Grand Jury Indicts 2 in Scam

A growing probe of kickbacks involving an Inland Empire defense contractor now reaches from a construction project at March Air Force Base to a paint job at Pearl Harbor and could send two San Bernardino County men to prison for more than 30 years, officials said Tuesday.

Jeffrey Bygum, 38, and Marion Francis “Skip” Ely III, 42, have surrendered on a federal indictment that accuses them of paying kickbacks to a former Defense Department contractor.

In connection with the payments, the two owners of Federal Contract Services of San Bernardino received two defense contracts in August 1997--one to revitalize an aircraft hangar at March Air Force Base in Riverside County and the second to paint a fuel tank at Pearl Harbor Naval Air Base in Hawaii, federal authorities said.

The indictment, returned by a federal grand jury in Los Angeles last week, charges Bygum and Ely with conspiracy to pay kickbacks, payment of kickbacks, conspiracy to tamper with a witness and witness tampering. Ely is also charged with filing a false income tax return for Federal Contract Services.

The men allegedly routed construction services to a former Defense Department contractor, Carl Douglas Fenstermacher of Dames & Moore Inc.

The men in late 1998 and early 1999 paid for $26,000 worth of construction work on Fenstermacher’s home in Fallbrook, said Assistant U.S. Atty. Monica Bachner. The indictment says that Bygum and Ely, both of Apple Valley, were trying to secure “favorable treatment” for their company.

Subsequently, Fenstermacher hired Federal Contract Services as a subcontractor to Dames & Moore on the two defense contracts.

Fenstermacher, 54, pleaded guilty in February to mail fraud and money laundering for allowing another subcontractor to submit $420,000 in fraudulent invoices to Dames & Moore. Fenstermacher is scheduled to be sentenced in late August.

Ely’s attorney, Kevin McDermott of Tustin, said the transaction involving Bygum, Ely and Fenstermacher may have been convoluted but was perfectly legal. He said Fenstermacher merely gave pieces of construction equipment to the men in exchange for work done on his home.

McDermott said that, even if the allegations are proved, the government’s “loss” would barely top $30,000. “This is an incredible amount of time and effort placed on 30 grand,” he said.

Attorneys representing Fenstermacher and Bygum did not return phone calls seeking comment.