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U.S. Will Prosecute Fluor Daniel Complaint

Construction: A former company employee has accused the firm of overbilling the government in 1995 and 1996.


The U.S. attorney's office said Thursday it will prosecute a whistle-blower lawsuit accusing Aliso Viejo-based Fluor Daniel Inc. of overbilling the government for $9.3 million in contract overhead expenses.

The civil lawsuit was filed under seal in 1997 by a former Fluor Daniel accountant. It was unsealed last week by a judge in U.S. District Court in Santa Ana.

Flour Daniel is a subsidiary of Fluor Corp., the largest U.S. engineering and construction company.

In the suit, Patrick C. Hoefer, who was in charge of government financial compliance for Fluor Daniel, claims the company knowingly submitted false expense certifications, proposals and invoices during the 1995 and 1996 fiscal years.

The company padded overhead costs that were incurred in finding and evaluating new technologies, the suit charges. Most of the costs came from work on civilian contracts, which made up 95% of Fluor Daniel's business, the suit says.

Fluor executives expressed dismay at the government's decision to intercede.

"We adamantly deny any wrongdoing and are disappointed that the Justice Department has elected to intervene in the matter," Fluor spokesman Rick Maslin said. "After a lot of discussion and negotiations with the department, the company still believes this is simply a disagreement among professionals."

Maslin said the company consulted with an outside advisor, who concluded that the company's billing practices were legal and proper.

Under the federal False Claims Act, Fluor could be assessed damages of as much as three times the amount of the fraud if it is found liable. The whistle-blower can receive 15% to 30% of any court award.

Hoefer's attorney, Dean Francis Pace, said Thursday that his client complained to the company's management about the alleged overbilling.

Hoefer persuaded them to correct the overhead claims for 1997, but they refused to do so for 1995 and 1996, Pace said.

"He was afraid he would be blamed," Pace said. "So he came to me and we filed a [whistle-blower] action."

Hoefer was suspended from his job shortly after the suit was filed and subsequently was fired, Pace said. Hoefer has filed separate wrongful discharge lawsuits in state and federal courts.

Under federal procedures, whistle-blower lawsuits are sealed until federal prosecutors decide whether to intervene on behalf of the complaining party. The U.S. attorney's office in Los Angeles took that step Thursday.

"We will be filing a superseding complaint within a couple of weeks, and that complaint will more thoroughly flesh out our allegations," Assistant U.S. Atty. Gary Plessman said.

Bloomberg News contributed to this report.

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