Did the Los Angeles Sheriff’s Department Defraud the Feds?

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LASD SEA King. Photo courtesy Wikipemedia Commons

On August 28, 2013,  Dave Rathbun sent an email to Chief Edmund Sexton of the Homeland Security Division of the Los Angeles Sheriff’s Department (LASD).

“Chief Sexton,” wrote Rathbun, who had been a crew chief in Aero Bureau, an elite unit inside the LASD that oversees the department’s aircraft fleet of aircraft. “I send you this email because I don’t want you to be blindsided by some very troubling information that I have been made aware of.”

The email would lead to an investigation that implicated senior officers of the nation’s largest law enforcement agency in an alleged effort to defraud the federal government.  The investigation received almost no attention at the time, when the LASD was already in the midst of a scandal that resulted in the conviction of then-Sheriff Lee Baca and his undersheriff Paul Tanaka.

But Witness LA has pieced together the details from interviews with sources inside and outside the department.

The investigation was triggered by the discovery months earlier in a Georgia warehouse that a shipment of Sikorsky helicopter engines designated to be returned to the U.S. Navy Marine One Program, which trains Sea King pilots who operate the White House helicopter fleet, was seriously faulty.

The cannisters which arrived at the warehouse contained helicopter engines—but they weren’t  the engines used by the aircraft loaned to the LASD over a decade before by the federal government’s Law Enforcement Support Office (LESO), which provides decommissioned military equipment to law enforcement agencies around the U.S. , under the so-called “1033 program.”

The LASD had decided to replace its Sea Kings, used for search and rescue operations across the sprawling area covered by the agency, with newer aircraft. Under the terms of the LESO program, the loaned aircraft were supposed to be returned intact to the original owner—the feds.

The transfer of military property is governed by strict rules, including the mandate that  “Property may not be sold, rented, exchanged, leased, bartered, used to secure a loan, stockpiled for later use.”

The Return of “Junk”

The original  whistleblower was Mike Stille, president and founder of Clayton International in Peachtree, Ga, who had been a consultant for the LASD on the Sea King fleet, and served as the middleman between the LASD and the feds for the return of the helicopters, and all their parts.

Red flags began emerging the minute he started paging through the paperwork that accompanied the Sea King engines.

Due to the stringent safety issues involved, all major aircraft parts such as engines, fuel controls, and gear boxes, must be accompanied by logbooks detailing when the part was serviced, on what aircraft or aircrafts it has been installed, and when, and so on.

Yet, for the first two of the six engines Stille received, he noticed that the records for the fuel controls were completely missing.

When he and his crew at Clayton International opened the canisters for the two engines, the reason for the missing paperwork became evident. In general, the engines looked fine, except when it came to the fuel controls, without which the aircraft can’t fly.

“They were old and unusable,” he recalled.

Next, Stille turned his attention to the other four canisters. These should have contained the four engines he had seen earlier on a trip to Aero Bureau’s surplus lot in Long Beach, CA .  Back then, those canisters had sported identification plaques, which included the engines’ serial numbers, the date when they had last been overhauled, and a third date when they’d been “preserved”—meaning wiped down thoroughly with protective oil, and then sealed in their containers for safekeeping.

But now, there were no ID labels, which was not a positive sign. There was no reason whatsoever for anyone to have removed those ID plaques.

One by one, Stille and his crew opened the four canisters.

“And I saw engines that were all but worthless,” said Stille. “They were just a bunch of old engine parts bolted back together.”

On one engine, the fuel control—which was painted a vivid claret—was not only worn out and unusable, “it belonged on an entirely different model of engine not used by LA or the Navy,” Stille explained.

These were not, in other words, the four engines that the sheriff’s department was required to return to the Navy. They were, according to Stille, “junk.”

When Stille checked further, he saw that, bizarrely, the engines did have the same metal serial number plates—the equivalent of a VIN number on a car—as those engines he had been hired to get back to the feds.

This meant someone had unscrewed number plates from the four good engines, and screwed them on these four unusable junkers now sitting on the concrete floor of Clayton’s warehouse.

The switched number plates led Stille to one more conclusion: Aero Bureau had plainly sold the four good engines, worth around $400,000 or $500,000 a piece, to someone.

He was equally sure that the LASD had also sold the two good fuel controls, each of which were worth around $40,000.

But could he prove it?

Furious, Stille decided to try.

The Fuel Control Switcheroo

It didn’t take him long to figure out who might have bought the fuel controls.

 He’d heard that a helicopter operating company in White City, Oregon, called the Croman Corporation, had recently been interested in acquiring some fuel controls. Croman specialized in contracting their helicopters, along with pilots, to the forest service for fire suppression, and occasionally also contracted their aircraft to timber firms to do heli-logging.

And Croman flew Sea Kings. Stille called Croman and talked to Kory Kaufman, another person he’d known for years, and whom he considered a friend. He asked if Kaufman had managed to procure any of those fuel controls he’d been looking for.

“Oh, yeah, the LA County Sheriff’s Department sold us two of them,” said Kaufman.

“And we also traded them two timed-out cores,” Kaufman added.

When WitnessLA spoke to Kaufman, he repeated what much of what he said to Stille, and explained that “timed out” means that the fuel controls cannot safely or legally fly until they’ve been overhauled.

According to Kaufman, one of his mechanics flew to LA to personally remove the good fuel controls from the Sea King engines, and screw the bad controls back in their place. “We wanted to make sure they were installed properly,” he said.

Kaufman also told us that the officials he spoke to at Aero Bureau never gave him, or anyone else at Croman, any reason to believe that the LASD didn’t have the right to sell the two fuel controls.

Interestingly, when it came to payment, the Aero Bureau people didn’t want a check to be sent to the LASD, or to LA County. They told Croman to send the money to British Columbia (Canada)-located Rotor Maxx, which overhauls various Sikorsky helicopters and parts, ostensibly to pay old bills or for future work.

One Missing Sea King Engine Label. Photo Courtesy WitnessLA

Stille asked Kaufman if he still had the serial numbers of the two old fuel controls Croman had given to Aero Bureau. Kaufman did, and dug them up for Stille.

As Stille had suspected, the numbers Kaufman read off were identical to those on the timed-out parts installed on two of the supposedly good engines Stille was staring at in his warehouse.

Yet it was one thing to suspect that the LASD people had sold RotoMaxx four engines, then covered their actions by interchanging the serial number plates. It was quite another thing to find evidence to substantiate those suspicions.

But then Stille had an idea.

Since he did so much work for the Marine One program, the Navy and other government entities often stored equipment with his company, Stille knew that the Navy had recently transferred 42 engines to the Department of State for use on the S-61T program, a helicopter being built by Sikorsky for use in the Middle East.

The overhaul of a portion of these engines was managed by Sikorsky under a Department of State contract. Since there were so many engines that needed work, Sikorsky parceled the engines out to several contractors, including Rotor Maxx, to be overhauled from the ground up.

(Sikorsky hasn’t made any new Sea Kings or Sea King engines in years, so for those still devoted to the helicopters for their unique combination of qualities, the only way to get a “new” engine is to overhaul an old engine with obsessive skill and care.)

Stille knew about the deal because Clayton had been storing those engines for the Navy until they were needed.

Due to the fact that he is a meticulous record keeper, Stille still had copies of the logbooks for the engines he’d been storing, which meant he also had paperwork for every engine part that was installed on those old engines he’d stored.

Stille got out the logbooks and began scanning them. Voila. The data plates for the parts on four of that batch of old and unusable engines that had gone from his place to Rotor Maxx, via Sikorsky, matched the numbers on the parts attached to the four junk engines that the LASD had tried to pass off as being in like-new condition.

This also meant that Rotor Maxx had used the good engines meant for the Navy to perform their own sleight of hand: Instead of going to the cost and trouble of overhauling the old, junky engines for Sikorsky, they simply assembled faux “overhauled” engines from the major components of the four pristine LASD engines, with the data plates switched to fool Sikorsky into thinking Rotor Maxx had done the work for which they were going to be paid up to $300,000 per engine.

“In other words,” said Stille, since they underpaid for the LASD engines, “they made a very nice profit for doing nothing at all—and saying they did.”

As for the LASD, “the intent,” suggested Stille, “was to misrepresent what was being turned back into the Navy.”

Stille talked the matter over with Dave Rathbun, who had worked a while for Clayton after his retirement from the LASD in 2002, and the two had remained friends.

The former Air 5 Crew Chief said he thought it was time to notify the FBI.  But he decided, out of his sense of obligation to first notify his former employers at LASD what was going on first.

The Investigation  Begins

Rathbun’s August 18,  2013 email to Chief Sexton got an immediate response.

By the end of the following day,  Sexton had sent a formal request to Captain Alicia Ault of the LASD Internal Affairs Bureau (IAB) asking for an investigation to be opened into the actions of Cpt. Louis Duran, Lt. Robert Wheat, and Sgt. Casey Dowling—the Aero Bureau’s senior officers.

Sexton also included in his request a letter from Dowling which described the status of what he described as “spare parts”   for the Sea Kings.  In the letter Dowling said that all the Navy’s property that they were supposed to give back had indeed been returned via Stille.

They did, he admitted, keep six engines that they “weren’t required to return.”  But all the rest of the engines, gear boxes, and tail or main rotors had gone back. (Although Stille had paperwork and physical evidence that said that, in fact, they had not.)

Pointedly, however, Sexton’s note included a copy of the specific restrictions governing LESO equipment which made clear that one does not get to sell or barter Navy property to recoup the money spent on routine maintenance and repair on the extremely valuable aircraft and equipment one has been using for free for years.

 At the time that Rathbun and Stille began discussing the idea of calling the feds, the Los Angeles office of the FBI was already three- plus years into a widening criminal investigation into brutality and corruption by members of the Los Angeles County Sheriff’s Department.

That investigation would eventually result in the conviction of 21 department members, including the once-untouchable former undersheriff, Paul Tanaka and, most recently, LA’s popular longtime sheriff, Lee Baca, who will be sentenced to federal prison on May 12 of this year.

 As it happened, Dave Rathbun’s LASD deputy son, Mike Rathbun, had spoken to the feds multiple times as whistleblower.  This came about after the younger Rathbun and his deputy partner, James Sexton,  had witnessed what they believed to be serious wrongdoing when they worked in the chronically-troubled county jail system.

But when they tried to report what they knew to the appropriate parties at the LASD, they began receiving convincing threats.  Eventually, the pattern of threats widened to include their family members, which meant that Dave Rathbun began having conversations with the FBI as well.

So  Dave Rathbun knew whom to call.

‘We Were the Victims, Too”

He dialed Special Agent Leah Marx, and told her in detail what Stille had discovered.

Marx (who has since married and is now Leah Marx Tanner) was the lead agent on the existing LASD investigation.  According to Rathbun, Marx said that financial wrongdoing wasn’t her expertise.  “But I’m going to call a guy who does exactly this kind thing.”

The person Marx contacted was Special Agent Jonathan “Casey” MacDonald (who went by Casey).  Soon, both he and Marx were talking to Stille.

A few months later, Agent McDonald flew to Clayton headquarters in Peachtree City where, with a local FBI agent, he photographed the junk engines and the bad fuel controls, while Stille gave them a tutorial about what they were seeing.

“They even fingerprinted the switched number plates,” said Stille.

According to both Rathbun and Stille, the FBI’s concern escalated when they learned that these bad parts masquerading as good parts, were headed for the Marine One presidential program.

“I had to talk them out of the trees, a little,” Stille said. “I explained that although the engines were going to the presidential program, none of those engines would have wound up on the president’s personal aircraft.”  They sere slated to be used on training aircraft for the program.

Nevertheless, the agents were off and running.  They contacted Croman and the Navy, and others.

Croman’s Korey Kaufman said he talked to the feds multiple times.  “And we told them,” said Kaufman, “that we were the victims too.”

 The FBI was particularly eager to talk to Jeremy Brown at Rotor Maxx.  But Brown was a Canadian, which meant various kinds of permissions were involved.

“At one point they were waiting for him to fly in the U.S. and they were going to seize him,” said Stille.

Eventually, the FBI did wind up, metaphorically, on Brown and Rotor Maxx’s doorstep, as Stille had warned many months before.  But the actions of a Canadian company were not really what most interested the LA feds.  It was the people at Aero Bureau.

Meanwhile back at the sheriff’s department, on December 4, 2013, the top three people at Aero Bureau during the engine swap period were relieved of duty by the sheriff’s department, now that the FBI had formally begun an investigation.

These were the same three that Chief Sexton had flagged in his IAB memo: Sgt. Casey Dowling, the guy who sent the email to Stille barring him from coming on sheriff’s department property; Lt. Robert Wheat, the operations lieutenant and second in command; and Captain Louis Duran, the bureau’s loyalty-obsessed commanding officer.

Who Benefited?

Yet, as the investigation moved on during much of 2014, according to the feds, there was one large puzzle piece missing.

“Casey told me they still couldn’t find evidence of personal gain,” said Stille.

They still didn’t know if money had found its way into anyone’s individual pockets, although many familiar with the case of the switched engines felt someone at Aero Bureau had to be getting something out of the deal.

“Why take the risk of committing a crime and defrauding the federal government, if you weren’t getting something out of it?” asked one LASD source.

Certainly $10,000 could have changed hands between RotorMaxx and Louie or someone without leaving any trail, said one Aero sources we spoke with.  “But how would you know if that happened or not?”  And how would you prove it?

And it was also possible, said Aero Bureau sources, that Duran and company simply wanted a slush fund they could draw on for bureau wants and needs without going to the county for approval.

“And with Tanaka’s protection, they would have figured they could get away with it,” said an LASD source.

 In any event, finding and proving personal gain became a sticking point, and gradually the Aero Bureau investigation began to slow down.

 It didn’t help that, as 2014 ended and 2015 began, in LA the feds’ interest was increasingly hyper-focused on gathering the evidence and witnesses needed to charge and try the former undersheriff, Paul Tanaka, and after him the former sheriff, Lee Baca.

Finally, on April 13, 2015, Assistant U.S. Attorney Brandon Fox—who was the lead prosecutor on the majority of the cases that the feds were bringing against members of the LASD —wrote a letter to Special Agent Casey McDonald officially “declining” to file charges.

When Cory McDonald told Stille that the FBI had decided to drop the case, he reiterated that their inability to nail down who personally profited was the stumbling block.

Our sources close to the U.S. Attorney’s Office, told us the same thing.

They couldn’t pursue everything.  The feds have bosses too. And, without finding the personal gain, the investigation lost its…well….punch.

Interestingly, although the local feds dropped the investigation, agents from the investigative wing of the Office of the Inspector General in the State Department picked it up.

And, in February 2016, Special Agent Samuel C. Brown contacted Stille.

Again, there was a flurry of action, mostly aimed at Rotor Maxx’s involvement with the engine switch, but part way through 2016, this new D.C. based investigation too seemed to lose energy.

Once the feds had finished their probe, the LA County Sheriff’s Department, Internal Affairs, could start their own investigation, which had been on hold since December 2013.

In 2016, LASD internal affairs too ended their investigation according sheriff’s department spokeswoman, Nicole Nishida.

As for the outcome:  “The conclusion cannot be disclosed,” she said.

Prior to the end of the Internal Affairs investigation, Louis Duran, Casey Dowling, and Robert Wheat and four other department members filed a lawsuit against the County of Los Angeles,  alleging that former sheriff Lee Baca retaliated against each of them for their support of former undersheriff Paul Tanaka’s 2013-2014 candidacy for sheriff.

(Pre-indictment, Tanaka ran for the position and made it as far as the November 2014 runoff.)

At the 2015 civil trial, when questioned by county attorneys about the matter of the Navy’s engines, Wheat said little, Duran claimed little or no knowledge of the issue.  Dowling cried when on the witness stand about how difficult it had been to be relieved of duty.

On December 15, 2015, a federal jury found in favor of the plaintiffs.

Duran, Dowling and Wheat each received $120,000 in damages.

As of this writing, Louis Duran, Casey Dowling and Robert Wheat have retired from the Los Angeles Sheriff’s Department.  Their attorney, Brad Gage, told us emphatically that his three clients had been cleared of any wrongdoing by three different agencies.

RotorMaxx’s Jeremy Brown, who was the firm’s founder, is no longer with the company and was reportedly forced into a buyout by his partners.

Yet, many inside or close to Aero Bureau are still frustrated.

According to one pilot, who was familiar with the details of the RotorMaxx transaction, what took place with the data plate switch on the four engines, in particular,  was extremely dangerous.

“You don’t tamper with serial numbers. You don’t tamper with the logs for parts, you don’t tamper with what’s ‘serviceable’ and what is ‘not serviceable.’ It was absolutely insane,” he said. “What if one of those parts had not been fully inspected” and been installed on a plane? he asked.  What if Stille had not caught what he caught?

Mike Stille put it another way.

The bottom line, he said, is that “the choices and actions”  by certain people in Aero Bureau “hold in contempt the good will of the Navy to loan the use of Navy aircraft and engines for all those years.”

The working pilots we spoke with this week agreed. Look, one told us, “Eighty-five percent of the guys at Aero Bureau aren’t like that.  We just want to go to work, and do the right thing, and do a good job protecting and serving the residents of Los Angeles County.  We love what we do.  We keep showing up. And we know the difference between right and wrong.”

As for Duran and company?

“Let’s just say we’re glad they’re gone.”

The Crime Report is pleased to co-publish this story with Witness LA.  This is a condensed and slightly edited version of  Parts 2 and 3 of this series. Part 3 was published today.  The full version of the series, produced with the support of  the  Fund for Investigative Journalismcan be read here.  Readers’ comments are welcome.

 

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