U.S. DISTRICT ATTORNEY'S OFFICE NEWS RELEASE - Michael C. Ormsby, United States Attorney for the Eastern District of Washington announced today that Paul F. Kempf, age 52, of West Richland, Washington, was sentenced to 46 months in prison for utilizing his position as a manager at Fluor Hanford Inc. (Fluor), and at CH2M Hill Hanford Group Inc. (CH2M Hill), to defraud the U.S. Department of Energy with his government backed purchase card (P-Card). Paul F. Kempf will be under court supervision for three years after he is released from prison. In addition, he was ordered to pay $487,000 in restitution to the government.
On September 20, 2011, Paul F. Kempf pleaded guilty to two counts of Wire Fraud for perpetrating a scheme in which he utilized his government backed P-Card to illegally funnel money to his wife's company, AMG Marketing. Paul F. Kempf was a Laboratory Operations Manager and P-Card holder, first for Fluor and then for CH2M Hill, between September of 2000 and September of 2005. During that time period Paul F. Kempf utilized his position to create "ghost purchases" of laboratory equipment from his wife's company AMG Marketing which he paid for with his government backed P-Card. Although no laboratory equipment was ever provided to Fluor or CH2M Hill, as a result of these purchases AMG Marketing was paid over $487,000. The U.S. Department of Energy ultimately bore the full loss caused by Paul F. Kempf's fraud scheme. Paul F. Kempf and his wife, Anita M. Gust, utilized the money they obtained from the fraud for their own personal expenses including spending $50,000 renovating a 1966 Chevrolet Nova, $63,000 on auto and boat related expenses, and $17,000 in home improvements.
Anita M. Gust pleaded guilty last year to two counts of Wire Fraud for her role in the fraud and was sentenced to one year and a day. Additionally, Fluor entered into a civil settlement agreement with the United States on June 17, 2011, paying $4 million to the government in part for a release of its civil liability related to Paul F. Kempf's fraud scheme.
Similarly, on September 22, 2011, CH2M Hill entered into a civil settlement agreement with the United States paying $1.5 million in part for a release of its civil liability related to Paul F. Kempf's fraud scheme.
"Employees of government contractors who abuse their positions of trust to defraud the government must be held accountable," said Michael C. Ormsby, United States Attorney for the Eastern District of Washington. "This is especially true where the offending employee is a manager or supervisor of others."
This investigation was conducted by the U.S. Department of Energy Office of Inspector General. The case was prosecuted by K. Jill Bolton, Assistant U.S. Attorney for the Eastern District of Washington.