The Committee on Energy and Commerce
Subcommittee on Oversight and Investigations
2125 Rayburn House Office Building
Washington, DC 20515
(202) 225-2927
Hearings on Procurement and Property Mismanagement
and Theft at Los Alamos National Laboratory
Consultant, Office of the President
University of California
February 26, 2003 1:00 PM
In mid-2001 I applied for a nationally advertised position as Office Leader of the Office of Security Inquiries (OSI) at the Los Alamos National Laboratory (LANL). Publicized responsibilities included conducting investigations into thefts, protecting property, and being responsible for the strategic and tactical planning of all OSI operations.
I was selected for the position with a $10,000.00 bonus if I could arrive by mid-January, 2002; I was hired on January 22, 2002. I learned that one of the reasons I was hired, and with specificity prior to the end of January, was because my employment fulfilled a standard within the Department of Energy (DOE) Appendix O mandate, ensuring the Lab would receive supplemental funding (multi-million dollars) from DOE.
I was advised by my Division Leader, Stanley Busboom and my Deputy Division Leader, John (Gene) Tucker that the reason I was hired was because of my extensive law enforcement experience and expertise, especially in criminal investigations. I was told by Busboom and Tucker to professionalize all OSI functions as I deemed appropriate, and they would support me in my efforts.
I fulfilled all job requirements and supervisory directions in totality, receiving a 100%-plus rating for my performance of duty on October 2, 2002. Statements within that rating included: “Mr. Walp has not faltered”;... “applied.hands-on leadership and management”. “A pro-active and caring leader.a strong and professional manager.very effective performer”.
Shortly after my arrival I was contacted by the Office Leader of the Office of Internal Security, Ken Schiffer, who proposed there was significant theft occurring at the Lab. Tucker agreed with Schiffer’s postulation, stating theft has been so rampant at the Lab “it has been making the valley green for years”. Subsequently I was ordered by Busboom to conduct research and submit a written report on the theft issue.
Preliminary data disclosed that OSI inquiry reports were severely lacking in investigatory analysis; property was inappropriately handled as lost, salvaged or dismantled when in fact it was stolen; major theft occurred at unsecured drop points; and most importantly, there was a severe problem with lost property. That is, although it was the spring of 2002, the Business Division did not have accountability of over 700 pieces of property that was identified as lost in 1999 through 2001, amounting to approximately $2.7 million. Lost items included: nearly 260 computers; 124 printers; 48 radios; 37 cameras; a $25,000.00 thermal analyzer; $25,000.00 control milling machine; $35,000.00 2-ton magnet; $32,000.00 magnet lifting unit; $33,000.00 wire brush; $23,000 water tank; $27,000 remote terminal; $11,000 copier; $20,000 spectometer; $20,000.00 module oscillator; 2 work stations worth $47,000.00; $11,000.00 cryogenic refrigerator; 2 trailer vans worth $19,000.00; and a $6,000.00 forklift. It was investigatory speculation that many of the items reported as lost were actually stolen.
The requested theft report was submitted to Busboom on March 26.
After submitting the March theft report I learned that theft was occurring within the purchase card and purchase order programs, but the most egregious area was most likely in the Local Vendor Agreement (LVA) and Just In Time (JIT) systems. The LVA and JIT systems allows a Lab employee to use their personal identification badge as a credit card, with little to no audit controls. Lab personnel proposed that the LVA and JIT systems were so flagrant that any employee, for example, could have a computer installed in their residence and no one would ever know. These same personnel advised me that they had been telling their supervisors and administrators about this theft for years, but these Lab officials would not take any action to resolve the problems.
Memorandums had been prepared by Business Division personnel in the fall of 2001, warning of the problems associated with the purchase card system, yet their supervisors failed to take any action. Other BUS Division memorandums were prepared after the release of the March theft report, confirming the severity of the theft, and the egregious mismanagement of Lab auditing and property control systems.
I asked Tucker to allow me to work with the FBI to address this blatant theft. Tucker rejected my request, stating that because of the Wen Ho Lee and hard drive cases the Lab did not like the FBI coming into their domain. Tucker also proposed that if I continued in my efforts I am liable to determine that high level Lab management are involved in these thefts and that would not be good for the Lab’s image.
Between June and September, 2002, five major criminal incidents were disclosed.
Unbeknownst to me, during 2001, major theft was occurring in the Nonproliferation International Security (NIS) area. Information on this criminal activity had been given to Lab authorities Bill Sprouse, Tucker, Katherine Brittian, and Scott Gibbs, by certain Lab employees, but these authorities failed to take any substantive action. The employees became disenchanted with the cavalier approach of these Lab officials, consequently making a complaint with the FBI on June 24, 2002. On July 1, 2002, the FBI assumed the NIS investigation in conjunction with OSI.
The major method of theft used by the NIS suspects was the purchase order system. A review of purchase order transactions by the suspects in the last 18 months revealed over $400,000.00 in questionable purchases. Purchases included:
Ninety-two hunting knives; 72 hunting-type jackets and shirts; 26 GPS systems; 32 pairs of fishing/hunting-type boots; 22 cameras; 6 Rototillers; and 56 different types of lock pick and glass cutting devices. Other items included a go-cart; motorcycle helmets (2 children); model airplanes; sleeping bags; plumbing fixtures; truck beds; and shock absorbers.
The FBI apprehended two suspects in this case on October 31, 2002.
Lab employee Lillian Anaya was suspected of attempting to purchase a Ford Mustang with parts, amounting to nearly $30,000.00, using a government credit card. Stanley Hettich, a Business Division administrator willfully failed to report this crime to OSI, indicating he had not reported any similar type situations to OSI in the last three years. Hettich suggested that the ESA Division had gone native, and the whole system of property purchase was out of control. Hettich blamed Mr. Richard Marquez and Mr. Joseph Salgado for this failing, because they ordered him to give Lab employees anything they wanted; customer satisfaction was the key.
Lab employee Mary Wood used a government credit card to purchase personal items, and secure cash at local casinos. Salgado directed that Wood should not be interviewed and she should just be fired. Tucker recommended that she not be interviewed because she would not confess and it would be a waste of time. Security Specialist Steven Doran, OSI, interviewed the subject at which time she confessed. Immediately after the confession Dickson ordered that all the reports be submitted to him and he would determine what would happen to the case.
Lab employee Orlando Smith was suspected of improperly purchasing tools amounting to approximately $1.2 million in 12 months, from an unauthorized vendor, while misusing a government vehicle.
Lab employee Clarissa Rodriguez forged a government voucher for $1,800.00.
The aforesaid investigations were initiated in accordance with professional investigatory processes, but were quickly tainted by persistent interference and obstruction by multiple Lab officials. This interference and obstruction included:
Contrary to an original agreement between the FBI and the Lab, all documentary reports needed by OSI or the FBI had to be reviewed and approved by Frank Dickson, the Lab Chief Counsel prior to distribution. This system severely hampered investigative processes, and in one case the FBI waited for approximately six weeks to receive a much-needed report because Dickson failed to act on the request.
Dickson verbally oppressed Doran and me to reveal all confidential FBI investigative information to individuals who had no need to know and should not have known. Dickson had been previously warned by the FBI not to tell anyone about this information especially anyone in the Audits and Assessments Division because there was suspect in that division. Notwithstanding, Dickson forcefully ensured confidential information was given to a member of the Audits and Assessments Division, placing multiple OSI/FBI investigations in jeopardy.
Ms. Chris Chandler, an employee of Dickson, attempted to forcefully secure confidential FBI investigative notes from me, through verbal intimidation; she was refused access to the notes. During the discourse she stated that she did not care about anyone’s constitutional rights or the successful prosecution of an FBI investigation. If Chandler would have obtained these notes it could have jeopardized multiple OSI/FBI investigations.
Dickson attempted to force the FBI to take premature investigative action against multiple suspects, threatening he would place the suspects on investigative leave unless the FBI acquiesced to his demands. The threatening action of Dickson, if brought to fruition, would have placed the NIS and Mustang cases in jeopardy.
Dickson attempted to gain entry into an area that contained suspected NIS stolen property placing an FBI investigation in jeopardy. After being refused by the FBI, Dickson became irate at Doran and Walp because they failed to cajole the FBI into allowing him access.
Salgado and Dickson directed, through Busboom and Tucker, to remove Doran and Walp from the NIS investigation two days before culmination of that investigation. Despite the pleas of the FBI to allow Walp and Doran to remain on the case because they were integral to the success of that investigation, Busboom adamantly refused. The only reason given by Busboom for this action was that it was “Dickson’s payback against Walp” for Walp challenging Dickson’s improprieties in the forged voucher incident.
Dickson directed that potential FBI criminal evidence held in official OSI investigatory control, be taken from OSI, thereby breaking the chain of evidence and jeopardizing an FBI investigation.
Chandler conducted a dual inquiry on this case that had the potential of obstructing the FBI investigation.
Dickson, Tucker and Phillip Kruger of the Laboratory Human Resources Division, conspired to cover up this federal felony by failing to immediately notify an appropriate criminal justice authority, and handled the case administratively. Although Tucker originally agreed this was a federal felony that must be investigated by a federal law enforcement agency, he then recanted, explicating to me, since the property did not belong to the United States taxpayers, but rather the University of California (UC), there was no crime. Hence, that is why Dickson has the authority to do anything he wants with any crime that occurs on Lab property. Tucker also said that all property and monies in control of the Los Alamos National Lab does not belong to United States taxpayers because it is UC property and monies.
Doran and I were consistently warned that our major job was not inquiry into crime, but rather, protection of the Lab, its image, and ultimately the UC contract. Concerning this issue paraphrased comments included:
- Dickson stated to Walp -
Salgado is concerned about the NIS case bringing negative PR to the Lab, which may negatively affect the UC contract, therefore I (Dickson) will keep a pulse on all FBI activity.
While preparing a news release on the Anaya and Wood cases, Dickson wanted to keep information out of the release concerning the total amount of thefts committed by Wood, stating “what we’re looking at is protecting the Lab here”.
- Dickson stated to Walp and Doran -
We need to remember who we work for, who is our boss and that is the Lab, not the FBI. That is the way it is, we must look out for the Lab and its image first, not the FBI investigation.
- Salgado stated to Walp -
I am concerned that the Mustang and tool cases may generate bad PR for the Lab, which may negatively affect the Lab’s contract.
The critical aspect of the Mustang case is the bad PR for the Lab, not the illegal attempt to purchase the vehicle.
- Chandler stated to Walp -
I am not concerned about violating anyone’s constitutional rights or interfering with an FBI prosecution; my job and your job is to protect our employer, the Lab.
- Busboom stated to Walp and Doran -
Of critical importance is protecting the UC contract, and it should be the primary concern of you as you perform your OSI functions; your major job is not law enforcement or helping the FBI, but to protect the Lab and its contract.
- Tucker stated to Walp -
If you continue your efforts in ferreting out Lab theft you may find that high management personnel are implicated and that would not be good for the Lab’s image.
Dickson doesn’t want UC to be embarrassed concerning the Mustang case, so they are going to take action that forces the FBI to move on the case, because Lab officials must look out for the Lab first, its image, and not the FBI investigation.
Your main job and that of OSI is to protect the Lab, Lab people, the Lab contract and the Lab image above anything else; Tucker identified this concept as “corporate philosophy” and/or “corporate rules”. The corporate rules must be followed by you and other OSI members if they are to be successful as Lab employees.
- Tucker states to Walp and Doran -
You need to know that your major responsibility is to your employer, the people who pay your checks, therefore you must ensure that you protect them, their image, and the UC contract.
Lab officials have progressively espoused multiple reasons for the terminations of Doran and Walp, to include: (a) They didn’t fit (contained in their termination papers); yet Busboom refused to elaborate on what that meant; (b) Doran and Walp didn’t get along with certain groups and/or individuals at the Lab. The groups and/or individuals identified in a Lab press release as the groups and/or individuals they did not get along with, were groups or individuals who were either suspects in crimes, or were interfering or obstructing OSI/FBI investigations; (c) Salgado proposed that the reason was that a chronology of the Mustang case contained incorrect telephone data obtained from OSI. This insignificant issue was an inadvertent error of an OSI employee, not Walp or Doran. The issue was quickly corrected, and had no significance to the relevant factors associated with the case; (d) Salgado said it had to do with FBI investigatory issues concerning the wearing of a body wire, and the number of suspects involved in the NIS case. All data on these matters were accurately and completely forwarded to Salgado in a timely manner, with the clarification that these issues were under the control of the FBI, not OSI; and (e) Dickson proposed the reason was because Doran and Walp had a poor relationship with the FBI. Recent investigation into this allegation by a federal investigator found this accusation to be totally erroneous.
In January of 2003, it was disclosed by a UC official that the actual reason for our terminations was, as originally proposed by Doran and Walp, a willful attempt by Lab officials to prevent Doran and Walp from talking to DOE Inspector General
Investigators. The reason, according to the official, was because they were fearful of what we would reveal to these investigators concerning the crime, mismanagement and corruption at the Los Alamos National Lab.
During the course of our employment Doran and I were consistently threatened that our efforts to approach our responsibilities from a point of integrity, without regard for the Lab contract, would cause us problems. For example:
1. Tucker stated to Doran and me, that we must be careful in challenging the ethics of Lab officials because the Lab is famous for sacrificing its children for the sake of its image.
2. Busboom told Doran and me, Dickson would level me with both barrels and would fire Doran if we interfered with Dickson’s relationship with the FBI, the DOE IG, or the U.S. Attorney.
3. Busboom, Tucker and John Tapia told Doran and me they believed Dickson was attempting to make us scapegoats; that Dickson was trying to blame Walp and OSI for his own shortcomings; and Dickson was conspiring to get people to falsely accuse Walp of being uncooperative.
Although much has been accomplished in addressing the theft, mismanagement and corruption of the Lab, there is still much to do. For example:
1. All lost reports for the last decade need to be reviewed item-by-item, to ascertain, with specificity, their locations. The Lab uses a classification system that identifies property as salvaged, dismantled and retired. It is hypothesized that these classifications have been used to cover up for lost and stolen items. It is speculated that if these classification reports were reviewed, the microscope would reveal significant fresh ink.
2. Since Johnson Control of Northern New Mexico never reported any item of theft under $5,000, the details of this unknown needs to be analyzed.
3. A November 7 Price-Waterhouse-Coopers (PWC) perfunctory report, illustrated $153 million dollars of questionable “purchase card” transactions, while a review of questionable “purchase order” transactions by NIS personnel amounted to approximately $400,000.
Thus, all Lab “purchase card” and “purchase order” transactions need to be analyzed item-by-item, purchaser-by-purchaser, for at least the last decade. It is theorized that the attempted Mustang purchase and the illegal purchase orders within NIS were not the first situations of this type effectuated by these illegal processes.
4. All voucher transactions for the last decade should be reviewed for illegalities.
5. It is proposed that the most egregious area of theft is contained within the LVA and JIT systems. A comprehensive analyses of these purchases for the last decade needs to be completed.
Doran and I had multiple cases we had no opportunity to investigate, but need to be addressed. They include:
1. Significant theft of gasoline.
2. Two cases of potential fraud that may involve kickbacks to present and former employees of the Lab.
3. Steve and I were recently contacted by multiple individuals, proposing that they were aware of major fraud and theft that had occurred at the Lab in previous years, amounting to multiple millions of dollars in theft and fraud.
4. There are outstanding issues concerning criminal matters. Such as: (a) theft of FBI evidence from an OSI office; (b) the possibility of federal/state crimes being committed by Lab officials; and (c) that crimes although known by Lab officials, were never reported to an appropriate authority. As of this date, Security Specialists James Mullins and Doran, and I, have never been contacted by any law enforcement agency for official interviews, notwithstanding we are critical witnesses to these matters.
I attempted to effectuate a Federal Bureau of Investigation (FBI) investigative task force to address these blatant failings, but the plan was soundly rejected by my immediate supervisor.
Between June 24th and September 20th five major criminal investigations were unraveled.
Although these investigations commenced in accordance with professional investigatory processes, by August these systems began to be tainted by interference and obstruction by certain Lab officials. Namely:
1. Contrary to an original agreement between the FBI and the Lab, Frank Dickson, the Lab Chief Counsel, ordered that all documentary evidence had to be personally approved by him prior to distribution; he attempted to force the FBI to take premature investigative actions; he verbally oppressed Steven Doran and I to reveal confidential FBI investigative information to people who should have not known; he directed that potential FBI criminal evidence held in official OSI investigatory control be forcefully taken from the custody of OSI, thereby breaking the chain of evidence control; and he ineptly attempted to gain access into an area where suspected stolen property was stored. These acts either hampered or had the potential of obstructing FBI investigations.
2. Chris Chandler, an employee of Dickson, through verbal intimidation, attempted to secure confidential FBI written notes from me, indicating within that discourse that she was not concerned about a person’s constitutional rights or a successful FBI prosecution; and, she conducted a dual inquiry that had the potential of obstructing an FBI investigation.
3. Stanley Hettich, a Business Division administrator, willfully failed to report criminal activity occurring within his area of responsibility, admitting he had not reported any similar situations in the last three years.
4. John (Gene) Tucker, my immediate supervisor inappropriately forced Doran and me to remove certain “spy type” information from an official OSI inquiry report; and, advised Doran and me that we would be sacrificed as children of the Lab for the sake of the Lab’s image, if we challenged the ethics of Lab officials.
5. Dickson, Tucker, and Phillip Kruger of the Laboratory Human Resources Division, willfully failed to immediately notify an appropriate criminal justice authority, as it pertained to the crime of forgery of a federal voucher.
6. Stan Busboom, my Division Leader, and Tucker, removed Doran and myself from an official FBI investigation two days before culmination of that investigation, and to the potential detriment of that investigation.
7. Busboom stated to Doran and me that unless we ensured there was a positive relationship between Dickson and the U.S. Attorney and the FBI, Dickson would level me with both barrels and Doran would be fired.
8. Busboom and Tucker opined that Salgado and Dickson were attempting to make Doran and me scapegoats.
9. Doran and I were warned by a Lab official that Dickson was attempting to fabricate negative information against Doran and me and that Tucker was involved in this conspiracy.
Doran and I were consistently advised by multiple Lab officials that our major role was not inquiry into crime, but the protection of the Lab and its image, for the purpose of protecting the University of California contract.
Although much has been accomplished in addressing the theft, mismanagement and corruption of the Lab, there is still much to do. For example:
1. All lost reports for the last decade need to be reviewed item-by-item, to ascertain, with specificity, their locations. The Lab uses a classification system that identifies property as salvaged, dismantled and retired. It is hypothesized that these classifications have been used to cover up for lost and stolen items. It is speculated that if these classification reports were reviewed, the microscope would reveal significant fresh ink.
2. Since Johnson Control of Northern New Mexico never reported any item of theft under $5,000, the details of this unknown needs to be analyzed.
3. A November 7 Price-Waterhouse-Coopers (PWC) perfunctory report, illustrated $153 million dollars of questionable “purchase card” transactions, while a review of questionable “purchase order” transactions by NIS personnel amounted to approximately $400,000.
Thus, all Lab “purchase card” and “purchase order” transactions need to be analyzed item-by-item, purchaser-by-purchaser, for at least the last decade. It is theorized that the attempted Mustang purchase and the illegal purchase orders within NIS were not the first situations of this type effectuated by these illegal processes.
4. All voucher transactions for the last decade should be reviewed for illegalities.
5. It is proposed that the most egregious area of theft is contained within the LVA and JIT systems. A comprehensive analyses of these purchases for the last decade needs to be completed.
Doran and I had multiple cases we had no opportunity to investigate, but need to be addressed. They include:
1. Significant theft of gasoline.
2. Two cases of potential fraud that may involve kickbacks to present and former employees of the Lab.
3. Steve and I were recently contacted by multiple individuals, proposing that they were aware of major fraud and theft that had occurred at the Lab in previous years, amounting to multiple millions of dollars in theft and fraud.
4. There are outstanding issues concerning criminal matters. Such as: (a) theft of FBI evidence from an OSI office; (b) the possibility of federal/state crimes being committed by Lab officials; and (c) that crimes although known by Lab officials, were never reported to an appropriate authority. As of this date, Security Specialists James Mullins and Doran, and I, have never been contacted by any law enforcement agency for official interviews, notwithstanding we are critical witnesses to these matters.
Most recently Steve and I, and our attorney were informed by a top administrator of the University of California that he has direct evidence that we were wrongfully terminated because Lab officials did not want us speaking to DOE Inspector General Investigators.
The aforesaid is an overview of the issues I encountered when employed by the Lab.
I am prepared to answer any questions that you may have concerning these and associated matters.
Thank you.