Mulliken: PUD under federal investigation

But FBI spokeswoman says surprise announcement is an exaggeration

The Grant County PUD is under "federal investigation" for dealings within its fiber system, state Sen. Joyce Mulliken said in a surprise announcement at a Monday voters' forum. However, an FBI spokeswoman indicated that news is an exaggeration.

Mulliken was responding to an anonymous written question read by forum moderator Jim Weitzel as to why the state has not done anything about the "illegal" actions of the PUD.

In response, to the surprise of most of the approximately 50 people in attendance at the Ephrata Performing Arts Center, Mulliken said a federal investigation had been launched. She added that she was "embarrassed" in Olympia whenever anyone mentioned Grant PUD's entry into the retail market.

"I can tell you that there's a federal investigation, and I can assure you that justice will be served," Mulliken said.

Robbie Burroughs, spokeswoman for the Federal Bureau of Investigation's Seattle office, said in an interview Wednesday afternoon that the FBI had received a referral from the Washington State Patrol of "possible irregularities" going on at the PUD.

However, the FBI's next action, Burroughs said, is unknown at the time.

"We've not yet made a determination whether it merits an FBI investigation," she said.

Burroughs added that FBI normally does not announce, or make any public statement, about its investigations, but the unusual circumstances of Mulliken's announcement warranted her comments.

Mulliken, who is not up for re-election, attended the forum to speak on behalf of gubernatorial candidate Dino Rossi and George Nethercutt, who is challenging U.S. Sen. Patty Murray for her seat.

The forum's organizers, the Ephrata Chamber of Commerce, invited candidates in every contested race affecting Grant County voters, including a crowded cast of challengers for seats currently held by PUD

commissioners Mike Conley and Tom Flint.

In an interview with the Herald Tuesday, Mulliken said she became emotional and may have spoken too quickly.

"When I was told that information, I was not told to keep it in confidence, but I think I probably should have," she said.

Mulliken said she heard about a possible investigation from fellow Republican Sen. Val Stevens, who serves on the Senate's Technology and Communications Committee, while the two were in Olympia during the legislative session.

Bert Mills, public information officer for the Washington State Senate, said Stevens received an e-mail on July 25 from a Grant County man stating that he had heard "through the grapevine" that the state patrol's investigation had been forwarded to the FBI.

Stevens then mentioned the matter to Mulliken, Mills said. Stevens was in meetings all Tuesday and Wednesday evenings and could not be reached for comment, Mills said.

Though she later thought twice about her statement Monday night, Mulliken said she sticks by her words because she feels Stevens is a credible source.

The Washington State Patrol received complaints of PUD fraud violations from Craig Jungers, vice president of the Moses Lake Internet service provider Network Essentials, a few months ago.

Jungers said he had sent the information to other agencies, including the Grant County sheriff's and prosecutor's offices, the Ephrata Police Department and the state auditor's office, all of whom were unwilling or

unable to launch an investigation.

The state patrol took a look at the documents Jungers provided, he said, but told him later they didn't see a criminal violation and would forward the information to the FBI.

Washington State Patrol Detective Randy Grant, who works for the agency's criminal-investigation unit out of Wenatchee, said the state patrol chose to pass on the case because a December 2003 state audit pointed to no

evidence of criminal conduct by PUD employees in conducting fiber business.

Burroughs refused to speak about the specifics of the information received by the FBI.

However, Jungers, who has frequently criticized PUD administrators' and commissioners' management of the fiber system, told the Herald what information he had delivered to the state patrol:

- Documents relating to the PUD's aborted attempt to acquire automated-meter readers from Canadian engineering firm Nertec. Jungers criticized this contract last spring because PUD staff arranged a purchase of equipment without approval from the commission in 2002. Nertec balked at the terms laid out in a performance bond, so the deal fell through.

"This is pretty clearly a conspiracy to defraud," Jungers said.

- Documents relating to the PUD administrators' agreement with service provider Benton REA. The state auditor found PUD administrators misspent $994,577.75 on a series of payments to Benton REA to help set up Benton's fiber-service provider. According to the PUD commission's independent investigator James Austin, those dollars were sent to Benton via an unsigned contract whose goal was to get enough money to Benton to subsidize its service-provider operations.

Following the release of the December auditor's report, the commission first demoted, then terminated fiber administrators Ed Williams and Coe Hutchison. Don Godard, former general manager, later resigned under public

pressure from the report. PUD Commissioner Vera Claussen, who is not up for election this year but attended the forum, said she was surprised to hear Mulliken's statement.

I had no idea there was any investigation going on," Claussen said in an interview.

She added that she was not aware of the state patrol's involvement in the matter, and she doesn't know whether the FBI will find any evidence of criminal activity if it chooses to investigate.

"I don't know what criteria they would be using," Claussen said.

Mulliken said she hopes someone will get to the bottom of the matter.

"They keep saying mistakes have been made, but those mistakes, in some cases, were against the law," she said.