Man Pleads Guilty to Naval Base Fraud : Point Mugu: A key government witness admits participating in a scheme that also targeted Unocal Corp. between 1984 and 1989. He and two others were charged. More indictments are expected.
Bill M. Frazier of Camarillo, a key witness in the government’s investigation of purchasing practices at Point Mugu Naval Air Station, pleaded guilty to fraud in federal court Monday.
Frazier, 45, appeared before U.S. District Judge William M. Byrne in Los Angeles and admitted participating in a conspiracy to defraud both the Navy base, home of the Pacific Missile Test Center, and Unocal Corp. between 1984 and 1989.
He was indicted along with two others in August on conspiracy charges in connection with the scheme. In addition, a document called an information--the legal equivalent of an indictment--was filed Monday, focusing entirely on the Point Mugu fraud investigation.
Frazier pleaded guilty to one count each of conspiracy, mail fraud and tax fraud.
According to court documents, Frazier solicited kickbacks from base employees, and workers sought cash and gratuities from him for doing business there.
In one instance, according to the documents, a Point Mugu employee took a $1,000 bribe from Frazier in exchange for creating a false purchasing agreement with a phony business.
Frazier submitted 158 “materially false and fraudulent” invoices to the Navy base, “demanding payment for nonexistent industrial merchandise” between October, 1986, and June, 1989, the documents said.
Assistant U.S. Atty. Patricia A. Beaman, who is coordinating the Point Mugu investigation, said Frazier agreed to cooperate with the government in its fraud investigation at the base.
“We have a good case as far as fraud at Point Mugu is concerned, and we expect it will improve with Frazier’s cooperation,” Beaman said.
More people are expected to be indicted by next spring in connection with the investigation, she said.
The Navy base may have been bilked of up to $3 million, Beaman estimated.
None of the fraud allegations involve weapons or military hardware used at the base. The investigation centers on Navy orders for industrial merchandise placed by base purchasing agents and others from suppliers in Ventura County and nearby counties.
In a typical transaction, the base pays for merchandise--such as building or plumbing materials--when a supplier presents an invoice. The invoice is then checked by base personnel to make sure the merchandise was ordered and received by the Navy.
At the heart of the scheme, according to the indictment, was the fabrication of “bogus orders of merchandise that was never delivered” to the Navy base and Unocal.
About six Unocal employees who worked on oil platforms off Ventura County were fired or resigned in the wake of the government investigation.
When all of the damage is added up, Beaman said, Frazier alone may have defrauded the Navy base of $500,000 and Unocal of about $900,000.
The mail fraud charge resulted from checks mailed to Frazier from the Navy for bogus merchandise. The tax fraud charges resulted from Frazier’s not reporting his illegal income.
Frazier faces a maximum sentence of 13 years in prison, $750,000 in fines, three years of court-ordered supervision and full restitution of funds lost by the base and the oil company.
Frazier said he told an associate in the fraud scheme, Martin S. Anderson, that individuals with whom he was dealing at Point Mugu and Unocal “wanted money for doing business. We supplied the money and gratuities and falsified the invoices.”
Anderson, 44, who now lives in Ohio, was president of the now-defunct Anderson Industrial Supply of Oxnard. He pleaded guilty on Oct. 17 to conspiracy to participate in the fraud and not fully reporting income taxes.
A third defendant, Erwin H. Muller, 49, of Camarillo, also pleaded guilty to the same counts earlier this month.
All three defendants, who are expected to be sentenced in January, are free on bail.
Like Frazier, Muller has agreed to cooperate with the government.
Frazier, who owns Camarillo Tool and Supply Co., a legitimate firm, was instrumental in creating two other businesses in Ventura County that were virtually bogus, according to the government document.
The businesses, called Bray Plumbing and Bry-son Supply, were operated for purposes of defrauding the Navy base between August, 1988, and May, 1989, the document said.
“In exchange for the cash and gratuities, Point Mugu employees would cause orders for both legitimate and nonexistent merchandise to be placed by Point Mugu buyers with Camarillo Tool, Bray Plumbing and Bry-son Supply,” the document said. The fraud was camouflaged through the creation of false invoices, it said.
Of the three defendants, Beaman said, Frazier “is the most culpable because of his role in paying the kickbacks and doing the paperwork. He’s got to know who he was dealing with.”
