Fluor Settles Fraud Claim

Fluor Corp. agreed to pay $8.2 million to settle a whistle-blower lawsuit contending the huge engineering company billed the federal government for overhead costs on private-sector work, prosecutors said Monday.

The Aliso Viejo company denied any wrongdoing and said it settled to avoid costly litigation in the complex case.

Former Fluor accountant Patrick C. Hoefer filed the suit in 1997; the U.S. attorney’s office took it over for prosecution in 1999. Hoefer will receive $1.8 million of the settlement--about 22%--and Fluor will pay an additional $300,000 for his attorneys’ fees. Federal law allows employees who accuse their companies of cheating the government to receive as much as 25% of the amount recovered if federal prosecutors join the case.

“There’s a possibility the government might never have discovered the fraud had it not been for Mr. Hoefer,” said Assistant U.S. Atty. Gary Plessman, chief of the civil fraud section in Los Angeles.

Fluor bills the federal government hundreds of millions of dollars each year, much of it related to clean-ups at former nuclear weapons production sites at Fernald, Ohio, and Hanford, Wash.

Hoefer, who oversaw government financial compliance for Fluor unit Fluor Daniel, claimed the company knowingly submitted false expense certifications, proposals and invoices during fiscal years 1995 and 1996.

His suit alleged that when he brought the matter to the company’s attention, it changed its accounting for fiscal 1997 but not the previous two years. Fearing he would be blamed, he filed the suit, according to his complaint.

Hoefer, of Newport Beach, declined comment Monday. He has settled a wrongful-termination lawsuit against Fluor.

The dispute involved a now-closed division that searched for new technologies. Hoefer’s suit contended the division’s overhead should have been spread equally across all of Fluor’s businesses--more than 90% of which were commercial--but instead was billed almost entirely to the government.

Initially filed under seal, the suit said the overbillings totaled $9.3 million.

“This has always been a difference in interpretation,” Fluor spokesman Keith Karpe said. “And we still adamantly disagree with the way they interpret it.”

Fluor shares closed at $51.98, down 42 cents on the Big Board.