A-80338, OCTOBER 26, 1936, 16 COMP. GEN. 435

A-80338: Oct 26, 1936

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CONTAIN SIGNATURES WHICH ARE NOT GENUINE AND MISREPRESENTATIONS OF FACT DELIBERATELY MADE WITH INTENT TO MISLEAD. NOTWITHSTANDING THE GOVERNMENT MAY HAVE RECEIVED CERTAIN BENEFITS FROM THE PURCHASES. IN SUCH CASES THERE IS FOR CONSIDERATION WHETHER THERE HAS BEEN A VIOLATION OF THE CRIMINAL STATUTES IN CONNECTION WITH CLAIMS AGAINST THE UNITED STATES FOR THE PAYMENT OF MONEYS. 1936: THERE ARE BEFORE THIS OFFICE FOR SETTLEMENT CERTAIN CLAIMS STATED ON VOUCHERS TRANSMITTED WITH ACTING SECRETARY OF COMMERCE LIBBEY'S LETTER OF SEPTEMBER 13. AS FOLLOWS: THERE ARE TRANSMITTED HEREWITH THE FOLLOWING ACCOUNTS SUBMITTED IN THE AMOUNTS STATED. 12.75 THESE ACCOUNTS HAVE RECEIVED THE ADMINISTRATIVE EXAMINATION REQUIRED BY LAW.

A-80338, OCTOBER 26, 1936, 16 COMP. GEN. 435

FALSE CLAIMS AGAINST THE UNITED STATES PAYMENT MAY NOT BE MADE FOR SPLIT PURCHASES OF SUPPLIES MADE TO AVOID COMPLIANCE WITH SECTION 3709, REVISED STATUTES, AS AMENDED, REQUIRING ADVERTISING AND AWARD TO THE LOWEST RESPONSIBLE BIDDER, WHERE THE VOUCHERS CONCERNED, AND THE BIDS LATER OBTAINED IN AN EFFORT TO SUBSTANTIATE THE PURCHASES, CONTAIN SIGNATURES WHICH ARE NOT GENUINE AND MISREPRESENTATIONS OF FACT DELIBERATELY MADE WITH INTENT TO MISLEAD, NOTWITHSTANDING THE GOVERNMENT MAY HAVE RECEIVED CERTAIN BENEFITS FROM THE PURCHASES. IN SUCH CASES THERE IS FOR CONSIDERATION WHETHER THERE HAS BEEN A VIOLATION OF THE CRIMINAL STATUTES IN CONNECTION WITH CLAIMS AGAINST THE UNITED STATES FOR THE PAYMENT OF MONEYS.

ACTING COMPTROLLER GENERAL ELLIOTT TO THE SECRETARY OF COMMERCE, OCTOBER 26, 1936:

THERE ARE BEFORE THIS OFFICE FOR SETTLEMENT CERTAIN CLAIMS STATED ON VOUCHERS TRANSMITTED WITH ACTING SECRETARY OF COMMERCE LIBBEY'S LETTER OF SEPTEMBER 13, 1935, AS FOLLOWS:

THERE ARE TRANSMITTED HEREWITH THE FOLLOWING ACCOUNTS SUBMITTED IN THE AMOUNTS STATED, COVERING DYNAMITE AND SUPPLIES FURNISHED THE BUREAU OF AIR COMMERCE, THIS DEPARTMENT, IN CONNECTION WITH CLEARING RANGE SITE AT SEATTLE, WASHINGTON, IN LINE WITH CORRESPONDENCE ATTACHED TO VOUCHER NO. 247844, HEREWITH:

CHART LAKE FOREST PARK MERCANTILE COMPANY ------------------------- $22.10 OSCAR NELSON ------------------------------------------------- 23.80 REDMOND TRADING COMPANY -------------------------------------- 23.24 H. AND H. LUMBER COMPANY ------------------------------------- 23.80 RICHMOND HIGHLANDS LUMBER CO. -------------------------------- 23.80 A. S. WHITE -------------------------------------------------- 23.24 CHAS. R. WATTS AND CO. --------------------------------------- 4.20 CHAS. R. WATTS AND CO. --------------------------------------- 37.52 B. W. YEOMAN ------- ------------------------------------------ 15.75 CHARLES MONSTER --------- ------------------------------------- 24.00 O. W. HOLMQUIST -------------- -------------------------------- 12.75

THESE ACCOUNTS HAVE RECEIVED THE ADMINISTRATIVE EXAMINATION REQUIRED BY LAW, ARE APPROVED FOR PAYMENT AS PROPER CHARGES AGAINST THE APPROPRIATION INDICATED, AND ARE REFERRED TO YOU FOR DIRECT SETTLEMENT AT THE REQUEST OF THE BUREAU OF AIR COMMERCE.

THE RECORD AND VOUCHERS FILED TO SUPPORT THE CLAIMS ADMITTEDLY CONTAIN MANY STATEMENTS WHICH EITHER ARE CONTRARY TO, OR DO NOT CORRECTLY REPRESENT, THE FACTS UPON WHICH THE CLAIMS DEPEND FOR THEIR VALIDITY; AND THE QUESTIONS ARISING THEREON HAVE BEEN THE SUBJECT OF CORRESPONDENCE WITH OFFICIALS IN YOUR DEPARTMENT SINCE THE CLAIMS AND VOUCHERS WERE SUBMITTED. (SEE 34 OP.ATTY.GEN. 446.) THE INFORMATION THUS DEVELOPED SEEMS TO ESTABLISH THAT THE STATEMENTS CONTAINED IN THE REPORT DATED MAY 8, 1935, FROM THE DISTRICT MANAGER AT OAKLAND, CALIF., TO THE ASSISTANT DIRECTOR OF AIR COMMERCE ARE IN ALL MATERIAL RESPECTS CORRECT, AS FOLLOWS:

1. ON AUGUST 24, 1934, P.W.A. FUNDS WERE ALLOTTED FOR PERFORMANCE OF CERTAIN WORK UNDER F.P. NO. 52, WHICH INCLUDED THE CLEARING OF RADIO RANGE SITE AT SEATTLE, WASHINGTON. DUE TO AN EXTREMELY WET WINTER, IT WAS IMPOSSIBLE TO COMMENCE WORK IN THE CLEARING OF THE RANGE SITE AT SEATTLE UNTIL ABOUT FEBRUARY 1, 1935. ASSISTANT AIRWAYS ENGINEER M. W. WILSON WAS ASSIGNED TO THIS WORK WITH NOT ONLY THE BENEFIT OF FULL INSTRUCTIONS RELATIVE TO P.W.A. PROJECTS, BUT ALSO THE KNOWLEDGE THAT HE POSSESSED THROUGH YEARS OF SERVICE WITH THE AIR NAVIGATION DIVISION AS TO THE PROPER PROCEDURE NECESSARY IN THE PURCHASE OF MATERIAL AND SUPPLIES WHEN SUCH MATERIAL AND SUPPLIES EXCEEDED $25.00. IN VIEW OF THE FOREGOING, THIS OFFICE NATURALLY HAD THE GREATEST CONFIDENCE IN MR. WILSON'S ABILITY TO BE ABLE TO SATISFACTORILY CARRY OUT THE WORK ASSIGNED HIM, AND IS THEREFORE AT A TOTAL LOSS TO EXPLAIN THE IRREGULARITIES THAT HAVE PRESENTED THEMSELVES IN THE PURCHASE OF DYNAMITE AND CAPS AS WELL AS THE HIRING OF TEAMS ABSOLUTELY NECESSARY IN THE PROSECUTION OF THE WORK INVOLVED AT SEATTLE.

2. TO NOT ONLY SATISFY THIS OFFICE BUT TO ASSIST THE AIR NAVIGATION DIVISION IN RENDERING A DECISION RELATIVE TO THE MATTER WHICH WILL BE PRESENTED BELOW, A FULL INVESTIGATION HAS BEEN MADE BY THIS OFFICE TO ASCERTAIN, IF POSSIBLE, THE NECESSITY FOR THE APPARENT IRREGULARITIES THAT APPEAR IN THE PURCHASING OF DYNAMITE AND CAPS AS WELL AS THE HIRING OF TEAMS. EVERY EFFORT WILL BE MADE TO PRESENT THE FACTS OF THE ENTIRE MATTER AS THEY HAVE BEEN INVESTIGATED AND AS BRIEFLY AS POSSIBLE WITHOUT DISTORTING OR DESTROYING A SITUATION WHICH ACCORDING TO MR. WILSON'SLETTERS CAN BE ATTRIBUTED, AS HE STATES, TO ILLNESS WHICH, HOWEVER, THIS OFFICE CANNOT CONCUR IN, RESULTING IN A COMPLETE PRESENTATION OF THE ENTIRE MATTER TO THE AIR NAVIGATION DIVISION FOR INSTRUCTIONS AND ADVICE.

3. IMMEDIATELY UPON INVESTIGATING THE WORK THAT HAD TO BE ACCOMPLISHED AT SEATTLE, MR. WILSON ON FEBRUARY 4, 1935, PURCHASED 136 LBS. OF 30 PERCENT GIANT POWDER (DYNAMITE) AT A COST OF $19.04, ALONG WITH 50 NO. 6 CAPS AT $4.20, A TOTAL OF $23.24, FROM CHAS. R. WATTS AND COMPANY, 1326 N. LAKE, SEATTLE, WASHINGTON. ON FEBRUARY 7TH HE PURCHASED 170 LBS. OF GIANT RED STUMPING (DYNAMITE) AT A COST OF $23.80, FROM THE ATLAS POWDER COMPANY, 1320 JOS. VANCE BUILDING, SEATTLE, WASHINGTON. BOTH VOUCHERS WERE RECEIVED BY THIS OFFICE ON FEBRUARY 11TH AND BECAUSE OF THEIR WORDING, WHICH IN THE INSTANCE OF THE FIRST VOUCHER WAS TERMED 30 PERCENT GIANT POWDER AND IN THE INSTANCE OF THE SECOND VOUCHER GIANT RED STUMPING, NO MENTION BEING MADE THAT BOTH PURCHASES WERE DYNAMITE, THEY WERE NATURALLY CHECKED O.K. BY THE VOUCHER CLERK AND PAID BY THE SPECIAL DISBURSING AGENT ON FEBRUARY 12TH. HAD EITHER THE VOUCHER CLERK OR THE SPECIAL DISBURSING AGENT BEEN AWARE OF THE FACT THAT BOTH VOUCHERS WERE NOTHING MORE THAN 30 PERCENT DYNAMITE, THE QUESTION WOULD IMMEDIATELY HAVE ARISEN AS TO THE PURCHASE OF THE SAME TYPE OF ARTICLE FOR AN AMOUNT GREATER THAN $25.00 WITHOUT FIRST OBTAINING BIDS. HOWEVER, AND AS STATED IN THE FOREPART OF THIS PARAGRAPH, WHERE THE WORDING WAS SUCH AS NOT TO INDICATE IDENTICAL PURCHASES, THIS OFFICE UNFORTUNATELY MADE PAYMENT OF DYNAMITE WHICH HAD BEEN PURCHASED IN SUCH A MANNER AS NOT TO EXCEED THE $25.00 LIMITATIONS.

4. WITH MR. WILSON'S LETTER DATED MARCH 1ST (COPY ATTACHED) WERE ENCLOSED THREE VOUCHERS COVERING THE PURCHASES OF EXPLOSIVES AND ELECTRIC CAPS FROM THREE SEPARATE COMPANIES WHICH PROMPTED LETTER FROM THIS OFFICE TO MR. WILSON DATED MARCH 5TH (COPY ATTACHED). THIS LETTER NOT ONLY LISTS THE NAME OF THE DEALER BUT THE AMOUNT OF EXPLOSIVES PURCHASED, AND FURTHER STATES THAT BIDS APPARENTLY HAD BEEN UNAVOIDABLY OMITTED WITH HIS LETTER OF MARCH 1ST. THIS OFFICE AT THIS TIME KNOWING THAT MR. WILSON WAS FULLY AWARE OF THE FACT THAT PURCHASES IN EXCESS OF $25.00 HAD TO BE COVERED BY BIDS, BELIEVED THAT THE BIDS HAD BEEN UNAVOIDABLY OMITTED AND CONSEQUENTLY REQUESTED THAT THEY BE FORWARDED. FURTHER, THIS OFFICE DID NOT AT THIS TIME HAVE ANY REASON TO DOUBT THAT BIDS HAD NOT BEEN OBTAINED. HOWEVER, UPON RECEIPT ON THE FOLLOWING DAY, MARCH 6TH, OF FOUR MORE VOUCHERS, ALL COVERING THE PURCHASE OF 30 PERCENT DYNAMITE, IT WAS QUITE APPARENT THAT PURCHASES HAD BEEN MADE IN AMOUNTS LESS THAN $25.00 FROM NUMEROUS COMPANIES AND THAT NO BIDS HAD ACTUALLY BEEN OBTAINED. THIS PROMPTED LETTER FROM THIS OFFICE DATED MARCH 6TH (COPY ATTACHED). UP TO THIS TIME SEVEN VOUCHERS HAD BEEN RECEIVED, EXCLUSIVE OF THE TWO VOUCHERS THAT HAD BEEN PAID ON FEBRUARY 12TH, ALL FOR 30 PERCENT DYNAMITE AND NONE IN EXCESS OF $25.00. IN SHORT, 1,156 LBS. OF 30 PERCENT DYNAMITE HAD BEEN PURCHASED AT A COST OF $161.84, ALONG WITH 50 LBS. OF 50 PERCENT DYNAMITE AT $8.38, AND 250 ELECTRIC CAPS AT $21.00, A TOTAL OF $191.22, ALL WITHOUT BIDS. (THE ABOVE TOTAL INCLUDES THE PAYMENT OF TWO VOUCHERS ON FEBRUARY 12TH--- ONE IN THE AMOUNT OF $23.24 AND THE OTHER IN THE AMOUNT OF $23.80.)

5. LETTER FROM THIS OFFICE DATED MARCH 5TH WAS FORWARDED AIR MAIL AND IN ANSWER THERETO A LETTER WAS RECEIVED FROM MR. WILSON ALSO DATED MARCH 5TH, BUT NOT RECEIVED BY THIS OFFICE UNTIL MARCH 8TH, IN WHICH HE STATES,"THERE ARE ENCLOSED HEREWITH ALL BIDS RECEIVED FROM THE VARIOUS DEALERS.' COPY OF THIS LETTER, AS WELL AS THE BIDS, ARE ENCLOSED.

6. ON MARCH 22ND THIS OFFICE RECEIVED THE FINAL VOUCHER FOR THE PURCHASE OF DYNAMITE AND CAPS, WHICH INCLUDED THE PURCHASE OF 238 LBS. OF 30 PERCENT DYNAMITE AT A COST OF $33.32, AND 50 ELECTRIC CAPS AT A COST OF $4.20. WITH RECEIPT OF THIS VOUCHER IT MEANT THAT THERE HAD BEEN PURCHASED, WITHOUT BIDS, 1,394 LBS. OF 30 PERCENT DYNAMITE AT A COST OF $195.16; 50 LBS. OF 50 PERCENT DYNAMITE AT $8.38; AND 300 ELECTRIC CAPS AT $25.20; A GRAND TOTAL OF $228.74. OF THIS AMOUNT PAYMENT HAD BEEN MADE BY THIS OFFICE FOR 306 LBS. OF 30 PERCENT DYNAMITE AT $42.84, AND 50 ELECTRIC CAPS AT $4.20, A TOTAL OF $47.04, LEAVING AN UNPAID BALANCE OF $181.70.

7. IMMEDIATELY UPON RECEIPT OF THE SO-CALLED BIDS A CHECK THEREOF AS WELL AS THE SIGNED VOUCHERS WAS MADE, WITH A RESULT THAT BIDS HAD BEEN SIGNED BY DIFFERENT PERSONS THAN THOSE ACTUALLY SIGNING THE VOUCHERS. MOREOVER, THAT ALL OF THE POWDER HAD BEEN PURCHASED DIRECTLY OR INDIRECTLY FROM CHAS. R. WATTS AND COMPANY THROUGH EITHER THEIR DISTRIBUTORS AND DEALERS OR THEIR MAGAZINE KEEPERS. PLEASE NOTE ATTACHED MIMEOGRAPHED LIST OF THE ATLAS POWDER COMPANY, SHOWING THEIR DISTRIBUTING LOCATIONS, DISTRIBUTORS AND DEALERS, AS WELL AS MAGAZINE KEEPERS. THESE FACTS CONCLUSIVELY PROVE TO THIS OFFICE THAT PURCHASES OF DYNAMITE AND ELECTRIC CAPS HAD BEEN MADE WITHOUT BIDS AND WARRANTED A THOROUGH INVESTIGATION OF THE ENTIRE MATTER. THIS INVESTIGATION WAS MADE PRIOR TO MR. WILSON'S DEPARTURE FROM SEATTLE, WHICH DISCLOSED THE FOLLOWING:

1. THAT UPON MR. WILSON'S ARRIVAL IN SEATTLE HE VISITED THE OFFICE OF THE ATLAS POWDER COMPANY, JOS. VANCE BUILDING, WHERE HE TALKED TO MR. MCDONOUGH AND ARRANGED FOR THE EMPLOYMENT OF A. SWADNER AS FOREMAN POWDERMAN TO HANDLE THE BLASTING OPERATIONS. THE PURCHASE OF POWDER WAS DISCUSSED AND ARRANGEMENTS MADE FOR DELIVERY.

2. THAT WHERE MR. MCDONOUGH, OF THE ATLAS POWDER COMPANY, HAD FURNISHED THE SERVICES OF A. SWADNER AS FOREMAN-POWDERMAN, HE NATURALLY EXPECTED THAT THEY SHOULD GET THE POWDER BUSINESS, CONSEQUENTLY SET ABOUT TO CONVINCE MR. WILSON THAT HE COULD DO NO BETTER BY DEALING WITH OTHER POWDER COMPANIES. HE SHOWED MR. WILSON THE PRICE LIST OF THE DUPONT POWDER COMPANY, WHEREON THE PRICES WERE THE SAME AS THOSE OF THE ATLAS COMPANY. THE INVESTIGATING OFFICER STATES THAT MR. MCDONOUGH APPEARED RATHER RELUCTANT AND WAS NOT WILLING TO GIVE OUT VERY MUCH INFORMATION, ALTHOUGH HE DID STATE THAT THE GOVERNMENT SHOULD BE SATISFIED, AS THEY HAD FURNISHED AN EXCELLENT POWDERMAN, WHO HAD ACCOMPLISHED AN EXCELLENT JOB.

3. THE INVESTIGATING OFFICER REPORTS THAT UPON VISITING CHAS. R. WATTS AND COMPANY AT 1326 NORTH LAKE, MR. WATTS, WHO WAS VERY ANXIOUS TO TELL ALL HE KNEW ABOUT THE MATTER, ADVISED THAT ALL ARRANGEMENTS AS TO PRICES AND DELIVERY HAD BEEN MADE BY MR. WILSON WITH MR. MCDONOUGH AND THAT CHAS. R. WATTS AND COMPANY IS ONLY A GENERAL DISTRIBUTOR FOR THE ATLAS POWDER COMPANY. MR. WATTS FURTHER ADVISED THAT THE DEALERS IN WHOSE NAMES VOUCHERS AND PROPOSALS WERE SUBMITTED ARE ALL LOCAL AGENTS OF THE CHAS. R. WATTS COMPANY, AND FURTHER THAT, TO HIS KNOWLEDGE, MR. WILSON DID NOT VISIT OTHER DEALERS AT ALL. ALL DELIVERIES WERE HANDLED BY CHAS. R. WATTS AND COMPANY IN THE QUANTITIES DESIRED BY MR. WILSON AT THE RANGE SITE.

4. UPON RECEIPT OF THE DISTRICT MANAGER'S LETTER OF MARCH 6TH, MR. WILSON TOOK THE LETTER TO MR. WATTS AND STATED THAT HE WAS ABOUT TO LOSE HIS JOB, THEN THREATENED SUICIDE. MR. WATTS AFTER READING THE DISTRICT MANAGER'S LETTER, SAID HE FELT SORRY FOR MR. WILSON, WHO, IN HIS OPINION, WAS A VERY SICK MAN. CONSEQUENTLY HE HAD CONTRACTS PREPARED BY THE CLERKS IN HIS OFFICE AND THE CLERKS SIGNED THE NAMES OF THE LOCAL DEALERS TO THE CONTRACTS. HE STATED, HOWEVER, THAT THEY FIRST OBTAINED TELEPHONIC APPROVAL FROM THE DEALERS TO SIGN THEIR NAMES, ALSO THAT THE CLERKS SIGNED THE DEALERS' NAMES PER THEMSELVES. HOWEVER, THE BIDS DO NOT SHOW THAT THE SIGNATURES WERE PER ANYBODY. THUS IT APPEARS THAT NEITHER THE SIGNATURES ON THE BIDS NOR THOSE ON THE VOUCHERS ARE THE BONAFIDE SIGNATURES OF THE DEALERS. MR. WATTS PLEADED MR. WILSON'S CASE AND WAS VERY FLATTERING TO THE INVESTIGATING OFFICER. MR. WATTS FURTHER INSURED THE INVESTIGATING OFFICER THAT HE HAD PREVIOUS EXPERIENCE IN FIXING BIDS FOR THE STATE OF WASHINGTON AND THAT ALTHOUGH HE HAD TO WAIT A LONG TIME FOR HIS MONEY HE GOT IT EVENTUALLY, SO IN THIS CASE HE WAS EVEN WILLING TO WAIT A YEAR FOR HIS MONEY IF NECESSARY.

5. THE INVESTIGATING OFFICER TALKED WITH THE CLERKS IN MR. WATTS' OFFICE AND THEY INFORMED HIM THAT THEY HAD SIGNED THE BIDS UPON TELEPHONIC AUTHORITY FROM THE DEALERS. THEIR STATEMENTS WERE MADE IN THE PRESENCE OF AND WITH THE PERMISSION OF MR. WATTS. AS A MATTER OF FACT, MR. WATTS CALLED UPON THEM TO VERIFY EACH AND EVERY STATEMENT THAT HE MADE.

6. THE SEATTLE TELEPHONE BOOK UNDER THE HEADING OF "POWDER" DISCLOSES THE FOLLOWING DEALERS:

ATLAS POWDER COMPANY, JOS. VANCE BLDG., SEATTLE, WASHINGTON.

BARLOW, C.S., AND SONS, INC., 1326 NORTHLAKE, SEATTLE, WASHINGTON.

DUPONT, E. I., DE NEMOURS AND CO., HOGE BLDG., SEATTLE,

WASHINGTON.

PLUTO POWDER CO., 311 LENORA STREET, SEATTLE, WASHINGTON.

WATTS, CHAS. R., AND CO., 1326 NORTHLAKE, SEATTLE, WASHINGTON.

7. THAT IN VIEW OF THE FACT THAT AT LEAST FOUR POWDER COMPANIES WERE IN A POSITION TO BID AND TO MAKE DELIVERY AS REQUIRED THERE WAS NO NEED OF PURCHASING POWDER IN THE MANNER IN WHICH IT WAS OBTAINED BY ASSISTANT AIRWAYS ENGINEER WILSON. 8. NO FURTHER ACTION WAS TAKEN ON THIS CASE UNTIL THE RETURN OF MR. WILSON AFTER WHICH A THOROUGH DISCUSSION OF THE ENTIRE MATTER WAS HAD WITH HIM. HE ADVISED THAT THE FAILURE ON HIS PART TO OBSERVE CUSTOMARY PRACTICES IN HANDLING THE PURCHASING OF POWDER WAS CHARGEABLE ENTIRELY TO ILLNESS, AND SUBMITTED FOR CONSIDERATION LETTER OF APRIL 18TH (COPY ATTACHED) HEADED "POWDER.' IN DISCUSSION WITH MR. WILSON HE ADMITS THAT NO BIDS WERE OBTAINED UNTIL RECEIPT OF LETTER FROM THIS OFFICE DATED MARCH 6TH. HE FURTHER ADMITS DISCUSSING FREELY WITH MR. WATTS THE PREDICAMENT HE WAS IN, AND THAT DUE TO HIS FEAR OF DRASTIC DISCIPLINARY ACTION WHICH MIGHT EVEN RESULT IN DISMISSAL HE ACCEPTED THE AID THAT MR. WATTS RENDERED IN SUBMITTING BIDS, ETC. THIS BEARS OUT CONCLUSIVELY THE REPORT OF THE INVESTIGATING OFFICER.

TEAMS

9. A SITUATION SOMEWHAT SIMILAR TO THE POWDER SITUATION APPEARS ALSO IN THE HIRING OF TEAMS IN THAT THE TOTAL RENTAL OF TEAMS, HORSES, ETC., AMOUNTS TO $52.50, FOR WHICH NO BIDS WERE OBTAINED. THIS FIGURE IS DISCLOSED IN VOUCHERS RECEIVED BY THIS OFFICE ON MARCH 7TH, WHICH ARE ATTACHED.

10. IN CONNECTION WITH THE ABOVE NO WRITTEN ACTION WAS TAKEN BY THIS OFFICE, BUT THE MATTER WAS DISCUSSED WITH MR. WILSON AFTER HIS RETURN FROM SEATTLE. THE REASONS FOR THE HIRING OF TEAMS, HORSES, ETC., IN THE MANNER THAT THEY WERE HIRED IS COVERED BY MR. WILSON'S LETTER DATED APRIL 18TH (COPY ATTACHED), UNDER THE HEADING "TEAMS.'

11. AT THE TIME THAT INVESTIGATION WAS MADE OF THE DYNAMITE SITUATION AN INVESTIGATION WAS ALSO MADE AS TO THE NECESSITY FOR THE HIRING OF TEAMS, HORSES, ETC., ON WHAT APPEARS TO BE A SPLIT PURCHASE BASIS TO AVOID OBTAINING BIDS AND THEREBY KEEPING THE COSTS PER VOUCHER LESS THAN $25.00. THIS INVESTIGATION IN THE VICINITY OF RENTON DISCLOSED THAT AMONG THE FARMERS IN THAT LOCALITY SEVERAL WERE INTERESTED IN RENTING THEIR TEAMS, BUT WERE NOT GIVEN THE OPPORTUNITY TO DO SO. THE OPERATOR IN CHARGE AT SEATTLE ADVISED THE INVESTIGATING OFFICER THAT HE HAD HEARD SEVERAL DISGRUNTLED REMARKS BY SOME TEAMSTERS WHO DID NOT HAVE AN OPPORTUNITY TO BID ON THIS WORK.

12. IN SUMMING UP THE ENTIRE CASE, ATTENTION IS RESPECTFULLY INVITED TO THE FOLLOWING FACTS:

1. THAT VOUCHERS CANNOT BE APPROVED FOR PAYMENT BY THIS OFFICE IN VIEW OF THEIR IRREGULARITIES, ALTHOUGH INVESTIGATION CONCLUSIVELY INDICATES THAT THE SERVICES AND SUPPLIES AS SHOWN ON THE VOUCHERS HAVE BEEN ACTUALLY RECEIVED BY THE GOVERNMENT. CONSEQUENTLY, IN THE EVENT THAT PAYMENT CANNOT BE MADE, IT IS RECOMMENDED THAT CONSIDERATION BE GIVEN PARAGRAPH FIVE OF MR. WILSON'S LETTER TO THE DISTRICT MANAGER DATED APRIL 18TH, UNDER THE HEADING "POWDER.'

2. WHERE THE INVESTIGATION ALSO CONCLUSIVELY INDICATED THAT THE IRREGULARITIES AS APPEAR WERE NOT FOR THE GAIN OF THE INDIVIDUAL CONCERNED AND THAT HE DID NOT UNDER ANY CIRCUMSTANCE PROFIT BY THE IRREGULARITIES OF THE PURCHASES, IT IS BELIEVED THAT, DUE TO THE SERIOUSNESS OF THE IRREGULARITIES WHICH SHOULD NOT HAVE OCCURRED ON ACCOUNT OF HIS KNOWLEDGE OF THE PROPER METHOD OF MAKING PURCHASES, DISCIPLINARY ACTION IS RECOMMENDED.

3. THAT THE DISCIPLINARY ACTION REFERRED TO ABOVE BE IN THE NATURE OF A DEMOTION TO MECHANICIAN WITH RETENTION IN THIS DISTRICT. THIS OFFICE IS NOT IN FAVOR OF DISMISSAL IN VIEW OF MR. WILSON'S APPROXIMATELY SEVEN YEARS OF SERVICE, ALTHOUGH IT IS REALIZED THAT THE SERIOUSNESS OF THIS ENTIRE MATTER WOULD, UNDOUBTEDLY, WARRANT SUCH ACTION. MR. WILSON'S RECORD IN THE AIR NAVIGATION DIVISION STARTED WITH THAT OF AN INSPECTOR OF AIRWAYS CONSTRUCTION IN 1927, AND ALTHOUGH HE HAS AT TIMES CAUSED CONSIDERABLE RESENTMENT NOT ONLY AMONG THE MEN THAT WERE WORKING FOR HIM BUT OUTSIDERS, IT IS BELIEVED THAT THIS IS THE FIRST REAL SERIOUS VIOLATION OF THE RULES AND REGULATIONS WHICH GOVERN THE DEPARTMENT.

4. THIS OFFICE, ALTHOUGH REALIZING THE SERIOUSNESS OF THE MATTER THAT HAS BEEN PRESENTED HEREWITH, WISHES TO AGAIN RECOMMEND AGAINST DISMISSAL AND THE RETENTION OF MR. WILSON AS A RELIEF MECHANICIAN IN THIS DISTRICT. THIS DISTRICT AT PRESENT DOES NOT HAVE A RELIEF MECHANICIAN, AND IT IS BELIEVED THAT HE SHOULD BE GIVEN ANOTHER OPPORTUNITY IN THAT CAPACITY.

13. THE ENTIRE MATTER HAS RECEIVED CAREFUL CONSIDERATION AND IS FORWARDED AFTER A THOROUGH INVESTIGATION WITH REQUEST THAT EARLY CONSIDERATION BE GIVEN BY THE BUREAU WITH THE HOPES OF AN EARLY SETTLEMENT FOR ALL CONCERNED.

THE DISTRICT MANAGER'S LETTER OF MARCH 5, 1935, TO MR. WILSON, READS:

1. ATTACHED TO YOUR LETTER OF MARCH 1ST WERE THREE VOUCHERS COVERING THE PURCHASE OF EXPLOSIVES AND ELECTRIC CAPS. THESE VOUCHERS INDICATE THREE DISTINCTIVE AND SEPARATE PURCHASES FOR THE AMOUNT OF EXPLOSIVES NEEDED AT SEATTLE AND ARE LISTED AS FOLLOWS:

TABLE

DATE NAME OF DEALER ARTICLE QUANTITY COST AMOUNT

LBS. CWT. FEB. 10, 1935 LAKE FOREST PARK

DYNAMITE, 68 $14 $9.52

MERCANTILE CO. 30 PERCENT. FEB. 12, 1935 OSCAR NELSON -------- --- DO --

170 14 23.80 FEB. 16, 1935 REDMOND TRADING CO. -- --- DO - - 136 14 19.04

TOTAL ------------ ---------- 374 ------ 52.36 WHERE THE TOTAL AMOUNT OF EXPLOSIVES USED AT ONE JOB EXCEEDS $25.00, IT APPEARS THAT BIDS MUST HAVE BEEN OBTAINED BUT WERE UNAVOIDABLY OMITTED AS AN ENCLOSURE WITH YOUR LETTER OF MARCH 1ST. PLEASE FORWARD BIDS.

2.THE FOURTH PARAGRAPH OF YOUR LETTER INDICATES THAT 1,478 LBS. OF EXPLOSIVES HAVE BEEN USED. INFORMATION IS REQUESTED AS TO HOW THE BALANCE OF EXPLOSIVES USED AT THE SEATTLE RANGE JOB WERE ACQUIRED, AS WE HAVE NO RECORD EXCEPT FOR THE 374 LBS. OF 30 PERCENT DYNAMITE, PLUS 50 LBS. OF 50 PERCENT DYNAMITE. OUR RECORDS FURTHER INDICATE THE USE OF ONLY 100 CAPS, WHILE YOUR LETTER STATES 300 CAPS WERE USED. PLEASE CLARIFY THESE DISCREPANCIES.

MR. WILSON MADE RESPONSE TO THIS LETTER ON THE SAME DAY, AS FOLLOWS:

SUBJECT: PURCHASE OF EXPLOSIVES FOR SEATTLE RANGE SITE.

1. THERE ARE INCLOSED HEREWITH ALL BIDS RECEIVED FROM THE VARIOUS DEALERS. AN ESTIMATE OF THE PROBABLE AMOUNT OF EXPLOSIVES REQUIRED WAS PLACED AT FROM 1,500 TO 1,800 POUNDS AND 300 CAPS, BY MR. A. E. SWADNER, WHO WAS EMPLOYED AS FOREMAN POWDERMAN. FROM THIS ESTIMATE OF PROBABLE REQUIREMENTS DEALERS AGREED TO QUOTE SCHEDULE PUBLISHED PRICES IF THE BUSINESS COULD BE SPLIT AMONG THEM, AS EACH DEALER CARRIES ONLY A SMALL AMOUNT OF EXPLOSIVES IN MAGAZINES OUTSIDE OF THE CITY LIMITS, AND NO DELIVERY CHARGE WOULD BE MADE IF THE ENTIRE ORDER PLACED WITH ANY ONE DEALER COULD BE MADE AT ONE TIME. IT WAS FURTHER AGREED, HOWEVER, THAT IN THE EVENT OF SUSPENSION OF THE WORK FROM ANY CAUSE, THAT IN EVENT ANY DEALER HAD NOT RECEIVED A PROPORTIONATE SHARE OF THE BUSINESS, THAT THE TRANSACTION WOULD BE CONSIDERED CLOSED. IN VIEW OF THE SAVING OF HANDLING AND DELIVERY CHARGES THIS PROCEDURE WAS FOLLOWED.

2. THE TOTAL AMOUNTS OF DYNAMITE AND CAPS MENTIONED IN MY LETTER OF MARCH 1 INCLUDED ESTIMATE OF PROBABLE REQUIREMENTS TO COMPLETE ALL BLASTING. THE CORRECT AMOUNTS PURCHASED AND USED TO DATE ARE 250 ELECTRIC CAPS, 50 LBS. 50 PERCENT DITCHING POWDER, AND 1,256 LBS. OF 30 PERCENT STUMPAGE POWDER OR DYNAMITE.

3. THERE IS A VAST IMPROVEMENT IN THE APPEARANCE OF THE RANGE SITE, AND IT WILL BE POSSIBLE TO USE A HORSE-DRAWN MOWER TO KEEP DOWN VEGETATION ON THE GREATER PART OF THE SURFACE OF THE SITE.

THE DISTRICT MANAGER AGAIN ASKED FOR THE TRUE FACTS IN LETTER TO WILSON OF MARCH 6, 1935, AS FOLLOWS:

1. UNDER DATE OF MARCH 5TH A LETTER WAS FORWARDED YOU REQUESTING THAT YOU FORWARD BIDS, IN THAT 374 POUNDS OF DYNAMITE HAD BEEN PURCHASED, AT A PRICE OF $52.36. IT WAS THOUGHT AT THAT TIME THAT THE ENCLOSURE OF THE BIDS COVERING THIS PURCHASE HAD BEEN UNAVOIDABLY OMITTED; HOWEVER, UPON RECEIPT OF FOUR MORE VOUCHERS, ALL COVERING THE PURCHASE OF DYNAMITE, IT APPEARS YOU HAVE PURCHASED NOT TO EXCEED $25 WORTH OF DYNAMITE AT EACH OF SEVEN DIFFERENT HOUSES. FOR YOUR INFORMATION THEY ARE LISTED BELOW:

TABLE

DATE NAME OF DEALER ARTICLE QUANTITY COST AMOUNT

LBS. CWT. FEB. 10, 1935 LAKE FOREST PARK

DYNAMITE, 68 $14 $9.52

MERCANTILE CO. 30 PERCENT FEB. 12, 1935 OSCAR NELSON ------ --- DO --- 170 14 23.80 FEB. 16, 1935 REDMOND TRADING CO. --- DO --- 136 14 19.04 FEB. 19, 1935 H. AND H. LUMBER CO. --- DO --- 170 14 23.80 FEB. 21, 1935 RICHMOND HIGHLANDS --- DO --- 140 14 19.60

LUMBER CO. FEB. 27, 1935 A. S. WHITE ---------- DO --- 136 14 19.04 MAR. 1, 1935 CHAS. R. WATTS --- DO --- 30 14 4.20

AND CO.

TOTAL ---------- ---------- 850 ----- 119.00

2. FROM THE ABOVE IT IS QUITE EVIDENT YOU HAVE PURCHASED 850 POUNDS OF 30 PERCENT DYNAMITE, AT A TOTAL COST OF $119.00, FROM SEVEN DIFFERENT HOUSES, WITHOUT BIDS. IT IS ALSO QUITE APPARENT THAT 200 CAPS WERE PURCHASED, AT A TOTAL PRICE OF $16.80, PLUS 50 POUNDS OF 50 PERCENT DYNAMITE, AT $8.38, A GRAND TOTAL OF $144.18--- ALL DYNAMITE AND CAPS FOR FEDERAL PROJECT NO. 52, AND FOR USE AT ONE STATION, NAMELY, THE SEATTLE RANGE SITE.

3. YOU CERTAINLY ARE SUFFICIENTLY FAMILIAR WITH REGULATIONS TO KNOW THAT SPLIT PURCHASES NOT TO EXCEED $25 AT ANY ONE HOUSE IS PROHIBITED; FURTHER, THAT THE PURCHASE OF THIS LARGE AMOUNT OF DYNAMITE SHOULD HAVE BEEN MADE ON A COMPETITIVE BID BASIS, AND IN THE EVENT OF A TIE, ALL THOSE INVOLVED EITHER MATCH OR DRAW STRAWS. YOU ARE, THEREFORE, REQUESTED TO SUBMIT IMMEDIATELY A FULL STATEMENT AS TO WHY IT WAS NECESSARY TO PURCHASE 850 POUNDS OF DYNAMITE, AT $119.00, WITHOUT BIDS; ALSO, HOW YOU EXPECT THIS OFFICE TO MAKE PAYMENT, WHEN IT IS QUITE OBVIOUS PURCHASES WERE MADE AT DIFFERENT HOUSES TO AVOID OBTAINING BIDS.

4. YOUR SERVICES HAVE ALWAYS BEEN CONSIDERED BY THIS OFFICE AS EXCELLENT; YOU HAVE BEEN UNTIRING IN YOUR EFFORTS AND HAVE PRODUCED AT TIMES REMARKABLE RESULTS. HOWEVER, ALL OF THESE RESULTS BECOME GREATLY OVERSHADOWED WHEN YOU SUBMIT FOR PAYMENT BY THIS OFFICE SEVEN DISTINCT AND SEPARATE VOUCHERS, MOST OF WHICH ARE IN THE AMOUNT OF APPROXIMATELY $23.00, TO AVOID OBTAINING BIDS. YOU ALSO KNOW THE GENERAL ACCOUNTING OFFICE WILL NOT UNDER ANY CIRCUMSTANCES TOLERATE THE PURCHASING OF ANY ARTICLE OR SUPPLIES WHERE IT IS QUITE OBVIOUS SPLIT PURCHASES WERE MADE TO AVOID OBTAINING BIDS.

5. AN IMMEDIATE REPLY WITH FULL EXPLANATION IS EXPECTED.

MR. WILSON DID NOT REPLY TO THIS LAST LETTER UNTIL APRIL 18, 1935. HIS LETTER OF THAT DATE, CONCERNING POWDER, IT IS STATED:

* * * THE HIGH EXPLOSIVES WERE ACCEPTED IN SMALL QUANTITIES FROM SEVERAL DEALERS AS NEEDED FOR IMMEDIATE USE, IN THE BELIEF THAT AN ACTUAL SAVING OF DELIVERY CHARGES WERE BEING MADE (REF., ,GENERAL RULES," PARAGRAPH 4,"ONE SALE, ONE DELIVERY, TO ONE DESTINATION"). THIS IMPRESSION WAS BASED ON THE BELIEF THAT SMALL DEALERS WERE IN A POSITION TO FURNISH ONLY SMALL QUANTITIES FROM LIMITED STOCKS ON HAND AND COULD REALIZE A PROFIT FROM SINGLE TRANSACTIONS. I HAVE LATER LEARNED THAT THESE DEALERS ARE ALLOWED THE 6,000 LB. LOT PRICE BY JOBBERS ON SMALL ORDERS AND ACCORDINGLY ACTUALLY RECEIVE $1.75 PER HUNDRED POUNDS GROSS PROFIT ON EXPLOSIVES, FROM WHICH TRANSPORTATION COSTS MUST BE DEDUCTED. IT IS LOGICAL TO BELIEVE THAT THIS BUSINESS WOULD HAVE BEEN UNATTRACTIVE TO ANY ONE OF THESE DEALERS IF IT HAD BEEN NECESSARY TO HAVE MADE ALL OF THE DELIVERIES WHICH WERE REQUIRED AT THE CONVENIENCE OF THE GOVERNMENT. * * *

3. IT IS UNDERSTOOD THAT THE NEAREST MAGAZINE FROM WHICH HIGH EXPLOSIVES WERE OBTAINED WAS LOCATED AT BOTHELL, WASHINGTON, OVER 30 MILES DISTANT FROM THE SEATTLE RADIO RANGE SITE. IT HAS BEEN MY IMPRESSION THAT IT HAS BEEN CONSIDERED FAIR COMPETITION WHEN THREE OR MORE INDEPENDENT DEALERS WHOSE BUSINESSES ARE OPERATED ENTIRELY SEPARATELY FROM EACH OTHER HAVE BEEN INVITED TO PARTICIPATE COMPETITIVELY IN FURNISHING PRICES TO THE GOVERNMENT.

4. * * * IT IS ADVISED THAT PROPOSALS FORWARDED WERE PREPARED BEFORE I WAS AWARE THAT AN ADVANTAGE COULD BE REALIZED IN SAVING DELIVERY CHARGES BY DIVIDING THE BUSINESS AMONG SEVERAL DEALERS, AND DUE TO MY ILLNESS I OVERLOOKED ADDING A SUITABLE CLAUSE TO THE PROPOSALS WHICH WOULD HAVE CLARIFIED THE ENTIRE TRANSACTION.

5. I HAVE ALWAYS ENDEAVORED TO PUT MY BEST EFFORT INTO ANY WORK ASSIGNED ME, AND IT IS DEEPLY REGRETTED THAT THIS HAS OCCURRED. I WISH TO DO WHATEVER I CAN TO ADJUST THE MATTER, AND IN THE EVENT REGULATIONS PREVENT THE GOVERNMENT FROM MAKING PAYMENT FOR THE EXPLOSIVES USED, IT IS RESPECTFULLY REQUESTED THAT I BE PERMITTED TO WITHDRAW THE CLAIMS AND MAKE PAYMENT FROM MY PERSONAL FUNDS.

THE ACTUAL MATERIAL FACTS WERE NOT ENTIRELY DISCLOSED UNTIL THERE HAD BEEN INVESTIGATION AND THE SEVERAL PARTIES INVOLVED HAD BEEN INTERVIEWED.

THE CONCLUSION IS UNAVOIDABLE FROM THIS RECORD THAT CERTAIN OF MR. WILSON'S LETTERS CONTAIN INCORRECT AND MISLEADING STATEMENTS OF FACT AND THAT HE WELL KNEW THE TRUE FACTS AT THE TIME BUT THAT IT WAS HIS PURPOSE TO MISLEAD HIS SUPERIORS AND TO CONCEAL A COURSE OF PROCEDURE FOLLOWED IN THE MAKING OF PURCHASES WHICH WAS DESIGNED AND INTENDED TO AVOID COMPLIANCE WITH SECTION 3709 OF THE REVISED STATUTES, AS AMENDED. U.S.C. 5 AND 6; 30 OP.ATTY.GEN. 381, 382. ANY SUCH COURSE OF ACTION IS CONTRARY TO LAW. 36 OP.ATTY.GEN. 33, 37. ALSO, THE CONCLUSION IS UNAVOIDABLE THAT CERTAIN OF THE SIGNATURES ON THE BIDS AND VOUCHERS INVOLVED ARE NOT GENUINE AND THAT CERTAIN OF SUCH BIDS AND VOUCHERS CONTAIN MISREPRESENTATIONS OF FACT DELIBERATELY MADE WITH THE INTENTION TO MISLEAD IN CONNECTION WITH CLAIMS AGAINST THE UNITED STATES FOR THE PAYMENT OF MONEYS. IN THESE CIRCUMSTANCES THE CLAIMS PRESENTED ARE NOT AUTHORIZED TO BE CERTIFIED FOR PAYMENT, IRRESPECTIVE OF THE FACT THAT THE GOVERNMENT MAY HAVE RECEIVED CERTAIN BENEFITS. THE CLAIMS, ACCORDINGLY, WILL BE DISALLOWED. IT WOULD APPEAR FROM THE REPORTED FACTS THAT THERE MAY HAVE BEEN A VIOLATION OF THE CRIMINAL STATUTES IN CONNECTION WITH THE CLAIMS PRESENTED. SEE, AMONG OTHERS, (1) SECTION 29 OF THE CRIMINAL CODE, 28 U.S.C. 73, MAKING IT A FELONY TO FALSELY MAKE OR FORGE BIDS OR PUBLIC RECORDS OR TO KNOWINGLY TRANSMIT SUCH FALSE OR FORGED BIDS, FOR THE PURPOSE OF OBTAINING MONEY, ETC.; (2) SECTION 30 OF THE CRIMINAL CODE, 28 U.S.C. 74, MAKING IT A FELONY FOR POSSESSING SUCH FALSE OR FORGED WRITING FOR THE PURPOSE OF ENABLING ANOTHER TO OBTAIN ANY SUM OF MONEY FROM THE UNITED STATES; (3) SECTIONS 34 AND 35 OF THE CRIMINAL CODE, 18 U.S.C. 79, 80, AND 83, MAKING IT A FELONY TO ATTEMPT, KNOWINGLY OR FRAUDULENTLY, TO HAVE PAYMENT MADE BY THE UNITED STATES ON A FALSE OR FORGED INSTRUMENT OR TO PRESENT OR CAUSE TO BE PRESENTED A FALSE, FICTITIOUS, OR FRAUDULENT CLAIM OR TO WILLFULLY COVER UP, CONCEAL, OR MISREPRESENT A MATERIAL FACT OR TO USE OR CAUSE TO BE USED A FALSE VOUCHER, ETC.; (4) SECTION 37 OF THE CRIMINAL CODE, 28 U.S.C. 88, MAKING IT A FELONY TO CONSPIRE WITH ANOTHER TO COMMIT ANY OFFENSE AGAINST THE UNITED STATES; (5) ACT OF MARCH 4, 1911, 36 STAT. 1355, 18 U.S.C. 189, MAKING IT A FELONY FOR A PUBLIC OFFICIAL TO MAKE A FALSE OR FICTITIOUS ENTRY OR STATEMENT IN A PUBLIC RECORD IN ANY MATTER CONNECTED WITH HIS DUTIES OR TO AID OR ABET IN THE MAKING OF SUCH FALSE OR FICTITIOUS ENTRY; ALSO SECTION 106 OF THE CRIMINAL CODE, MAKING IT A CRIME FOR A PUBLIC OFFICER OF THE UNITED STATES TO MAKE OR GIVE A CERTIFICATE OR WRITING CONTAINING ANY STATEMENT HE KNOWS TO BE FALSE; KURZROCK V. UNITED STATES, 1 F./2D) 209.

A COPY OF THIS LETTER IS BEING REFERRED TO THE ATTORNEY GENERAL IN ACCORDANCE WITH THE APPARENT PURPOSE OF REQUIREMENTS OF SECTION 146, CRIMINAL CODE (18 U.S.C. 251).