5 Are Indicted in Scheme to Bilk Navy Out of $1 Million

A shipping company’s sinking fortunes led employees to defraud the Navy out of about $1 million in connection with the operation of 10 oceanographic vessels, officials say.

Five employees at Rockville, Md.-based MSO were indicted on federal charges accusing them of obtaining reimbursement for work that was never done and billing the government for $3 million in goods the company had not paid for.

“The total loss is upwards of a million dollars,” said Scott E. Jacobs, special agent in charge of the Perth Amboy, N.J., office of the Naval Criminal Investigative Service.

“We are still computing the total dollar loss,” he said Wednesday.

In March, a former MSO ship manager, Michael Zaremba, pleaded guilty to charges that he and others falsified records. He now is cooperating with the government, prosecutors said.

MSO won a $40-million contract in April, 1989, to provide a crew, equipment and supplies to operate 10 Navy oceanographic ships. In 1989 and 1990, the company was in “severe financial distress,” prompting the alleged fraud outlined in a 31-count indictment.