Orange County Forced to Refund Federal Money It Never Paid to Contractor

Orange County has been forced to repay $480,000 to the Federal Aviation Administration after the U.S. Department of Justice concluded that the county withheld that amount from a paving contractor but still billed the federal government.

A federal prosecutor specializing in fraud spent more than a year investigating county airport staff before deciding not to bring a “false claims” action against the county.

Airport officials withheld money from the construction contractor in April 1991, alleging that the work was shoddy, but they still requested reimbursement for the same amount in the form of an FAA grant less than two months later.

The county’s actions “create a prima facie case that John Wayne Airport knowingly submitted an inappropriate claim,” Assistant U.S. Atty. Stephen A. Shefler wrote in a Dec. 17, 1999, letter to the county.

However, Shefler concluded in his letter that, “For a variety of reasons, we have decided to seek restitution on the basis of payment by mistake.”

Shefler would not comment Wednesday, but sources close to the investigation said prosecutors did not have sufficient evidence to file charges. The federal investigation was kept secret from Orange County supervisors until this month, when they were asked to approve the FAA reimbursement as part of a settlement agreement between county attorneys and Shefler.

The supervisors did so Tuesday, taking the money from airport funds.

Federal officials discovered the overbilling during an investigation--which ultimately ended without charges--into claims that paving contractor Ball, Ball & Brosamer Inc. had used faulty construction materials at airports around the country, including John Wayne. Company officials could not be reached for comment Wednesday.

County Counsel Laurence M. Watson agreed that the billing had been a mistake.

Watson said county officials asked the FAA to cover the cost of paving work done by the company in 1990 for a major expansion of the airport. However, local officials failed to disclose that the county had refused to pay for much of the paving work covered by the grant after accusing the firm of doing a shoddy job.

“The FAA wanted the money back [and] it wasn’t right that we should keep it,” Watson said this week.