Second ex-Ingalls supervisor sentenced to prison time in $11.3 million fraud

Government indicates it is still investigating Ingalls

GULFPORT -- Former Ingalls Shipbuilding Supervisor Charles Gardner Jr. said he "never meant to hurt anybody, the government or my family" before he was sentenced Thursday for approving his employees' time on the job though he knew it was fraudulent.

"I'm sorry for all of this, for the crime I committed, and I learned my lesson," he told U.S. District Judge Sul Ozerden before the judge sentenced him to six months in prison, one year of supervised release and eight months of house arrest along with a $20,000 fine. Gardner's wife and various other family members, including their three children, attended the sentencing. Afterward, his wife told her husband's attorney she did not want to be without him and that they'd been together since she was 15.

Ozerden told Gardner he realized others at the Pascagoula shipyard had been doing the same thing to meet "unrealistic budgets," but said his actions showed a "lack of respect for the law" and resulted in a "large loss to the government for which the court will not be able to order restitution."

Gardner, 41, of Mobile, and a former employee Gardner supervised, Neil Riley Holden, 52, of Jackson County, pleaded guilty to misprision of felony in the case, meaning they had knowledge of a crime but failed to report it.

Prosecutors and investigators said the fraud occurred between January 2010 and February 2013 and resulted in a loss to the government of up to $11.3 million. It led to the firings of more than 20 Ingalls employees, including Gardner and Holden.

According to court records, the pair did not report fraudulent time their employees submitted for their work on hulls of Navy and Coast Guard vessels.

Of the total financial loss, a little more than $1,8 million was attributed to Gardner, and $600,000 to Holden. Holden, who worked at Ingalls for 30 years, was sentenced Wednesday to three years' probation and eight months of house arrest. He was fined $17,500.

Neither man, however, benefited financially from the fraud. Their attorneys said they did what they did to keep their jobs.

During testimony Thursday, Vicki Skidmore of the U.S. Defense Contract Audit Agency testified she was hired by the U.S. Attorney's Office to determine the financial loss to the government for a civil suit the government plans to file against Ingalls to recover the money.

During cross-examination, Gardner's attorney, Rufus Alldredge, questioned Skidmore's numbers.

"I think she has a motive to make the numbers as high as possible for the purpose of the civil suit," Alldredge said. Skidmore said Ingalls had disputed her loss estimates and claimed the government's overall loss at a little more than $1 million. She did not agree with Ingalls' figures.

Alldredge said his client, who cooperated with investigators from the start of the probe, was a Christian man with no felony record who had always been a productive member of society.

"We want him to be honest with the court (and) with the government and he has continued to cooperate with the investigation, whatever it is, that's going on at Ingalls," Assistant U.S. Attorney Jay Golden said.

The Sun Herald tried to contact Ingalls for a comment on the investigation, but never heard back.

Alldredge said Ingalls used to have a sign up warning people of the crime.

He said the sign read, "Mischarging is illegal" but he said Ingalls took it down several years ago.

In a motion Alldredge filed, he said, " the culture of mischarging labor at Huntington Ingalls was obviously pervasive" and the government admitted what the shipyard expected from Gardner and Holden "contained unrealistic expectations."

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 investigated the case. In addition, Ingalls conducted its own internal investigation.

This story was originally published December 10, 2015 at 6:30 PM with the headline "Second ex-Ingalls supervisor sentenced to prison time in $11.3 million fraud ."