October 14, 2014

Oregon accuses lawmaker's company of destroying evidence in 2010 construction fraud case

PORTLAND (AP) — Records show state officials accused a construction company owned by Oregon state Rep. Kim Thatcher of destroying evidence and engaging in a cover-up to thwart an investigation into allegations of contracting fraud.

Thatcher's firm, KT Contracting, was fined $60,000 in 2010 after a judge ruled records were intentionally destroyed, the Oregonian reported Friday. The newspaper discovered the allegations while vetting Thatcher's campaign for the state Senate.

Thatcher, a Republican from Keizer, has built a political persona as a guardian of taxpayer dollars. Thatcher told The Oregonian she and her companies did nothing wrong and committed no fraud. She said she was targeted by a state “witch hunt” because of her political criticism of the Oregon Department of Transportation.

The allegations stem from a $1.5 million subcontract in 2005 for a state highway project in Eugene. KT Contracting provided traffic control services, signs and devices, and obtained materials and services from an affiliated company also owned and run by Thatcher — Highway Specialties.

The state blamed KT Contracting for delays in the project and assessed a $214,000 charge. The company denied it was to blame and sued ODOT, but eventually dropped the case midway through a trial.

As part of the litigation, state attorneys delved into the flow of invoices and mark-ups between KT Contracting and Highway Specialties. They questioned whether all the charges were legitimate and eventually found evidence that documents were destroyed.

Thatcher's husband and nephew, who worked for the company, offered reasons for the missing records, but a forensic computer expert disputed them.

Marion County Circuit Court Judge Tracy Prall in May 2010 ruled that the company intentionally destroyed a hard drive and intentionally deleted other accounting records to avoid turning them over to the state. The judge did not name a person responsible for the destruction. She ordered a $63,010 sanction.

Thatcher told The Oregonian she knew the state was suspicious of her claims. She attributed that to confusion over her corporate structure and said her companies never submitted phony invoices to the state.

Thatcher didn't recall reading Prall's findings at the time. When they were read to her during an interview, she said she disagreed with each one.

The Oregon Department of Justice opened a criminal racketeering investigation but closed it in 2012 without bringing charges.