Boiler-Repair Firm Sued Over Bills Paid by Navy
Marine Boiler Repair Inc., a National City firm indicted earlier this year on federal charges of falsifying time sheets to inflate its contracts with the Navy, was slapped Friday with a civil lawsuit seeking to recoup payments by the Pentagon.
The suit, filed by the Justice Department in U.S. District Court in San Diego, says Marine and its chief administrator, Stephanie Cardoza of San Diego, conspired to mislead Pentagon auditors by altering and destroying work records for more than a decade, ending in 1983.
The Navy suspended the company from obtaining further military contracts after the indictment of Marine and Cardoza in April on 88 counts of fraud and making false statements. The criminal case is scheduled for trial Feb. 4 in San Diego.
Although the civil suit says the federal government has not yet calculated its total losses from the alleged conspiracy, documents filed in connection with the criminal indictment say a naval audit of one year’s records found that Marine obtained $1.6 million in undeserved payments through the scheme.
Attorneys for the company and Cardoza said Friday that they were surprised by the filing of the civil lawsuit.
“It’s somewhat unusual to see a civil suit filed immediately prior to a criminal case commencing,” said Marcus Topel, a San Francisco attorney representing Cardoza. “Perhaps the Department of Defense or the local naval authorities are seeking to poison or muddy the waters prior to her trial.”
Documents filed in the cases against the company say Marine was a subcontractor, performing boiler repairs on dozens of Navy ships docked in San Diego Harbor, including the aircraft carriers Kitty Hawk, Constellation and Ranger.
The criminal and civil cases allege that Marine routinely falsified records to allocate workers’ hours to jobs subject to government audit, regardless of where the employees actually worked.
Cardoza is accused of directing employees to keep time records in pencil “to make later alteration and falsification of these records easier,” according to the civil suit.
“The effect of these inflated hours was that (Marine) work received higher settlements in price negotiations between the prime contractor and the Navy,” Asst. U.S. Attorney William Braniff said in a filing in the criminal case.
Documents filed in the criminal case say Marine was investigated on similar charges by a federal grand jury in 1977, but that key records which accurately showed how employees’ time was spent were destroyed when the company obtained a two-day delay in responding to a subpoena.
The current charges stem from an investigation that led to a June 1983 raid by the FBI and the Naval Investigative Service in which dozens of documents were seized from the company’s National City offices.
Topel and Robert Coffin, a San Diego attorney representing Marine, declined to comment on the charges. In court filings, they have stated that the time-recording system employed by Marine was in common use among Navy contractors and that neither the company nor Cardoza believed it to be illegal.
