Space Swindle

From faulty parts for the International Space Station to the theft of moon rocks, the nation's cash-thin space agency was defrauded dozens of times over the last year by contractors — and sometimes by its own employees, investigative reports show.

Some of the problems discovered by NASA's inspector general office involved faulty parts, improper repairs and fake test results that could endanger the safety of astronauts and others, the internal watchdog said. It said NASA should significantly improve its oversight of contractors.

Two of the contractors are located in Oklahoma.

"We are particularly concerned with product substitution fraud that can impact safety," said Paul Shawcross, executive officer for the inspector general. "When we get a fraudulent parts case, we notify the safety people. If there's any risk, those parts will be immediately taken out of service."

An Associated Press review of inspector general records found that in the past year, the internal watchdog cited more than 50 individuals and nearly three dozen instances in which the National Aeronautics and Space Administration was victimized by improper actions, mostly involving criminal and civil fraud. Six cases involved the faulty parts or false certification of test results. Other investigations found breaches of NASA's computer system by hackers. There was no indication that lives of astronauts or anyone else was endangered from the faulty parts.

NASA says such problems are taken seriously but that the dollar amounts of fraud represent a small part of the agency's overall budget, which in 2002 was $14.8 billion. A total of the fraudulent amounts was not available.

"With that amount of money involved there's going to be fraud, bad procedures and unintentional mistakes," NASA spokesman Robert Mirelson said. "We're not really seeing any kind of a trend where there's an attitude that here's an agency easy to defraud.

"We certainly do not accept that we have to live with safety violations and fraud. When we find it we will correct it and take appropriate action," he said.

No case was more bizarre than the July 13, 2002 theft of a 600-pound safe filled with lunar samples from every Apollo mission.

A week later authorities arrested four individuals, three of them student employees at the Johnson Space Center in Houston where the theft took place. The arrests came after undercover agents received an e-mail tip and started communicating with a person offering "priceless moon rocks" collected by Apollo astronauts in 1969 and the early 1970s, the FBI said.

In another case, a NASA contract worker pleaded guilty to accepting $27,000 worth of collect telephone calls from prison inmates, and her company billed the cost to the Hubble Space Telescope program.

The chairman of the House Science subcommittee that oversees NASA, Rep. Dana Rohrabacher, R-Calif., said, "It is clear that there are some fundamental errors in the NASA system. I would hope that NASA Administrator (Sean) O'Keefe pays attention to these fundamental systemic problems."

Cutting dollars lost to fraud is important at NASA, an agency that has acknowledged its major project, the International Space Station, was heading for overruns that could reach $600 million or more.

Examples of fraud cited by the inspector general:

• Key Enterprises Inc. of Oilton, Okla., and company official Christopher Key were charged in U.S. District Court in Tulsa on May 24 with making a false statement, aiding and abetting and mail fraud. The indictment said the company improperly repaired Pratt & Whitney JT8D engine parts used by NASA, and then improperly certified the repair as conforming to manufacturer specifications. A trial is pending.
• On Sept. 4, Herco Aircraft Machine Inc. and its owner, Heriberto Cortez, were indicted in U.S. District Court in San Antonio on charges of conspiracy and mail fraud. The indictment said Herco manufactured substandard parts in T-38 jets, used by astranaut-pilots to maintain their flying proficiency and to transport NASA crew members. A trial is set for December.
• Police in Milan, Italy on July 31 arrested 14 members of the "Reservoir Dogs," a computer hacking crew that used NASA computers at the Jet Propulsion Laboratory in Pasadena, Calif., to chat on the Internet.
• On July 8, 2002, Copeland Manufacturing Corp. of Tulsa was sentenced in Oklahoma on July 8 to five years probation, fined $251,722 and ordered to pay $68,048 in restitution for making false statements. The company's aluminum battery alignment guides, used for replacing batteries on the International Space Station, were found to have unauthorized weld repairs.
• The U.S. attorney's office in New Haven, Conn., on April 12 announced a civil settlement with Chromalloy Gas Turbine Corp. for conduct relating to improper certification of aircraft engine balancing tests by a former subsidiary in Newington, Conn. Chromalloy, headquartered in San Antonio, agreed to pay $150,000, but did not acknowledge a violation of law.
• On March 4, 2002, former NASA contract worker Douglas F. Starfield pleaded guilty in U.S. District Court in Clarksburg, W. Va., to one count of transmitting communications containing threats to injure someone. While employed at NASA's Independent Verification and Validation facility in Fairmont, W.Va., Starfield admitted sending a threatening message to the chief executive officer of Boise Cascade Corp. He was sentenced to three years probation.
• On Feb. 1, 2002, a juvenile computer hacker known as "Pimpshiz" was sentenced in Contra Costa County, Calif. after pleading guilty to replacing a NASA web page at the Goddard Space Flight Center, Greenbelt, Md., with his own web page protesting a lawsuit against the Napster music sharing web site. His sentence included forfeiture of his computer, restricted computer use to e-mail only for two years and a prohibition that he may not use the "Pimpshiz" nickname during his two-years probation.