Probe Targets Fraud at Base : Military: Federal investigation of Point Mugu facility finds evidence that civilian employees of Navy accepted kickbacks and bribes from suppliers of merchandise.

A widening federal investigation at the Point Mugu Naval Air Station is turning up evidence that several civilian employees have defrauded the government out of millions of dollars in the purchase of goods used at the big weapons testing facility, The Times has learned.

The investigation also has uncovered questionable practices by a handful of base officers in the purchase of merchandise for their offices, a knowledgeable source said.

By next spring, a federal grand jury indictment is expected to disclose a number of charges against Point Mugu personnel, which could tarnish the prestigious image of the 45-year-old base--the Navy’s largest weapons testing facility.

“We will look at everyone who was involved at Point Mugu,” said Assistant U.S. Atty. Patricia A. Beaman in Los Angeles. “It’s mostly civilian personnel.”

The total cost of the fraud to the government could be more than $3 million, she said.

One investigator said that kickbacks and bribes between suppliers in Ventura and Los Angeles counties and Point Mugu civilian personnel on the Navy payroll may be so deep-rooted that it has been a way of doing business for several years.

“It’s a good ol’ boy network,” the investigator said.

The government investigation began in August, 1989, when federal agents started looking into reports of kickbacks, bribes and phantom invoices camouflaging merchandise never delivered to both the Point Mugu Navy facility and to Unocal’s Ventura County offshore oil platforms.

Thus far, the investigation has produced a federal grand jury indictment in which three individuals are charged with participating in a conspiracy to defraud the Navy base and Unocal. One of the defendants pleaded guilty this month.

According to the indictment, returned last August, the fraud scheme was carried out between April, 1984, and September, 1986. This investigation, in turn, served as a springboard for a broader corruption inquiry into purchasing practices on the Navy base.

Investigators believe as many as two dozen civilian employees at the Navy base may be tainted by the alleged fraud.

A number of Ventura and Los Angeles county companies that supply the base with items from toilet paper to paint--but not weapons hardware--also are being investigated, sources said.

The Point Mugu civilian workers, such as purchasing agents, were receiving “illegal kickbacks,” including microwave ovens, refrigerators, home improvements and tools, according to the August indictment.

As one interview by federal investigators led to another, it appeared to government agents that some officers also may have engaged in questionable practices.

The officers may have ordered merchandise not authorized by the Navy and may have covered up the purchases by creating fictitious orders for Navy-authorized goods, one investigator said.

For example, investigators are looking into whether, in this manner, one officer ordered an expensive desk, another a fancy credenza and a third a $300 pen set for his desk, all for their offices.

Investigators cannot yet provide the base commander with a list of suspects because they still have to do months of digging into the suspected corruption.

Declared one government agent: “We still don’t know how high up the kickbacks and corruption go.”

The base commander, Rear Adm. William E. Newman, 51, declined to be interviewed.

“The admiral is concerned about the nature of the investigation and the possibility for more indictments,” said base spokesman Harry Lee. “Therefore, it is inappropriate at this time to comment.”

The government has investigated Point Mugu before.

Last year, a Navy civilian employee at Point Mugu, Jammie Lee Nash, 38, pleaded guilty in federal court in Los Angeles to one count of conflict of interest. The charge stemmed from a 1990 indictment alleging that he solicited and accepted up to $2,000 in kickbacks in exchange for a government painting contract. He was sentenced to three years’ probation and fined $800.

Under federal law, all government employees--including the civilians who work for the Armed Services--are prohibited from accepting gratuities, even including a free lunch or a bottle of liquor.

The inquiry at Point Mugu is being coordinated by Beaman in conjunction with the Naval Investigative Service, the Internal Revenue Service’s criminal investigation division and the Postal Inspection Service.

The investigation takes on a high government priority given the critical mission of the base--home of the Pacific Missile Test Center, which evaluates state-of-the-art air-launched weapons and electronic warfare systems.

About 13,000 military and civilian personnel work on the oceanfront base, which since its founding in 1946 has launched more missiles than any other U.S. government testing range.

“The nature of the fraud is that it’s subverting our purchasing system on this base, and that makes it very, very serious from our standpoint,” said Alton Davis, a postal investigator.

Indicted in August and charged with participating in a conspiracy to defraud the base and Unocal were Martin S. Anderson, 44, former president of the now-defunct Anderson Industrial Supply of Oxnard; Bill M. Frazier, 45, of Camarillo, a salesman at the firm, and Erwin H. Muller, 49, of Camarillo, who, according to the indictment, established bogus companies “to supply false and fraudulent invoices which were used in a scheme to defraud Point Mugu and Unocal.”

Muller pleaded guilty Oct. 3 to a conspiracy charge and a federal income tax evasion count. He signed a plea-bargain agreement and has been cooperating with the government in the investigation.

The cases of Anderson, whose firm supplied industrial merchandise such as electrical, plumbing and building materials, and Frazier, who has extensive contacts among suppliers and purchasing agents, are pending.

Anderson and Muller declined to comment on the indictment on advice of their attorneys.

The August indictment accused Frazier of being the individual who “would solicit and receive requests for cash or personal items from co-conspirator purchasing agents of Point Mugu and Unocal.”

Frazier said he, too, would not comment on the indictment on the advice of his attorney.

But, in response to a reporter’s question, Frazier declared that the Navy at Point Mugu continued to do business with him even after he was indicted.

“They are still buying here,” Frazier said. “I can’t give you a reason why.”

Investigators appear satisfied that the Unocal phase of the inquiry is completed. Half a dozen or more Unocal employees who worked on five oil platforms off Ventura County have either been fired or have resigned.

It did not take investigators long to discover that the Unocal conspiracy also was being perpetrated by the Anderson firm in a similar manner at Point Mugu, according to investigators and the indictment.