Timecard Fraud Trial Set to Begin this Month

Regular readers of this blog will recall our coverage of the alleged timecard fraud that occurred at DOE's nuclear cleanup site in Washington State. You can read here and here and here for a refresher. The local newspaper for that area reported this week that the first five defendants are scheduled to go to trial beginning September 29th. We've been watching this story with keen interest because its the first time, to our knowledge, that employees are being held personally accountable, in court, for participating in timecard fraud. Usually contractors that get caught get a slap on the wrist and maybe the employee is terminated or suspended for a period. The contractors promises to improve its internal controls and after a short period, life returns to normal.

In this case, the contractor has already repaid $18.5 million and several employees have plead guilty and were fined. Other participants are going to trial. The crux of this case involved the payment of overtime for hours not worked. Employees (with the support of their union) refused to work overtime unless they were guaranteed eight hours. In many cases, the work requiring overtime did not take eight hours so the employees were allowed to go home after their tasks were completed, yet they were paid eight hours of overtime.

The first five going to trial were supervisors who did not review and approve timecards but were responsible for getting work completed. These supervisors would go out and solicit volunteers for overtime even though they knew that workers would only volunteer if overtime was offered in eight hour shifts. They knew that the work to be performed would not take eight hours and they told the workers that they could go home after the work was completed and they knew that those employees would be paid for eight hours of work. In addition, they claimed eight hours of overtime for themselves. One of these defendants was paid $64 thousand in overtime in one year. Others earned between $12 and $20 thousand in overtime.

The prosecution's case will be supported by the testimony of nine subordinate employees who have already plead guilty to timecard fraud and punished, plus testimony from other employees as well as timekeeping records.

Timekeeping went wrong on so many levels. There was the contractor with a big cost-type contract with little or no incentive to control costs. There were the employees with their powerful union that pushed its weight around - threatening production. There were employees, supervisors, and managers who benefited monetarily from the scheme. There was a lack of Government oversight that allowed the scheme to fester for such a long period.

For contractors and contractor employees alike, this should be a significant wake-up call that the Government will pursue timecard fraud as far as necessary.