Suit Seeks Money Lost in Fraud at Naval Base : Point Mugu: The civil action charges that four people and a Ventura firm were paid by the military for phantom purchases.

A federal investigation into purchasing fraud at Point Mugu Naval Air Weapons Station has triggered a civil lawsuit aimed at recovering hundreds of thousands of dollars stolen from the government.

The lawsuit charges that four individuals and a now-defunct Ventura firm were paid by the Navy for phantom merchandise, according to government papers filed Tuesday in U.S. District Court in Los Angeles.

Three of the defendants, who were indicted last August, have pleaded guilty to criminal charges of conspiring to defraud the big weapons testing facility between 1984 and 1989.

Although government investigators initially estimated that the fraud cost the government upward of $3 million, they have since scaled back the figure to a little under $1 million.

Assistant U.S. Atty. Patricia A. Beaman, who is coordinating a continuing criminal investigation, said Wednesday, “We expect additional indictments by this summer.”

She declined to elaborate.

The next round of indictments is expected to include at least two other Ventura County companies that supplied the Navy base and possibly some of the base’s civilian employees who made purchasing decisions, sources said.

A separate government inquiry is continuing into whether any Navy officers at the base were involved in wrongdoing in their purchasing practices, the sources added.

“It was just so blatant,” said a government investigator.

“It was going on for 20 years back into the ‘70s” and continued until about three years ago, said the source, who requested anonymity.

Point Mugu officials have declined to comment on the investigation.

None of the fraud allegations--criminal or civil--involve military hardware used at the base.

Instead, the investigation has focused on hundreds of thousands of dollars in purchases ranging from plumbing supplies to building material.

The three people who have pleaded guilty and who are named in the civil lawsuit are:

* Bill M. Frazier, 46, of Camarillo, who owned a supply firm that did business with the Navy facility for a number of years and later worked for another supplier. He pleaded guilty last October to one count each of conspiracy, mail fraud and tax fraud.

* Martin S. Anderson, 44, formerly of Ventura, who now resides in Castalia, Ohio. Anderson pleaded guilty to conspiracy and tax fraud.

* Erwin H. Muller, 49, of Ventura, a businessman in Camarillo. Muller pleaded guilty to conspiracy and tax fraud.

The three are scheduled to be sentenced Monday, but the hearing is expected to be postponed.

Also charged in the civil lawsuit was Anderson’s sister, Carol Anderson-Ito, 49, of Ventura, and Anderson Industrial Supply Inc. of Ventura. Anderson-Ito, who owns an acupuncture business in Ventura, was not charged with any criminal wrongdoing.

Anderson Industrial Supply, of which Martin S. Anderson was president and in which his sister had an interest, closed its doors a few years ago.

From 1984 through 1986, Anderson Industrial Supply, which employed Frazier as a salesman primarily responsible for Point Mugu, had sales to the base in excess of $1 million, according to the lawsuit.

The lawsuit alleges that the defendants “submitted at least 250 false and fraudulent invoices to Point Mugu for payment of merchandise which was never delivered and which never even existed,” said Assistant U.S. Atty. Kathleen Nicolaides.

Nicolaides said the six-count lawsuit calls for civil penalties up to $10,000 for each violation, plus unspecified additional damages.

The civil action was brought under the federal False Claims Act, enacted during the Civil War, which allows the government to claim individual and company assets in an effort to collect damages.

Nicolaides said the statute has been used frequently in recent years to collect damages in defense fraud cases.

As for whether the defendants have sufficient assets to cover any damage awards, a government source said: “I think a substantial amount of it can be recovered.”

Both the criminal and civil allegations are based on work by the Naval Investigative Service, the criminal investigation division of the Internal Revenue Service and the Postal Inspection Service.

Government investigators have characterized Frazier as the key perpetrator of the fraud scheme.

“Defendant Frazier would prepare false and fraudulent Anderson Industrial Supply invoices and shipping documents purporting to show that fictitious industrial merchandise had been provided by AIS to Point Mugu,” the civil lawsuit alleged.

In turn, according to the government’s suit, some Point Mugu employees would sign shipping orders “falsely representing that the non-existent and non-delivered merchandise had been received” by the Navy base.

So far, more than 250 false invoices have been uncovered by government investigators, but there could be many more, the lawsuit says.

Anderson’s attorney, Alan Rubin of Los Angeles, called the new civil lawsuit “excessive and unjustified.”

Anderson, he said, pleaded guilty to criminal charges.

“Whatever he did, he’ll be punished,” Rubin said.

“It’s not as if he’s a millionaire and has a ton of money to pay back.”

Attorneys for Frazier and Muller could not be reached.

Anderson-Ito did not return a telephone call seeking comment.