold, specifying fictitious services that were never provided. Khanijao and KKP
also allegedly diverted between $5 and $10 million in unlawful profits as a result of the
computer memory sales to the Air Force.
~· Julius Jerome Cullen, store director for the Great Lakes Commissary, Defense
Commissary Agency, Great Lakes, IL, pied guilty to one count of theft. From November
1997 to September 1998, Cullen instructed his subordinate commissary employees to
illegally convert numerous vendor promotional checks into cash. The employees then
provided the cash to Cullen. The intent of the vendor promotional checks is to increase the
sales of the vendor's products by reducing the cost of the promotional items to commissary
patrons. Cullen's theft deprived the customers of lower prices and the commissary of
increased sales volume.
DCIS Press Releases 9/16/00-9/30/00 http://www.dodig.osd.mil/DCIS/2000092.h1m
►,, Dan Massey and his company, Rhimco Industries, each pied guilty to making a false
statement. An investigation of Rhimco, a manufacturer of electrical connectors, and Massey
disclosed that the defendants supplied untested critical application aircraft parts to the DoD
and commercial customers. Between 1992 and 1996, various U.S. military components
reported that Rhimco electrical connectors routinely failed in their intended use in aircraft
and weapon systems. In addition, Rhimco connectors provided for testing yielded
significant failures. In response to inquiries from DoD officials regarding Rhimco part
failures, Massey falsely provided a bogus specification to the DoD in his attempt to provide
the untested parts.
►.:· Samiha Mitwally, president of Medi-Peth Medical Laboratory (Medi-Peth) and
Medi-Peth, Lake Hopatcong, NJ, pied guilty to various counts of mail fraud, impersonation
of Government officials, wire fraud, false claims and bankruptcy fraud. In 1997, Mitwally
devised a scheme where her companies would receive small dollar purchase order contracts
from various DoD medical centers and hospitals. She would then impersonate a DoD
contracting officer to order the goods directly from a legitimate medical supply vendor,
normally the manufacturer. The vendor, believing it had been awarded a Government
contract, would supply the items directly to the DoD but payment would go to Mitwally.
Mitwally also falsified a shipping invoice to make it appear she had paid for the shipping
costs on a Government contract, when her vendor had paid the shipping costs. After
numerous defrauded vendors attempted to recover money from Medi-Peth, Mitwally took
steps to protect assets held in her name by assuming the alias Mrs. Elaine Adams. In 1998
and 1999, under this alias, she filed petitions for bankruptcy for Medi -Peth with the U.S.
Bankruptcy Court, Newark.
►,, Ben Lazev, former purchasing agent for Yardney Technical Products (Yardney),
Pawcatuck, CT, pied guilty to conspiring to commit mail fraud. Lazev accepted cash
payments from officials of Boliden Metech, a precious metal recycler in Rhode Island, in
return for accepting less silver in settlement than was actually due. Lazev was employed by
Yardney for 36 years. Yardney, a Government contractor, produces batteries used in a
variety of military applications, including torpedoes. Silver is used in the manufacture of
the batteries and is supplied in large part by the DoD. The conspiracy took place over a
period of approximately 25 years and resulted in the loss of hundreds of thousands of
dollars to the DoD and others. The cash to pay Lazev was generated by former Boliden
Metech managers through a variety of fraudulent schemes that included the theft of
precious metal scrap from customers and the eventual processing of the stolen material
under fictitious, customer lots. The value was then returned to the conspirators in the form
of gold bullion that was later transported interstate and converted to cash. Four former
Boliden Metech managers have already pied guilty to Federal criminal charges in
connection with the conspiracy.
~ o 'l erlin , president of Midwest Soil Remediation, Elgin, IL, pied guilty to
conspiracy and paying kickbacks in connection with DoD contracts. In a related case,
Daniel F. Nobel, president of Certified Cleaning Services (CCS), Tacoma, WA, also pied
guilty to conspiring to pay kickbacks in connection with DoD contracts. Fetherling allegedly
paid approximately $105,757 in kickbacks to Carl Douglas Fenstermacher, a project
manager for Dames & Moore. Dames & Moore had been awarded a contract with the U.S.
Army for environmental remediation of a coal pilot plant at Fort Lewis, WA. Fenstermacher
allegedly solicited Fetherling for a kickback of $1 per ton of soil treated. Nobel, through
CCS, allegedly paid Fenstermacher approximately $383,000 in kickbacks. In both cases,
the defendants and Fenstermacher devised a scheme whereby payments were made to
fictitious companies set up by Fenstermacher. The kickbacks insured subcontracts from
Dames & Moore for Midwest Soil Remediation and Certified Cleaning Services. It is believed
these kickback costs were passed on to the DoD through Dames & Moore's contracts.
Sentences--3
DCIS Press Releases 9/16/00-9/30/00 http://www.dodig.osd.mil/DCIS/2000092.h1m
►· Patrick Ray Cook, Okmulgee, OK, and Zackariah O'Brien Stanley, Okmulgee, OK, were
sentenced as follows: Cook - 5 months incarceration, 5 months home confinement, 3 years
of supervised probation, restitution of $17,367, and a $100 special assessment; Stanley -
24 months supervised probation, 4 months home confinement, restitution of $17,367, and
a $100 special assessment. Cook and Stanley previously pied guilty to theft of Government
property. They broke into the 316th Quartermaster Battalion, U.S. Army Reserve,
Okmulgee, OK, and stole a High Mobility Multi-purpose Wheeled Vehicle (HUMVEE). The
HUMVEE was then driven to secluded acreage and stripped of its top, doors and
cryptograph communication radio and used as a recreational vehicle until abandoned
several weeks later. When the Government recovered the HUMVEE and the radio, neither
one was serviceable.
~ ... Lannes Neil Johnson was sentenced in U.S. District Court, Springfield, MO, to 3 years
probation and a $50 special assessment fee. Johnson previously pied guilty to conspiring to
submit false claims to the U.S. Government. Johnson is a former laboratory manager for
Mid America Clinical Laboratories. In that position, he obtained over $200,000 from false
claims submitted to the Department of Health and Human Services (HHS) and the DoD.
Johnson devised a scheme wherein he submitted Medicare and TRICARE beneficiary's
requests for payment of clinical laboratory services that were not ordered by physicians or
were billed as component elements of chemistry test panels or profiles.
Civil Informations Filed--1
~. A civil complaint was filed against Mil-Spec Acoustics Corporation (Mil-Spec), Brooklyn,
NY, seeking treble damages and civil penalties under the False Claims Act for allegedly
submitting false claims to the U.S. Army Communications and Electronics Command
(CECOM). The complaint alleges that Mil-Spec submitted false and/or fraudulent claims to
CECOM for the production of Vehicular Intercommunications (VI) Systems for the Army's
fleet of "first to fight" combat vehicles. A component of the VI System (the LS-688
loudspeaker) allegedly was not manufactured in accordance with the contract specifications
and Mil-Spec personnel manipulated the test procedures to make it appear the units passed
the required tests. As a result, CECOM sustained damages of at least $500,000.
Civil Settlements Filed--4
~-New England Health Associates, Incorporated (NEHA), agreed to pay the Government
$493,465 to settle allegations under the False Claims Act that NEHA submitted, or caused
to be submitted, false claims to the Medicare, Medicaid and TRICARE programs. On
discovering billing problems in connection with a particular physician's services, NEHA
voluntarily reported the inaccurate bills to the Government, sought to resolve liabilities
resulting from the improper bills, and took immediate corrective action to resolve the
billing problem for the future. The Government contends that NEHA billed higher
reimbursing codes for evaluation and management services that were supplied by a
physician who actually performed services, costs that should have been billed at a lower
reimbursing level, or not billed at all. The improper billing occurred from 1995 to 1997 .
. ~· Under a settlement reached with Systems and Electronics, Incorporated (SEI), Elk
Grove Village, IL, the company will pay the Government $175,000 to settle allegations it
submitted false claims under a U.S. Navy contract to manufacture aircraft stress gauges.
The settlement does not constitute an admission of wrongdoing, liability or an adjudication
of any issue. Under the contract, SEI used estimated contract labor rates, which were
DCIS Press Releases 9/16/00-9/30/00 http://www.dodig.osd.mil/DCIS/2000092.htin
higher than its actual rates, to calculate and submit claims. The contract required the
disclosure of decreases in the actual labor rates from the estimated rates. However, the SEI
allegedly concealed a decrease in the actual labor rates, thereby preventing the DoD from
renegotiating the estimated labor rates to the lower, actual rates. Additionally, SEI
allegedly proposed contract labor rates based on personnel who never worked for or
discussed employment with the company and, in some cases, had never heard of SEI.
. ...,. Jacques Dimitrie Glover, a supply technician with the Defense Logistics Information
Service, Defense Logistics Agency, Battle Creek, MI, entered into a civil settlement
agreement to pay the Government $5,000, plus accrued interest. An investigation disclosed
that Glover had submitted false claims for reimbursement of moving expenses in
connection with her Government paid relocation from Dayton, OH, to Battle Creek, MI. On
January 25, 2000, Glover pleaded guilty to theft of public funds and was sentenced to make
restitution of $3,179.57 and pay a $25 special assessment.
► Charter Hospital, Incorporated (Charter), entered into a national settlement with the
Government and agreed to pay $7 million to resolve claims of overcharging Federal health
care programs, including Medicare and TRICARE. As part of the settlement, Charter could
pay an additional $8 million in compensatory damages for fraud. The Health Care Financing
Administration retains the right to audit Charter's fiscal year 2000 claims and recover any
overpayments made to Charter. Charter is currently in Chapter 11 bankruptcy proceedings
and is liquidating its assets.
I Return ! .......................... , .................. , ........ , .. 'f.
Re: Follow-ups
Subject: Re: Follow-ups
Date: Fri, 15 Jun 2001 09:06:53 -0400
From: Pat Backus <[e-mail]>
To: Joe Gunn <[e-mail]>
BCC: Mike Kelly <[e-mail]>
Thanks for the info, Joe.
I have been checking with IT about this. They were aware of this and had looked into it quite closely
before subcontracting to Midwest.
Actually, there are a few things that are a little different than what you wrote. Tony is not the owner of
Midwest. I don't know if it has always been that way or if that was changed during this ordeal. He was
the president of Midwest at the time of the indictment. He received probation in exchange for
cooperation in nailing the Atmy guys that were involved. I heard that three of them were convicted and
this was not the first time they had done it. Midwest was temporarily deban·ed during some of the
investigation but that was lifted several months ago. I think Remtech (not Dustcoating) sued Dames &
Moore (not URS, although URS has bought D&M since) and won. Two guys from D&M were also
convicted. In IT's investigation, they did not see any suit that could be brought against Midwest.
If there is a problem, it may be more of IT's problem than ours. Our contract is with IT not Midwest.
Joe Gunn wrote:
Hey everyone!!! Hope all is well in NC and with Warren County. I thought you might want to know that the owner
of Midwest Soils, Tony Featherling, was indicted for bribery regarding the Ft. Lewis, WA thermal project.
Dustcoating had won the project, built a machine, and mobilized to the site. The contract was cancelled, and
Midwest came in to perform the work. According to the federal court case, Tony gave the URS project manager
a $100,000 to bribe him into cancelling the contract and replacing Dustcoating with Midwest Soils. The case
started in August of 2000, and Tony was sentenced 5/21/01. Not sure if this will affect you with IT and their sub,
Midwest. If federal money is involved, Midwest may be barred from federal contracts. You may want to look into
this with NC legal affairs and see if you have any recourse for against Midwest or IT. I look for Dustcoating to
sue and recover all assests of Midwest Soils, which may cause banckruptcy. Knowing IT as I do, they might buy
out Midwest to save face .......... If you need further details, call me ........
I I Pat Backus <pat. backus(a)ncmail.net>
, Environmental Engineer II
! Division of Waste Management/ PCB Landfill Detoxification Project I ! North Carolina Dept of Environment and Natural Resources I /_
RE: Do you know anything about this?
Subject: RE: Do you know anything about this?
Date: Thu, 14 Jun 2001 11:43: 16 -0700
From: "Duke, Gary W." <[e-mail]>
Pat,
To: "'Pat Backus"' <[e-mail]>, "Cloonan, Jim" <[e-mail]>,
"Duffey, John H" <[e-mail]>,
"Duke, Gary W." <[e-mail]>
CC: "Jaeger, David E" <[e-mail]>,
"Garrett, Jim" <[e-mail]>,
"Kipness, Lewis I."<[e-mail]>, "'[e-mail]"' <[e-mail]>
Per our conversation this afternoon I will have a written response from a
Midwest representative to forward to you later today or tomorrow, but this
should suffice to keep the situation under control until then.
As we already discussed I can assure you that debarment is definitely not an
issue; there was a temporary debarment of Midwest by the Army while they
investigated, but it was lifted on 2/27/01 after they concluded their
investigation and no further action against the company is expected since
they were never really the target.
The actual story of the "bribe" is more complicatetd than this message would
indicate. Tony Fetherling cooperated with federal investigators and his
sentence consists only of probation. While he remains an employee of Midwest
he is no longer an officer or stockholder, the Army is satisfied with this
arrangement.
The only civil suit likely to result from this action has already been
settled and did not even involve Midwest. Dustcoating rented equipment t o
Remtech, who had a contract with Dames & Moore, D&M has since been bought by
URS. Remtech did sue D&M and win. I would have to think any money due
Dustcoating would have to be recovered from Remtech since that is who their
contract was with. As an outside shot they could sue D&M directly but
without a direct business relationship between the two of them it would be
more difficult. Action against Midwest, who had no authority at all over the
contract that was terminated and who apparently has no relationship with
Dustcoating at all, seems to me to be even more farfetched.
Whoever wrote this appears to be quite a distance removed from the action
and has several key facts distorted or outright wrong, which is pretty
common after a rumor passes through enough people. Thanks for the
opportunity to set this straight before even more people start running in
circles.
-----Original Message-----
From: Pat Backus [mailto :Pat .Backus@ncmail .net ]
Sent: Thursday, June 14, 2001 9:55 AM
To: Cloonan, Jim; Duffey, John; Duke, Gary
Subject: Do you know anything about this?
I won't say who sent this to me . It was copied to Mike. If you know
anything about this, please let me know as soon as possible. Thanks.
I thought you might want to know that the owner of Midwest Soils, Tony
Featherling, was indicted for bribery regarding the Ft. Lewis, WA thermal
project. Dustcoating had won the project, built a machine, and mobilized to
the site. The contract was cancelled, and Midwest came in to perform the
work. According to the federal court case, Tony gave the URS project
manager a $100,000 to bribe him into cancelling the contract and replacing
Dustcoating with Midwest Soils. The case started in August of 2000 , and Tony
RE: Do you know anything about this?
..
was sentenced 5/21/01. Not sure if this will affect you with IT and their
s ub, Midwest. If federal money is invol ved, Midwest may be barred from
federal contracts. You may want to look into this with NC legal affairs and
see if you have any recourse for against Midwest or IT . I look for
Dustcoating to sue and recover all assests of Midwest Soils, which may cause
banckruptcy.
I DCIS Press Releases 7 / 1/00-7 /15/00 http://www.dodig.osd.mil/DCIS/2000071.h1m
Prosecutive Actions-4
.,. Michael Anderson, owner and operator of Ranger Military Surplus, Moriarty, NM, pied
guilty to providing a false statement to the Government, impersonating an officer and
being a convicted felon in possession of ammunition. In August 1998, the Defense Logistics
Agency debarred Anderson and his company from purchasing surplus and foreign excess
personal property from the Federal Government for three years. In November 1998,
Anderson fraudulently obtained a new bidder identification {ID) number from the Defense
Reutilization and Marketing Office (DRMO) at Holloman AFB, Alamogordo, NM, by using the
alias "Mikael Anderson" doing business as "Ranger Military Equipment Sales." Anderson
falsely certified he was not debarred. Anderson then purchased surplus property from the
DRMO. In February 1999, Anderson again certified in writing he was not debarred and used
his alias and fraudulent bidder ID number to purchase surplus property from the DRMO at
Holloman AFB. Also, in November 1998, Anderson attempted to enter Kirtland AFB,
Albuquerque, NM, to attend a DRMO sale. When asked for ID, he produced a New Mexico
State driver's license and a business card that read "Ranger Military Supply, Captain
Michael Anderson, United States Marine Corps." During the execution of Federal search
warrants, hundreds of rounds of ammunition were found in Anderson's residence and
business. It was also learned Anderson has seven previous convictions for felonies in Texas,
Arizona, New Mexico and Nevada.
►:,:-Barry Bartels waived indictment and pied guilty to theft of Government property. An
investigation disclosed that George Jacob, a contractor at the National Security Agency
(NSA), Fort Meade, MD, conspired with Bartels and two former NSA employees, Charles H.
Langhor and Christopher Aston, to steal NSA property that included scrap, precious metals
and equipment. A portion of the property, valued at $116,000, was then sold through
companies owned by Jacob. Langhor, Jacob and Aston have already pied guilty to similar
charges.
►:,: D e o el, president of Certified Cleaning Services (CCS), Tacoma, WA, pied
guilty to one count of paying a kickback. From February 1997 to February 1999, Nobel,
through CCS, paid approximately $382,000 in kickbacks to earl E>oaglas Fenstermacne , a
project manager performing work for Da es & Mo--ore, Incorporate (DMI), on oD
contracts. Nobel and Fenstermacher devised a scheme whereby Nobel agreed to make
payments to fictitious companies set up by Fenstermacher. Invoices from these companies
were provided to Nobel who used them as a basis to bill DMI for work that was not actually
performed. When paid by DMI for the fictitious work, Nobel arranged to have CCS
reimburse Fenstermacher for the entire amount of the proceeds. Subsequently,
Fenstermacher would kickback 10 percent of the funds to Nobel.
-------------------------------------------------------------·--------------------------····· .. ·--=----=------=----=----=------=------=--------=----=--=----=----=------=------=------=----=------=------=--------=--------=--=----============----=-----------------------------=====
Sentences--6
►., Otis A. Ruff was sentenced in U.S. District Court, Baltimore, MD, to 1 year supervised
probation and to pay a $100 special assessment fee. He previously pied guilty to theft of
DCIS Press Releases 7 / 1/00-7 / 15/00 http://www.dodig.osd.mil/DCIS/2000071.htin
Government property. Ruff was employed as a warehouseman at the Department of
Veterans Affairs in Fort Gillem, GA, where he maintained excess property for use by other
Government agencies. Ruff stole a Digital DEC Alpha computer server, valued at $28,000,
that had been officially transferred from the Department of Veterans Affairs to the DoD. He
then transported the computer to the State of Maryland where he took a civilian job with
the DoD .
....,. Willard Francis Workman, Jr., Bethesda, MD, was sentenced to 4 months home
confinement, 2 years supervised probation, a $2,000 fine and a $100 special assessment
fee. He was further ordered to pay $47,603 restitution to the Federal Data Corporation
(FDC), Bethesda, MD. Workman previously pied guilty to mail fraud. While employed by
the FDC, Workman used the U.S. mail for the receipt of kickbacks or "special promotional
incentive fees" from Legend Micro, Incorporated, Akron, OH. Between October 1998 and
August 1999, Workman received payments from Legend Micro at the rate of $10 per
computer sold under U.S. Navy delivery orders with FDC. Workman ultimately received
$62,700 in kickbacks for facilitating the selection of Legend Micro products by FDC and the
U.S. Navy.
·►-< Nancy Thetford, a.k.a. Nancy Cooper, was sentenced to 18 months confinement, 3
years supervised release, to pay restitution of $78,650 and a $100 special assessment.
Thetford pied guilty in March 2000 to one count of theft. This was Thetford's second
sentencing. She previously pied guilty to submitting fraudulent health insurance claim
forms to Government programs and was sentenced to probation. In June 2000, Thetford's
probation on the original charges was revoked and she was sentenced to 21 months
confinement and ordered to pay $1,131,438 restitution to the Department of Health and
Human Services. Thetford and a co-defendant, Tracy Huff, operated a medical billing
service in Denton, TX, from which claims were submitted to various insurance carriers,
including Medicare, Medicaid and TRICARE.
~-·· Richard Roland Alford, a.k.a. Michael Richard Hansen, Edward J. Phillips III, Jack
Phellps, Benedict Ryan and Jack Ryan, was sentenced to 52 months incarceration, 5 years
supervised probation, to pay restitution of $56,932 and a $310 special assessment fee.
Alford admitted creating and using false Government ID, impersonating a Federal agent,
committing wire fraud, theft of Government property, and submitting false statements on a
U.S. passport application. Using the Hansen alias, Alford devised a scheme to dupe
individuals into investing in a nonexistent business. Alford created sets of fake law
enforcement credentials containing the official DoD seal and used these to impersonate a
DoD special agent. He then used the fake ID and bogus DoD affiliation to market a
telecommunication venture he reportedly planned to start after his "pending retirement
from Government service." Using money from the deceived investors, Alford was able to
secure a number of credit cards including a Visa Charge Card from Providian National Bank.
He also used the fake ID to obtain the Government rate on a number of domestic airline
flights. During this same period, Alford submitted a bogus application to the U.S.
Department of State in an attempt to obtain an official U.S. passport. Alford's efforts to
obtain the passport were successfully thwarted during the course of the investigation.
Following indictment in Arizona, a warrant was issued for Alford's arrest. He fled to the Los
Angeles metropolitan area. While attempting to take him into custody there, Alford tried to
run-down two DCIS special agents and an assisting officer from the Los Angeles Police
Department. After a 45-minute car chase, Alford was apprehended and charged with two
additional counts of assaulting a federal officer and numerous state and local charges in Los
Angeles County. Those charges are still pending.
►:, Wayne Waterman, East Windsor, CT, pied guilty to one count of criminal trover relating
to his misuse of personal property without the consent of its owner. The same date Wayne
Waterman was sentenced to 1-year imprisonment, suspended, and 2 years probation.
While employed as a vice president of sales at Triumph Manufacturing (Triumph), a DoD
prime and subcontractor, Wayne Waterman was also involved in sales for Northern
Connecticut Technologies (NorConn), a company started by Barbara Waterman, his wife.
DCIS Press Releases 7/1/00-7/15/00 http://www.dodig.osd.mil/DCIS/2000071.h1In
Triumph manufactures parts for use in DoD submarines, surface ships and aircraft, as well
as other parts for commercial customers. The investigation determined that Wayne
Waterman removed technical drawings and aperture cards originally provided to Triumph
by the U.S. Government and other DoD contractors. Some of those technical drawings were
used by NorConn to develop quotations submitted to companies that formerly did business
with Triumph. In October 1999, a civil settlement was reached whereby Barbara
Waterman, Wayne Waterman and NorConn agreed to pay Triumph $127,500 without
admission of liability.
·~• Claude I. McClain, Jr., was sentenced to 6 months confinement, 3 years supervised
probation, payment of $18,444 restitution to the Government, $22,259 restitution to
various pawnshops and a $100 special assessment. He formerly pied guilty to conversion of
Government property. An investigation confirmed McClain stole numerous pieces of
computer equipment from the DoD Inspector General's warehouse in Springfield, VA, and
from its offices located in Arlington, VA.
Civil Settlements Filed--2
~• A $5,342,736 out of court settlement agreement was reached between Northrop
Grumman Corporation (Northrop), Electronic Sensors Systems Division, Linthicum, MD,
and the Government. The settlement resolves allegations involving violations of the Truth
in Negotiations Act. Northrop was awarded two Foreign Military Sales type contracts with
Taiwan, the Republic of China and the North Atlantic Treaty Organization for the APG-66
fire control radar used aboard the F-16 aircraft. Both contracts were initially awarded to
Westinghouse Electric Corporation, Electronic Systems Group, which was later acquired by
Northrop in March 1996. Northrop has denied any wrongdoing in this matter. During
contract negotiations, Northrop proposed to make certain parts "in-house" for the APG-66
radar system. Specifically, this included the antenna and Lower Power Radio Frequency
(LPRF) power supplies, which are considered major parts to the radar system. During the
spring of 1996, the Defense Contract Audit Agency and the General Accounting Office
performed a review of contracts and discovered Northrop later decided to purchase the
antennas and LPRF power supplies. During contract negotiations, this information was
never divulged. As a result, the fixed price contracts were negotiated at a substantially
higher price.
~ The Computer Sciences Corporation (CSC), Falls Church, VA, entered into a civil
settlement agreement with the Government and will pay $8,730.16 in lieu of a civil trial.
Under a U.S. Army contract, the CSC provided computer-integrated services at the Defense
Commissary Agency, Fort Lee, VA, from 1994 through 1997. Allegedly, CSC employees
attended college classes while their time was being fraudulently billed against the contract.