A subcontractor employee working on the now-canceled MOX project in South Carolina used football tickets, automobile tires, barbecue grills and other gifts to persuade employees of CB&I AREVA MOX Services and other vendors to help approve thousands of fraudulent invoices cumulatively valued at more than $6.4 million, according to a Dept. of Justice lawsuit filed Feb. 14 that names both companies as defendants. The controversial project at the Savannah River Site in Aiken, S.C., originally scheduled for completion in 2016, was canceled in January after cost and schedule estimates increased significantly.
According to the Justice Dept., Ohio-based Wise Services “falsely claimed reimbursement under its subcontracts with MOX Services for construction materials that did not exist, and that in turn MOX Services knowingly submitted $6.4 million in claims to NNSA (National Nuclear Security Administration) for the fraudulent charges.”
The lawsuit zeroes in on the actions of Phillip Thompson, a senior site representative for Wise Services who pleaded guilty to charges of conspiring to commit theft of government funds in 2017.
“Government contractors who line their bank accounts by receiving kickbacks or submitting fraudulent claims undermine the public's trust in government programs and operations,” remarked Assistant Attorney General Jody Hunt, in a statement. “We will continue to vigorously pursue those who misuse taxpayer funds.”
Contacted by ENR, engineering firm McDermott—which completed its acquisition of CB&I in 2018—declined to comment. Lawyers with Wise Services provided the following statement:
“Wise is aware of the claim filed and is cooperating fully with the government to resolve all issues. Wise denies that the company was aware of, or took part in, any kickback scheme perpetrated against the government by those whose actions were neither authorized by nor known to Wise Services.”
Between 2008 and 2016, the Justice Dept. states, Wise Services held three subcontracts with MOX Services to supply labor, materials, equipment, and supervision for unplanned construction activities, such as general labor, plumbing, electrical and carpentry work. All three contracts were valued at $25 million.
According to the lawsuit, Thompson submitted claims using forged invoices from six different suppliers. Apparently key to enabling the scheme was the authorization that Wise Services permitted Thompson to write checks to himself from a petty cash account. The contractor then submitted claims to MOX Services, the complaint reads, for what turned out to be “purchases of non-existent materials.”
The complaint reads: “Under this process, Mr. Thompson pretended that he had purchased millions of dollars of materials for the MOX project using his own money and then purported to ‘reimburse’ himself by writing checks to himself on the Wise petty cash account.
“Despite this inherently suspicious and unorthodox procedure for material procurement,” the complaint continues, “Wise did not receive any explanation from Mr. Thompson as to why materials purportedly required for the MOX Project had to be procured with petty cash as opposed to following standard procurement procedures.”
Kickbacks were also involved, with the Justice Dept. alleging that Wise—via Thompson—provided certain MOX employees with items valued at $52,000, including: “YETI coolers, sunglasses, mobile phones, NASCAR tickets, Masters Golf Tournament tickets, college football tickets, firearms, and hunting supplies.” These were allegedly offered to help Wise win favorable treatment from MOX employees.
Thompson allegedly provided the gifts to two key MOX Services employees: one who was responsible for approving invoices, and another who had responsibility for confirming receipt of materials. The complaint alleges that these workers were aware of Thompson’s scheme, with one discovering his own forged approval signature forged by Thompson onto an invoice. The second employee, who lacked responsibility for approving invoices, nevertheless signed off on invoices that were ultimately approved. As a result of that, the Justice Dept. claims that MOX Services “improperly approved, processed, and invoiced” the NNSA for those costs.
This wasn’t the first case involving allegations of fraudulent activity on the MOX project. In 2016, the Justice Dept. intervened in a suit originally filed under whistleblower provisions of the False Claims Act. That case involved allegation of a subcontractor supplying rebar that was falsely certified to have met Nuclear Quality Assurance-1 specifications.
Construction of the Mixed Oxide Fuel Fabrication facility, or MOX, first began in August 2007, with completion then targeted for 2016. In 2016, however, the Dept. of Energy issued a new estimate that indicated construction would not complete until 2048, at a nearly $17.2-billion final price tag.