Incident Reporting and Fraud (and FOIA)

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Incident Reporting and Fraud (and FOIA)
Dennis Swafford Analyst Financial
Management DOL - Chicago Regional
Office swafford.dennis_at_dol.gov 312-596-5460
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Incident Reporting

• Grantees are required to report the following
  activities through the DOL incident reporting
  system.
• Fraud, misfeasance, nonfeasance or malfeasance
• Misapplication of funds
• Gross mismanagement and misconduct
• Criminal activity
• Waste

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Known or Suspected

• Any known or suspected incidents of fraud, abuse
  or waste must be reported immediately.

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Reporting Mechanisms

• DOL Hotline - Office of Inspector General
  1-800-347-3756
• Department's Incident Reporting System
• DOL Incident Report Form DL 1-156 (see handout)
  
• DOL Office of Inspector General, Office of
  Investigations, Room S5514, 200 Constitution
  Avenue NW., Washington, DC 20210, or to the
  corresponding Regional Inspector General for
  Investigations, with a copy simultaneously
  provided to the Employment and Training
  Administration

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Your own reporting procedures

• Incidents can be reported and channeled through a
  state or local system
• In all cases, DOL must be notified

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Incidents vs. Complaints

• The grantee must have a venue or mechanism to
  resolve allegations, complaints or disputes from
• Grantees
• Vendors
• Participants
• Third Parties or citizens
• Employees
• (The grantee must also maintain formal appeals
  processes)

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The Investigative Process

• Submit report to agency to start a record
• Agency OIG assigns investigative responsibility
• Agency monitors investigation/prosecution
• OIG agency closeout

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The Importance of Internal Controls
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Where are the Soft Spots?

• 2006 ACFE Study Govt. Cases
• Skimming 22
• Cash larceny 19
• Billing schemes 32
• Payroll schemes 16
• Expense reimbursement schemes 13
• Check tampering 9
• Register disbursement schemes 1
• Non-cash assets 32
• Corruption 33
• Fraudulent statements 3
• Sums exceed 100 because some respondents
  indicated more than one fraudulent activity in a
  single case

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Common Types of Public Corruption Fraud

• False claims
• Time attendance
• Travel
• Bid rigging, sole sourcing
• Contract compliance violations
• Labor, environmental, and anti-kickback
  violations
• Improper cost allocation
• Double billing
• Unallowable costs
• Cross charging
• Simple theft

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Initial Detection of Govt. Fraud

• Tips 48
• (Employees 59, Customers 19, Vendors 12,
  Anonymous 10)
• Internal audit 32
• By accident 14
• Internal controls 11
• External audit 6
• Notified by police 1
• Sums exceed 100 because some respondents
  indicated more than one detection method

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Criminal Penalties

• False Statements (18 U.S.C. 1001)
• False Claims (18 U.S.C. 287)
• Conspiracy to Defraud (18 U.S.C. 371)
• Mail and Wire Fraud (18 U.S.C. 1341 and 1343)
• Theft and Embezzlement (18 U.S.C. 641)
• Computer Fraud (18 U.S.C. 1030)
• Obstruction of Audit (18 U.S.C. 1516)
• Bribery (18 U.S.C. 201)
• Salary Supplementing (18 U.S.C. 209)

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Civil, Contractual, and Administrative Penalties

• Civil False Claims Act (31 U.S.C. 3729)
• Forfeiture of Fraudulent Claims (28 U.S.C.
  2514)
• Contract Disputes Act (41 U.S.C. 604)
• Procurement Integrity Act (41 U.S.C. 423)
• Termination for Default FAR 52.249
• Findings of Irresponsibility FAR 9.1
• Suspension and Debarment FAR 9.4
• Program Fraud Civil Remedies Act (31 U.S.C.
  3801)

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The False Claims Act

• Knowingly presenting (or causing to be presented)
  to the federal government a false or fraudulent
  claim for payment
• Knowingly using (or causing to be used) a false
  record or statement to get a claim paid by the
  federal government
• Conspiring with others to get a false or
  fraudulent claim paid by the federal government
  or
• Knowingly using (or causing to be used) a false
  record or statement to conceal, avoid, or
  decrease an obligation to pay money or transmit
  property to the federal government.

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Avoid Fraud

• Internal administrative standards/controls
• Internal financial standards/controls
• Put resources into internal monitoring
• Staff training (not just ethics training)
• Be wary of contractors who attempt to "buy"
  business. Careful procurement policy procedure
  design.
• If you suspect that a contractor or any other
  party is offering a bribe, notify the OIG
  immediately. Immediate reporting is important for
  the following reasons  
• An attempt to bribe a Government official is
  itself a crime.
• Contractors whose bribe is rejected will
  sometimes falsely report that the employee
  "solicited" a bribe.
• Refusal to accept a bribe, in itself, has no
  deterrent effect.

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Freedom of Information Act

• Who is subject to FOIA?
• Who is responsible for FOIA?
• Releasable Material
• Release Timeframes
• Release Procedures
• Agency Responsible Official

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Review Question
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Question 1

• When it was discovered that an employee
• embezzled WIA funds, the agency notified the
• local authorities and criminal charges were made.
  
• Prosecution and a conviction was made. When
• should DOL be notified?
• A. Never since the person was charged and
  convicted.
• B. At the time of sentencing as part of victims
  statement.
• C. At first suspicion of wrong doing.

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Question 1 Answer
When it was discovered that an employee embezzled
WIA funds, the agency notified the local
authorities and criminal charges were made.
Prosecution and a conviction was made.
When should DOL be notified? C. At first
suspicion of wrong doing.
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Thank you for your attention Questions?
Dennis Swafford Analyst Financial
Management DOL - Chicago Regional
Office swafford.dennis_at_dol.gov 312-596-5460