Fired Ingalls supervisor sentenced for role in $11.3M fraud

GULFPORT -- A former supervisor at Ingalls Shipbuilding was sentenced Wednesday to three years' probation and eight months of house arrest for failing to report the fraudulent charging of time and labor for work on U.S. Coast Guard and Navy vessels at the Pascagoula shipyard.

U.S. District Judge Sul Ozerden also ordered Neil Riley Holden, 52, of Jackson County, to pay a $17,500 fine and a $100 special assessment fee. Holden and his former supervisor, Robert Gary Gardner Jr., 41, of Mobile, pleaded guilty in June to a bill of information charging them with misprision of felony, which means they knew a crime was being committed but failed to report it. Gardner used to live in Jackson County.

Court papers say the pair repeatedly failed to report the fraudulent time employees under them submitted for work on hulls on Navy and Coast Guard vessels. All of this was done, Holden and Gardner said, to meet unrealistic contract budgets.

Investigators and prosecutors said the fraud occurred between January 2010 and February 2013 and resulted in a loss to the government of up to $11.3 million and the firing of more than 20 Ingalls employees, including Holden and Gardner.

Of the total financial loss, more than $600,000 was attributed to Holden, though he did not pocket any cash as part of the scheme. His attorney, Tim Holleman, said it was a common practice to do what Holden was doing to meet budgets.

"Mr. Holden is paying a heavy price for doing his job," Holleman said. "But there is a message here that employees who do something wrong to benefit their employer sometimes pay the price."

Violation of trust

Ozerden described what Holden had done as a "violation of public trust.

"Though he didn't benefit financially, it was a way to preserve his employment," the judge said. "I understand that this is something others were doing and had been doing, but just because everyone around you is committing a crime doesn't mean you should do it too."

Gardner also was scheduled for sentencing Wednesday, but it was moved to Thursday after a dispute over the total financial loss attributed to him. Some of the workers identified as his employees, he said, did not actually work under his direction.

The government had initially said Holden's actions resulted in a financial loss to Ingalls of more than $2 million, but the government agreed to take a second look to determine the loss amount.

Holden worked at Ingalls for 30 years and Gardner for 14 years.

'An honest mistake'

More than 20 relatives of both Holden and Gardner attended the sentencing hearing Wednesday.

Andrea Holden described her husband as a "good, Christian man" who "knows he made an honest mistake."

Holden's brother-in-law, Michael Schwartz, also spoke.

"Neil Holden is a hardworking family man who admits that he has made a mistake," Schwartz said. "For the last three years, he has been paying the price for that mistake with his job loss, loss of his family income, personal humiliation and the emotional prison which he has placed himself -- consequences he will continue to face far into the future. But in that time, Neil has rediscovered his faith, dedicated his time to helping one daughter fix up her first home and proudly supported his two daughters and sons-in-law as they raise his first two grandchildren with another on the way."

The case was investigated by the Naval Criminal Investigative Service, the U.S. Defense Investigative Service, the U.S. Coast Guard Investigative Service and the U.S. Defense Contract Audit Agency. In addition, Ingalls conducted its own internal investigation.

This story was originally published December 9, 2015 at 5:54 PM with the headline "Fired Ingalls supervisor sentenced for role in $11.3M fraud ."