Firm Building Civic Arts Plaza Is Accused of Double-Billing : Investigation: County officials and FBI agents are looking into fraud allegations against the company managing construction of the major Thousand Oaks project.

Ventura County prosecutors and the FBI have launched a statewide fraud investigation triggered by allegations of double-billing by the company supervising construction of the new $64-million Civic Arts Plaza in Thousand Oaks, The Times has learned.

Sources said Thursday that the investigation focuses on systematic, fraudulent billing by Lehrer McGovern Bovis Inc., an international construction management firm with projects throughout California.

The New York-based firm, which has supervised construction of such massive projects as EuroDisney in Paris and renovation of the Statue of Liberty, is also managing construction at Thousand Oaks’ municipal service center, where city vehicles are repaired.

In addition, Lehrer McGovern Bovis recently supervised a land-grading job for the Calleguas Municipal Water District’s new facility opposite the East Valley sheriff’s station.

Both the city of Thousand Oaks and the Calleguas district are considered possible victims in the suspected double-billing scam, sources said.

Details of the fraud probe emerged after federal search warrants were served this week on Lehrer McGovern Bovis’ makeshift offices in Thousand Oaks--three trailers set up near the Civic Arts Plaza construction site, where work continued as usual Thursday.

“The city of Thousand Oaks is only one victim. Millions of dollars are involved,” said one source, who could not estimate how much the city might have overpaid, if anything.

In addition to the projects in Thousand Oaks, investigators are looking into possible double-billing on a five-year, $83-million renovation project at the U. S. 9th Circuit Court of Appeals in San Francisco. Another potential victim is UCLA, which hired the firm to oversee construction on campus, sources said.

While the inquiry focuses on California, investigators are also looking into possible fraud in billing public agencies and private companies outside the state, sources said.

Lehrer McGovern Bovis’ top executive in Los Angeles, Joseph Scarano, said he had “no idea what this is about.” Asked about the issue of double-billing, Scarano responded: “I can’t imagine where that is coming from.”

Sources emphasized that the city of Thousand Oaks was not a target of the probe, although they could not rule out investigation of some employees. One source said grand jury subpoenas were served on a number of Ventura County residents Thursday.

“We have received complete cooperation from the city of Thousand Oaks and City Manager Grant Brimhall,” Assistant Dist. Atty. Colleen (Toy) White said.

Gary Auer, head of the FBI’s Ventura County office, declined comment except to confirm that the search warrants were served as part of an ongoing investigation with the district attorney’s office.

According to sources, the investigation began about three months ago with a tip to Ventura County prosecutors that the city of Thousand Oaks was being double billed for management services at the Civic Arts Plaza, on the site of the former Jungleland wild animal park near Oakwood Drive and Thousand Oaks Boulevard.

When county prosecutors realized that the allegations extended to other projects around the state, they contacted the FBI, sources said.

And the FBI agreed to join the investigation in part because of the allegations that Lehrer McGovern Bovis might have cheated the federal government by double-billing work on the 9th Circuit courthouse, which is being refurbished after suffering extensive earthquake damage.

If it verifies the allegations, the FBI could prosecute Lehrer McGovern Bovis under federal wire fraud, mail fraud and fraud against government statutes, sources said.

In Thousand Oaks, Brimhall would not comment on the investigation Thursday. The city’s project manager for the Civic Arts Plaza, Edward Johnduff, did not return phone calls.

But other civic leaders expressed shock at the investigation, insisting that they had seen no evidence of impropriety.

The city’s finance director, Robert Biery, said Lehrer McGovern Bovis’ bills had matched--or even slightly beaten--the firm’s estimate for the job’s total price tag.

The firm won a competitive bidding process to begin work supervising design of the Civic Arts Plaza in 1989. Three years later, the City Council decided to keep Lehrer McGovern Bovis on board for the construction phase and offered the firm a new contract.

The total value of Lehrer McGovern Bovis’ contracts with Thousand Oaks was not available Thursday. But several city officials said they are convinced that city employees carefully monitored all payments to the company and should not be considered negligent.

“We’ve had people go down to the site daily and note who’s on the job and what they’re doing, and we don’t see any discrepancies in the billing,” Councilman Frank Schillo said. “We checked them as closely as we could without standing over them all the time.”

Schillo, who made the original motion to hire Lehrer McGovern Bovis in October, 1989, said he will believe that the firm is innocent until proven guilty, but acknowledged: “It may be that the city of Thousand Oaks is a victim.”

He emphasized that city employees had done everything possible to double-check the bills: “We’re satisfied that they are there when they say they are, that they are billing us for hours they’re actually on the job.”

Biery said he did not have enough staff members to audit field work. Although he writes the checks, Biery said he relies on individual project managers to scrutinize the bills.

A source explained the allegations of double-billing this way:

“You’re working on one project and you bill two projects for the same hours. A lot of management people are not on-site, so it’s difficult for the victim to ascertain the problem. There’s no red flag. It’s not like a carpenter comes in the morning and works 8 to 5.

“On the face of the documents, everything looks OK. What you’d really have to see are the documents for all their other projects to know. But I only see my bill, I don’t see yours. That’s why this is so terrific for the (alleged perpetrators). It’s not something that’s discoverable with due diligence.”

To verify charges of double-billing, investigators have to examine the suspect’s work at many different project sites, scrutinizing time sheets for overlapping hours. Thus, their examination of records relating to the Civic Arts Plaza and the Calleguas Water District project must be tied to exhaustive checks of other Lehrer McGovern Bovis projects across the state, sources said.

In Thousand Oaks, Lehrer McGovern Bovis has been responsible for supervising every phase of the controversial civic center.

During the design process, the firm’s managers reviewed plans with the architects and made suggestions to cut costs. During ongoing construction, they have managed the bid process and supervised the subcontractors hired for every job, from hanging the steel skeleton to installing bathroom toilets.

Just recently, Lehrer McGovern Bovis held a special study session with the City Council to discuss its progress on the Civic Arts Plaza, which is scheduled to open in October, 1994. City staff cheered as the firm showed a video tracking the building from groundbreaking to an impromptu ceremony when the last steel beam was lowered into place.

With more than half the construction completed and almost 90% of the project materials purchased, the $63.8-million cost has been consistently under budget and work has been ahead of schedule. Despite a few unscheduled purchases, including a $150,000 copper curtain embellishment for the 10-story fly tower, the project’s contingency fund still contains several million dollars, Brimhall said.

Indeed, city officials noted that Lehrer McGovern Bovis has saved them money several times over the past four years by recommending alternative designs or different construction schedules.

“They always had excellent suggestions,” said Bob Lewis, the city’s former mayor, who served on the council when Lehrer McGovern Bovis was hired. “We viewed them as having expertise, having no ax to grind against the city and being our advocate, rather than representing the general contractor.

“It was clear they knew what the heck they were doing,” he said.

The general manager of the Calleguas Municipal Water District, Donald Kendall, also praised Lehrer McGovern Bovis and said he could not imagine the firm had cheated him.

“I’m horrified,” Kendall said upon hearing of the investigation. “I just can’t believe it.”

Earlier this year, Lehrer McGovern Bovis completed a $90,000 contract to supervise grading on the construction site of Calleguas’ new filtration plant. The water district decided not to hire the firm to oversee the rest of the project because of the expense, Kendall said, noting that his staff could supervise the construction more cheaply.

But he hastened to add that the company’s work and cost-saving suggestions had impressed him, and that the grading project had come in on budget. In reviewing his bills Thursday, Kendall said he saw no hint of fraud.

Indeed, in 14 years of operation, the firm has never been accused of illegal billing until this week, according to Scarano, president of Lehrer McGovern Bovis’ Western region office in Los Angeles.

“We were completely floored by this whole thing,” Scarano said. “We have no idea what this is all about. We’ve asked a lot of questions, but we haven’t gotten very many answers. We just realized the best thing to do is cooperate as fully as we can. We want to get this behind us as quickly as possible.”

Times staff writers Carlos V. Lozano and Jim Newton contributed to this story.