DOE, A Deer? Or DOE, A-Scammed!

On September 3, 2011 a civil lawsuit was filed against George Peterson, Vice President of Kennewick Industrial & Electric Supply (KIE) for allegedly consciously engaging in two schemes including a kickback and fraud scheme. These schemes resulted in a big loss to the United State Department of Energy (DOE).

The allegations regarding the first scheme are that Mr. Peterson engaged, directly and indirectly, in a kickback scheme primarily executed by a KIE employee under his supervision, Martin Perez, and Gregory Detloff, a material coordinator for two DOE prime contractors, CH2M Hill Hanford Group Inc., (“CH2M Hill”) and Fluor Hanford Inc. (“Fluor”). The United States alleges that under that kickback scheme KIE through Mr. Perez, with the knowledge of Mr. Peterson, acted as a middleman for Mr. Detloff to make purchases from his wife’s company. The purchases were made at substantial and unreasonable markups. Mr. Detloff’s purchases on behalf of CH2M Hill and Fluor were made with his government issued purchase card (“P-Card”) and were ultimately paid for by DOE.

The United States has allegedly said that because of this kickback scheme the DOE ended up paying over $700,000 for materials that in reality cost around $350,000 or less.

Perez and Detloff have already pleaded guilty to the conspiracy to commute wire fraud.

The allegations regarding the second scheme are that Mr. Peterson engaged in, directly and indirectly, a fraudulent scheme primarily executed by KIE employees under his supervision, including Perez and others, as well as Suzie Zuniga, a material coordinator for Fluor. The United States alleges that these KIE employees, at times with the assistance of Peterson, facilitated Zuniga’s improper purchases of over $300,000 worth of personal electronics and household appliances with her government issued P-Card. KIE is not in the business of selling personal electronics and household appliances. Nonetheless, the KIE employees acted as middlemen making the improper purchases for Zuniga and then charging them to Fluor through Zuniga’s P-Card. The United States alleges that as a result of this fraud scheme DOE paid over $300,000 for personal electronics and household appliances that were never received by DOE or Fluor. Zuniga has pleaded guilty to fifteen counts of Wire Fraud for her role in the scheme.

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The United States is seeking damages and civil penalties from Peterson for his role in these schemes in pursuant to the False Claims Act and Anti-Kickback Act – Source.

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