Fraud suits target Aranza, Ada

Two lawsuits brought by the CNMI Attorney General’s Office Wednesday accuse a former government contractor and the current Board of Education treasurer of defrauding the local government.

In one suit, the AG’s office says Federated Sector Enterprises, a consulting firm managed by Ferdinand Aranza, bilked the Commonwealth out of more than $130,000 through a contract directing the company to write a port security plan for the government which it instead plagiarized.

A separate suit says Maria Lourdes Ada, now the treasurer for the Board of Education, violated regulations during her tenure as executive director of the Commonwealth Development Authority by having her sick leave converted into vacation time and then later exchanging that unused time for cash, a maneuver that gained her over $59,000.

The suit against Aranza stems from a contract that former governor Juan Babauta inked with his company in 2003 to develop a plan for winning additional Department of Homeland Security funding, according to the complaint filed in CNMI Superior Court.

After finalizing the contract, Aranza, a former director with the Department of the Interior’s Office of Insular Affairs, convinced government officials to amend it by including a deal paying his company to craft the port security plan, the complaint says, a project for which the firm charged 618 billable hours.

Yet sections of the plan Aranza’s company produced are “verbatim from the United States Coast Guard’s regulations,” the complaint says, adding that in other sections it “merely rephrases the USCG regulations.”

Consequently, the complaint says the number of hours Aranza’s company billed the government for writing the plan is “implausible.”

Moreover, the complaint says Aranza’s amendment to the contract violated the Commonwealth’s procurement regulations and is void. Aranza also misled government officials, it says, into believing the plan had to be complete by the end of 2003 or else federal officials would bar ships from arriving at local ports.

The complaint seeks punitive damages.

Efforts to reach Federated Sector Enterprises at their offices in Washington, DC, for a response revealed the company’s phone lines are disconnected and its e-mail system is out of service.

In the suit filed against Ada, who served as CDA’s head from 1998 until her retirement in 2005, the AG’s office says she converted her sick leave to paid vacation time after a memorandum from then CDA chair Juan Tenorio told her and staff this was an accepted practice and that the time could later be “cashed out.”

A prior CDA policy statement, however, had already said that converting the time violated regulations but the complaint notes that Ada nevertheless continued doing it and also encouraged her staff to accept cash payments for sick leave. This activity later caught the eye of a public auditor and an inquiry followed.

Assistant attorney general Meaghan Hassel-Shearer notes in a July 1 letter to Ada that the government has repeatedly asked her to settle the debts linked to her sick leave, adding that attorneys gave her a 10-year time period to make the payments.

In an interview Wednesday afternoon, Ada said she had not yet seen the complaint against her and gave no further comment.