Incident Reporting and Fraud (and FOIA)

Dennis SwaffordDennis SwaffordAnalyst – Financial ManagementDOL - Chicago Regional Officeswafford.dennis@dol.gov312-596-5460

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

Known or Suspected

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

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

Your own reporting procedures…

• Incidents can be reported and channeled through a state or local system

• In all cases, DOL must be notified

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)(The grantee must also maintain formal appeals processes)

The Investigative Process

Submit report to agency to start a record

Agency OIG assigns investigative responsibility

Agency monitors investigation/prosecution

OIG & agency closeout

The Importance of Internal Controls

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

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

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

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)

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)

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.

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.

Freedom of Information Act

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

Review Question

Question #1

When it was discovered that an employeeembezzled WIA funds, the agency notified thelocal authorities and criminal charges were made. Prosecution and a conviction was made. Whenshould DOL be notified?

A. Never since the person was charged and convicted.

B. At the time of sentencing as part of victim’s statement.

C. At first suspicion of wrong doing.

Question #1: AnswerWhen it was discovered that an employeeembezzled WIA funds, the agency notified thelocal authorities and criminal charges were made. Prosecution and a conviction was made. Whenshould DOL be notified?

C. At first suspicion of wrong doing.C. At first suspicion of wrong doing.

Thank you for your attention… Questions?

Dennis SwaffordDennis SwaffordAnalyst – Financial ManagementDOL - Chicago Regional Officeswafford.dennis@dol.gov312-596-5460