NASA Paid Millions to Fraudulent Contractor
NASA unwittingly paid for a subcontractor’s expenses in making a horror movie, operating a pizza franchise, vacationing around the world and meeting mortgage payments on two family homes and a ski lodge, according to a lawsuit filed in Los Angeles federal court.
The civil complaint accuses Rockwell International, once a prime contractor for NASA’s space shuttle and space station, of knowingly concealing the fraud by its now-defunct subcontractor, Omniplan, of Houston.
Omniplan’s owner, Ralph E. Montijo Jr., 69, pleaded guilty to about 180 criminal counts in 1996 and was sentenced to two years in federal prison. He was ordered to pay nearly $12 million in fines and restitution as part of a plea agreement.
The suit filed Tuesday by the Justice Department seeks unspecified damages and penalties from Rockwell and its merged successor, Boeing North American, based in Seal Beach.
The suit charges that Rockwell knew Montijo was using Omniplan’s corporate accounts to pay for personal expenses when it approved his reimbursement by the National Aeronautics and Space Administration.
Rockwell’s $4-billion NASA contract included a $350-million bonus based in part on how well it monitored its subcontractors. The aerospace giant vouched that Omniplan’s cost control procedures and management were excellent.
Between 1986 and 1993, the lawsuit said, Montijo:
* Bought three commercial buildings in the Houston area and rented them to his own company, Omniplan, at inflated rates, passing on the costs to the government. He also inflated leasing costs for cars, telephones, graphic reproduction equipment and cameras. Losses to the government were said to exceed $7 million.
* Billed for mortgage payments and maintenance costs on two homes in Houston and Tucson, Ariz., and a ski lodge in Mammoth Mountain, Calif. Montijo agreed to forfeit those properties when he pleaded guilty.
* Charged for trips to Mexico, India, Nepal, Switzerland, Holland, Grand Cayman Island, Singapore, Honduras, Argentina, England and Spain. Other personal expenses unwittingly paid for by NASA included a diamond bracelet, cameras, tires, luggage, membership fees in travel clubs and life insurance premiums.
* Embezzled money from Omniplan’s health benefits and pension plan, using some of it to buy several Papa Primo’s pizza franchises in Texas and Arizona. Rockwell should have insisted that an outside trustee run the plan, instead of Montijo, according to the lawsuit.
* Operated one pizza franchise out of a building Omniplan rented for its work on the NASA contract. The government wound up paying for the wages of employees who took telephone orders and kept records at his various pizza franchises.
* Charged NASA for expenses on several other business ventures, including the production of a feature-length horror movie, which was not identified in the lawsuit; a candy business and an Amway distributorship.
* Installed his wife as the figurehead president of Omniplan so that the company could qualify for preferential selection by Rockwell as a female-run business.
According to the lawsuit, Rockwell had evidence as early as 1986 that Omniplan was engaged in financial irregularities. In 1989, a Rockwell auditor questioned more than $1.4 million in Omniplan’s charges, but instead of ordering a full-scale investigation, the company instructed the auditor to revise his report, the Justice Department complaint said.
Boeing issued a statement saying it had cooperated in the investigation and believed it was not liable for the actions of the subcontractor. Calls made after business hours to Rockwell headquarters in Milwaukee and to United Space Alliance in Houston were not answered.
