Staff Reports
WC Monitor
2/20/2015
The highest level CH2M Hill Hanford Group official accused of aiding timecard fraud calls the civil fine he agreed to in exchange for having criminal charges dropped extortion. More than 20 months after Ryan Dodd, a former vice president for CH2M Hill, was charged with 34 felony counts, the Department of Justice dropped charges and accepted a civil fine of $44,000 in December 2014. Dodd denied knowledge of timecard fraud. He believed reasonable management procedures were in place to deter and detect such fraud, according to the settlement agreement.
With the case settled, Dodd now is free to talk about it. Agreeing to pay the fine put an end to an ordeal that had the potential to continue to consume his and his family’s lives, he said. His criminal trial was scheduled for this month, and prosecutors threatened to file civil lawsuits after the criminal cases were done, he said. He was accused of participating in a conspiracy to pay workers with federal tax dollars for hours they were not at work — that he knew or should have known that hourly workers were not putting in the hours they claimed on their timecards. Dodd found “not one email, not one piece of evidence” to show he conspired in the fraud, he said. Nor did he see convincing evidence to implicate the other managers and supervisors indicted with him.
DOJ contends fraud under CH2M Hill Hanford Group, the former Hanford tank farm contractor, was widespread and widely known. Overtime was called out in eight-hour shifts to induce workers to volunteer, but the work would often be completed much sooner. Workers would go home but claim the full eight hours, according to court documents. Dodd concedes there were bad apples and DOJ has convincing evidence that some hourly workers cheated. But he said it was not the widespread conspiracy that CH2M Hill admitted to in an agreement in February 2013. The company paid $18.5 million to the federal government to settle civil and criminal allegations. DOJ declined to discuss the case, but said in the settlement agreement it believed Dodd knew the U.S. government was being asked to pay for overtime that was not worked and that the alleged conspiracy helped him to win corporate bonuses.
Dodd Formerly Headed West Valley Cleanup
Dodd was interviewed by investigators in 2010, two years after the CH2M Hill contract to manage the tank farms expired “I did not really have anything to say,” he said. “I thought that was the end of it.” When CH2M Hill won the contract in 2011 to decommission the West Valley Demonstration Project, he was named to head the project. But just weeks after CH2M Hill took over the project, Dodd learned the DOJ was going to serve him with a letter related to the timecard fraud investigation, he said. He took time off from the West Valley project, expecting to return to work in a few months.
Instead, he and his wife returned to the house they had kept in the Tri-Cities three months later. CH2M Hill and Dodd agreed it was best for the West Valley project for him to leave, believing he would become a distraction or that negative publicity would reflect on the project and its workers, he said. He also had come to realize there was no end in sight to his legal troubles, and he was having trouble putting together a defense in New York for a case on the other side of the nation. He did continue to do some work for CH2M Hill in Richland for a time. He was indicted in March 2013 along with nine other CH2M Hill Hanford Group upper managers and supervisors. Two would reach deals with prosecutors and plead guilty. A jury found the first group of four to go to trial innocent on all counts in October 2014. Shortly after the jury verdict, plea deals were struck for the remaining defendants, dropping all criminal charges in exchange for civil fines of $5,500 to $44,000 each.
DOJ Looked at Past Internal Audits
DOJ apparently was relying on two lines of evidence to connect Dodd to the timecard fraud, based on court documents filed in the case. The first was a CH2M Hill internal audit in 2004, looking for evidence of significant overtime timecard fraud and the controls in place to prevent it. The audit did not find evidence of significant abuse or any questionable costs, based on a small sample of workers. But it said controls were weak and raised suspicions that a few workers in the small sample observed as part of the investigation may have left work while they were still on the clock. It also said Dodd was one of about 30 people sent a copy of the audit report in 2004, including officials at CH2M Hill, the Department of Energy and the DOE Office of Inspector General.
A committee was formed to increase controls over timecards, but little came of the effort. Dodd, one of several vice presidents, was not named to the committee. Dodd’s attorney, Kevin Curtis, said there could be 25 audits a year by CH2M Hill, DOE and other agencies. Vice presidents like Dodd, or their assistants who sorted through their email, might see notices weekly on audits that were upcoming, finishing or had exit interviews scheduled. “Audits were commonplace,” Curtis said.
Friendships, Phone Calls, Came Under Scrutiny
DOJ also appeared prepared to tie Dodd to the alleged conspiracy through his friendships with other indicted officials and phone calls. The key incident in the case happened during a 2008 bridal shower for one of Dodd’s daughters at the family’s Richland home. He did not attend the all-female gathering. Glenda Davis, a CH2M Hill supervisor who would be indicted and eventually plead guilty, provided the cake for the wedding reception and was at the shower with samples for the guests. Also there was Leslie Dodd’s good friend Stephanie Livesey, another CH2M Hill supervisor who would be indicted and plead not guilty. During the party, Davis received an anonymous text that some of her employees had left work mid-shift. She left the shower to investigate. A federal investigation was launched after that anonymous text. The cars of some tank farm workers were tracked with global positioning systems to show they were leaving Hanford and driving home during hours they claimed to be working.
At the time, Dodd was responsible for operations at the Hanford single-shell tanks. None of those workers tracked with GPS, nor Davis, were assigned to the work he managed at a high level, he said. However, at other times some of the workers were in his organization at CH2M Hill, but were five or six levels below him, rather than under his direct supervision. Investigators tied Dodd to the anonymous text incident through phone records. They had records of texts between Davis and Livesey and also between Livesey and one of the Dodd’s phones after the incident, although the content of the texts was not saved. Prosecutors maintained that Livesey was texting to a corporate phone assigned to Dodd. But Livesey’s attorney, Bob Thompson, said Livesey’s own list of phone numbers seized by investigators shows the phone was the one she routinely used to chat with Leslie Dodd. Davis also allegedly discussed the incident with Ryan Dodd and he told her she had handled it correctly, including driving back to Hanford to see if employees were working and telling them to fill out their timecards accurately.
Employees returned to claiming eight hours pay for shorter shifts after the incident, DOJ said in court documents. Dodd says it is possible Davis told him about the incident and how she handled it. But it would have been a casual conversation since she was not under his chain of command and he does not remember it. The government argued that Dodd knew or should have known that fraud was occurring and had a duty to report it. But by that logic, so should hundreds of others, including DOE officials, who were aware of the same audit and other information, Curtis said.
Prosecutors Charge CH2M Hill Needed to Incentivize Overtime
Prosecutors said CH2M Hill needed to entice employees to work overtime, which was voluntary under a union agreement, to complete projects tied to incentive payments. But many workers would not accept overtime shifts unless they were called out in eight-hour blocks, according to court documents. For CH2M Hill to get the work done, earning incentive pay and bonuses for its employees, officials were willing to accept the practice and let DOE cover the costs, prosecutors said. Dodd said that alleged motive makes no sense. Much of the documented timecard fraud was for projects involving routine checks of radiation levels, on which employees often worked without supervision and were taken on their word for how many hours they worked. Studies had been done to show how long work should take, with enough tasks assigned to last eight hours, Curtis said.
CH2M Hill had no pay incentives tied to routine work, Dodd said. The incentives were largely for work DOE was required to complete to meet milestones. More money spent on routine work meant that less money was available to do the work that could earn CH2M Hill incentive pay, he said. Dodd was tied to the case early on, with the CH2M Hill settlement agreement calling him out as an upper manager who had knowledge of timecard fraud and ratified it in connection with the incident of Davis’ anonymous text during the bridal shower. CH2M Hill’s payment of the $18.5 million amounted to a business decision, Thompson said. It’s a lot of money until compared to the value of the company’s Hanford work. After holding the tank farm contract until it expired in 2008, it won a $4.5 billion contract for central Hanford cleanup. The settlement would have ensured that CH2M Hill keep the work it had at Hanford, he said.
Case Has 11 Guilty Pleas So Far
Before the indictments against the 10 top managers and supervisors, nine radiation control technicians pleaded guilty to timecard fraud. The total cases with guilty pleas is now 11. Dodd believes some of them were innocent. “I have no faith they weren’t coerced,” he said. “I saw the tactics that were used.” The pressure started with dozens of indictments filed against some defendants, although it would be unlikely that many would go forward. Some charges against Dodd were dropped as the case progressed. There also was a sense that the case would go on indefinitely, the Dodds said. Not only was a possible civil case looming no matter the outcome of the criminal trial, but the prosecution had successfully argued that the statute of limitations was suspended for cases accusing monetary fraud against the federal government because the nation was at war in Afghanistan.
Case ‘Feels Like a Big Black Mark’ on Hanford Work
Dodd remains disappointed that the case “feels like a big black mark” on the accomplishments and hard work of employees at the Hanford tank farm under CH2M Hill from 1999 to 2008. Liquids were pumped from Hanford’s 149 single shell tanks and solids removed from seven of them. “The accusations made by the Department of Justice really point to the entire company and the entire Hanford site,” he said. “For the hundreds of people who show up every day and work really hard at the Hanford Site to achieve important cleanup goals, it is not fair to be painted this way.”
Because Dodd was a corporate officer, he was indemnified and CH2M Hill paid his legal fees, including the fine, but did not pay the legal expenses or fines of other defendants, Dodd said. He went back to work Jan. 12 but a little more than a week later CH2M Hill laid him off. He’s looking for work now. “I’m very anxious to get back to work and to be contributing to the success of a new project,” he said.
