A former Longview-based contractor pleaded guilty in federal court in Tacoma on Friday to defrauding insurance companies by submitting at least $3.2 million in inflated claims for disaster restoration work, according to the U.S. Attorney’s Office.

Donald Chill, 41, now of Marco Island, Fla., also admitted to defrauding the U.S. Small Business Administration.

Chill, who pleaded guilty to mail fraud, bank fraud and money laundering, will be sentenced Feb. 1 by U.S. District Judge Benjamin H. Settle.

Chill was the owner of Charles Prescott Restoration, a disaster restoration company specializing in rehabilitating real and personal property damaged by fire, flood, wind and vandalism, according to documents filed in federal court. He employed 10 to 17 workers between 1995 and 2007 performing work throughout Southwest Washington and Northwest Oregon, often doing work on property that was insured by Mutual of Enumclaw Insurance Co.

According to court documents, Chill’s firm would respond to a damaged site, make emergency repairs and then submit a proposal for comprehensive repairs. The company used a special computer program authorized by Mutual of Enumclaw that built in 20 percent profit and overhead for the contractor.

Beginning as early as 2004, Chill began inflating estimates and invoices mailed to Mutual of Enumclaw, according to the documents.

When the insurance company asked for second repair estimates from other contractors, Chill fabricated such estimates on his own office computers and sent them to Mutual of Enumclaw. The fabricated estimates were slightly above his own company’s estimates, insuring Chill’s company would get the work.

Chill “was able to obtain the cooperation from the Mutual of Enumclaw adjustor in accepting these false second estimates by small but improper payments or gifts,” according to the documents.

In 10 jobs selected for scrutiny by a U.S. Justice Department investigation, Chill fraudulently over-billed Mutual of Enumclaw by $3.2 million, the documents assert.

In one instance detailed in charging papers, Chill billed for $84,000 in purported electrical work at Glad Tidings Church in Clark County. The identified electrical contractor — dubbed “JW” — had actually done none of the billed work at all. The electrical contractor’s bill had been entirely fabricated by Chill and submitted to the insurance company, according to court papers.

In May 2007, Chill sold the business to another individual who is not identified in court papers. As part of the sale Chill certified that the company books and records were true and correct. Had the bank that financed the sale known of the false billing scheme, they would not have approved the $1.8 million loan to purchase the business, according to the court documents. The U.S. Small Business Administration had guaranteed the loan, and the agency would not have done so if it had known of the fraud, the documents assert.

Chill was charged with bank fraud for that part of the scheme, and he was charged with money laundering for using the illegal profits to purchase an expensive home on Marco Island, Florida. The home is being forfeited to the United States under the terms of the plea agreement.

As part of the plea agreement entered Friday, Chill will pay $3.23 million in restitution to Mutual of Enumclaw and an additional $1.7 million in restitution to Wachovia Bank and the SBA, who made the loans for the purchaser of Chill’s company.

Mail fraud is punishable by up to 20 years in prison and a $250,000 fine. Bank fraud is punishable by up to 30 years in prison and a $1 million fine. Money laundering is punishable by up to 10 years in prison and a $250,000 fine or up to twice the value of the criminally derived property.

The case was investigated by the Small Business Administration Office of Inspector General and the Internal Revenue Service Criminal Investigations (IRS-CI). The case is being prosecuted by Assistant United States Attorney Kurt Hermanns.