2 Ex-UCLA Officials Indicted in Fraud Case : Crime: Former radiology administrators allegedly embezzled $600,000 through false billings for work that was never performed.

Two former UCLA administrators were indicted Wednesday for allegedly embezzling more than $600,000 by duping the university into paying two employment agencies for work that was never performed. A federal grand jury indicted James G. Campbell, the former administrative officer of UCLA’s radiology department, and Benny Chow, its former chief financial officer, on 59 counts, including conspiracy, fraud and money laundering.

The indictment alleges that Campbell established the two employment agencies--Radiology Registry Agency Inc. and 21st Services Corp.--and, with Chow, knowingly approved fraudulent invoices billing UCLA for work that was not done.

Then, to try to avoid the appearance of personal gain, Campbell allegedly directed the employment agencies to divert some of that money to his relatives, friends and others.

For example, the indictment alleges that Radiology Registry Agency Inc. used more than $220,000 stolen from UCLA to pay construction workers who built a 2,000-square-foot extension on Campbell’s Lakewood home.

And Chow was allegedly paid about $500 a month for three years by the same agency, despite the fact that Chow did not perform any services, the indictment said.

If convicted on all charges, Campbell faces a maximum sentence of 635 years in prison and a fine of $20 million. Chow faces a maximum sentence of 165 years in prison and a fine of $8.25 million.

UCLA officials called in federal authorities to investigate in 1993, after an employee became suspicious about billing irregularities and notified her superiors. Campbell and Chow were dismissed last year.

The indictments “should send a very strong message to officials within the University of California system specifically and universities in general that the federal government will not tolerate acts of embezzlement of state or federal funds,” Assistant U.S. Atty. Nathan J. Hochman said.

The investigation leading to the indictments took two years and involved agents from the Department of Veterans Affairs, the Office of the Inspector General and the FBI, Hochman said.

Federal prosecutors filed separate charges Wednesday against Campbell’s brother, Bruce, and Stephen P. Walta, a corporate agent of Radiology Registry Agency Inc., over their alleged participation in the scheme. They each face a maximum sentence of 10 years in prison, a fine of $500,000 and three years probation.

Walta, James Campbell and Bruce Campbell could not be reached Wednesday. Chow’s lawyer, Brian Hennigan, said, “I am confident that when all the facts are disclosed to a jury that Benny will be found not guilty with regard to the charges contained in the indictment.”

Last month, an internal UCLA audit found that the school had paid $6 million to Radiology Registry Agency Inc. and 21st Services Corp. for more than three years. The employment agencies provided temporary help to the radiological services department, which performs X-rays, bone scans and magnetic resonance imaging for the UCLA Medical Center and--under a federal contract--the West Los Angeles Veterans Administration Medical Center.

The department, as is commonplace at hospitals, hires temporary employees through outside agencies to help out during peak periods or when regular employees are vacationing or sick.

Among other things, the UCLA audit found that the university was billed for specialized work supposedly completed by seven teen-agers, including a 13-year-old who was listed on pay sheets as a $26-an-hour radiological technical assistant.

But neither the audit nor the indictment revealed exactly how much money had been stolen from UCLA.

As laid out in the indictment, the diversion of funds to Bruce Campbell provides a glimpse into how the scheme allegedly worked. Bruce Campbell--a dentist, real estate agent and general contractor--was not licensed to practice medicine in California. Nevertheless, Radiology Registry Agency Inc. billed UCLA more than $295,600 over two years for physician services that he supposedly performed.

In fact, according to separate charges filed Wednesday, Bruce Campbell was performing a very different service: supervising the construction of a 2,000-square-foot extension on his brother’s house--a project that the indictment alleges was largely paid for by disbursements from UCLA through Radiology Registry Agency Inc.

The indictment also alleges that one of the employment agencies funneled thousands of dollars in illicit payments to CRE of Southern California, a limited partnership co-owned by James Campbell and Walta. According to Hochman, CRE used that money to buy real estate.

The billing irregularities first came to light in 1993 when, according to UCLA policy, the responsibility for approving contracts with temporary employment agencies was switched from one UCLA purchasing agent to another. The new agent quickly became suspicious and alerted her superiors, who in turn alerted federal authorities.

“UCLA should be commended for alerting us to this scheme,” Hochman said.