Oil Rig Workers Accused of Fraud, Staging 1992 Fall

Two oil rig workers who fell 80 feet from an offshore oil platform and then filed workers’ compensation claims in Ventura County against their employer were indicted Tuesday on charges of staging the accident.

Federal prosecutors accuse John Michael Costello, 34, of Pismo Beach and Gary Grant Mangler, 35, of Lompoc of staging the Sept. 8, 1992, incident at Platform Irene in the coastal waters of San Luis Obispo County so that they could collect millions of dollars.

The indictment was handed down by a federal grand jury in Los Angeles and includes charges of conspiracy, nine counts of mail fraud and two counts of workers’ compensation fraud.

The two could face up to 30 years in prison if convicted on the mail fraud charges, said Assistant U.S. Atty. Elizabeth R. Abrams. The maximum penalty for workers’ compensation fraud is five years, Abrams said.

“We believe the evidence will support the charges,” she said.

Costello and Mangler worked as roustabouts performing general maintenance on the offshore platform for Wagley Offshore-Onshore Inc., a former Port Hueneme contractor for Unocal Corp., which owns the platform, Abrams said.

The two asked another worker on the platform to say he had witnessed the fall and to push the general alarm after the two hit the water, according to the nine-page indictment.

The pair--who were airlifted by helicopter to Goleta Valley Hospital after the 80-foot fall--filed a federal lawsuit asking for $7.5 million against Unocal about three months after the incident, officials said. They later dropped the suit.

Costello and Mangler also filed for medical benefits and pay under federal and state workers’ compensation laws under the Longshore and Harbor Workers Compensation Act, according to the indictment.

Immediately after the incident, the two began receiving both state and federal workers’ compensation checks, which continued for more than a year, according to the indictment.

Agents from the Ventura County office of the FBI began their investigation into the incident in June 1995 after being informed of the potential false claim by local prosecutors, said supervising Agent Gary Auer.

Costello and Mangler are to be arraigned in federal court in Los Angeles within the next few weeks, officials said.