CB&I AREVA MOX Services and a former subcontractor say they should not have to pay the $19.2 million the United States is seeking in a fraud lawsuit. In separate documents filed over the last week in federal court, the companies said they had no knowledge of alleged schemes to defraud the government during construction of the now-canceled plutonium recycling facility at the Savannah River Site in South Carolina.
In its April 22 filing, MOX Services asked U.S. District Judge Terry Wooten to dismiss the case, adding that the Justice Department is trying to hold the company accountable for the actions of a subcontractor.
Separately, Wise Services said in its April 19 filing that the company cannot be held responsible for the actions of a “rogue employee,” Phillip Thompson, who admitted in 2017 to defrauding the government in a separate Justice Department prosecution. Thompson is currently serving a 23-month prison sentence.
The Justice Department sued Wise and MOX Services on Feb. 14, claiming the two companies worked together to carry out multiple scams that resulted in $6.4 million in fraudulent claims from 2008 to 2016 to the Department of Energy’s National Nuclear Security Administration.
The lawsuit states that these claims were made while MOX Services built the Mixed Oxide Fuel Fabrication Facility (MFFF), which was supposed to convert weapon-usable plutonium into commercial nuclear fuel. The Energy Department terminated the project in October 2018.
Ohio-based subcontractor Wise provided construction labor services to MOX Services. The company allegedly submitted fraudulent claims for nonexistent labor services that were mixed in with real invoices, which MOX Services then knowingly forwarded to the NNSA. In return, the Justice Department said, Thompson kicked back millions of dollars to MOX Services personnel through liquid cash, as well as perks such as NASCAR and Masters Tournament golf tickets, guns and hunting equipment, and gift cards.
The $6.4 million in alleged claims is separate from the kickbacks. The lawsuit does not include a total dollar amount for kickbacks.
Both companies say they are being wrongly accused based on their affiliations with Thompson, a former senior representative at Wise who pleaded guilty last year to defrauding the federal government to the tune of $4 million while supplying construction goods to MOX through a company called AV Security. Another defendant, Aaron Vennefron, also pleaded guilty in that case and was sentenced to 366 days in prison.
“The reality of the matter is that MOX Services, like the United States, had no knowledge of and was not part of Mr. Thompson’s alleged scheme,” MOX Services’ legal team wrote. “When MOX Services’ internal controls detected Mr. Thompson’s scheme in December of 2014, MOX Services immediately rejected the invoices, began verifying whether materials shown on the invoices had actually been delivered, and stripped Wise of its procurement authority thus ending the scheme.”
Wise followed suit, saying the company as a whole was not in on the scheme it pegged to Thompson. Because the company had no idea what Thompson was up to, Wise wrote, it had no reason to remove him from his position or to question if he was involved in criminal activity.
MOX Services also distanced itself from the subcontractor, saying Wise had a responsibility to provide accurate invoices that would ultimately be forwarded to the Energy Department for payment. “The United States not only recognizes that Wise had the contractual duty to ensure the receipt and, in some instances competitive pricing, of the materials it invoiced to MOX Services, but also the United States recognizes that Wise breached that duty to MOX Services,” according to the MOX Services’ filing.
MOX Services and Wise Services have each been charged with two counts of committing fraud against the federal government, as well as a civil penalty by violating the Anti-Kickback Act. Both were also charged with one count of payment by mistake. MOX Services was separately charged with breach of contract, and Wise with unjust enrichment.
The U.S. Justice Department is seeking $19.2 million, or three times the $6.4 million allegedly stolen via false claims. The department is also seeking up to $22,363 for each false claim violation, and the same amount for the Anti-Kickback Act violation. The federal agency is also seeking financial damages accrued through the breach of contract and through the payment by mistake claim, both of which would be determined during the trial.
