Special Agents from GSA Office of Inspector General, Department of Homeland Security, Federal Protective Service, Diplomatic Security and a Sprint representative participated in the National Missing and Exploited Children's Fingerprint Day.

On June 24, 2010, Chief Warrant Officer Frank A. Bailey was subject to a court-martial, and was sentenced to confinement for 23 months, dismissed from the U.S. Army, and forfeited all pay and allowances.  Bailey signed a pre-plea agreement and pled guilty to the following violations of the Uniformed Code of Military Justice: one count of Article 107 (False Official Statement), twenty-five counts of Article 121 (Larceny), one count of Article 81 (Conspiracy), one count of Article 92 (Failure to Obey Order or Regulation), nine counts of Article 80 (Attempted Larceny), and two counts of Article 134 (Adultery and Fraternization).  Because Bailey signed a pre-plea agreement, he will only serve ten months of confinement as ordered by the military Convening Authority.    

Previously, on May 10, 2010, Sergeant Elizabeth Mendoza signed a plea agreement and pled guilty to one count of the Uniformed Code of Military Justice, Article 107 (False Official Statement); seven counts of Article 121 (Larceny); two counts of the Article 81 (Conspiracy), and one count of Article 92 (Failure to Obey Order or Regulation).  Mendoza was sentenced and received a Bad Conduct Discharge and a reduction in rank.

In January 2008, investigators in the GSA OIG’s Mid-West Regional Office along with the 280th Military Police Detachment, US Army Criminal Investigation Command, Fort Knox, KY, initiated an investigation upon receiving allegations that several soldiers, from the 19th Engineer Battalion, Fort Knox, KY, were ordering items from the GSA Advantage system using the unit's Department of Defense Account Activity Code (DODAAC).

Investigation revealed that Mendoza and Bailey, who were assigned to the unit’s supply section, were using the unit's DODAAC account numbers to purchase numerous government items, including laptop computers, computer hard-drives, and other electronic components from the GSA Advantage system. 

The investigation established that from about August 2006 to September 2008, Bailey and Mendoza had conspired and purchased the items from GSA Advantage, and then had those items shipped to either the unit's address in Kentucky or to the unit's addresses in Iraq and Afghanistan, where the unit was also deployed during the above time frame. 

To date then investigation has identified over $165,000 worth of government property purchases from GSA Advantage which had not been identified in the unit's records or had been physically located within the unit.

When Bill Webster, an assistant commissioner at the General Services Administration, checked into his hotel in Orlando, Fla., last month to attend a conference, the clerk informed him his government-issued travel card was rejected.

Webster, who happens to oversee GSA's travel, motor vehicle and card services division, was seeing one of his program's fraud-prevention controls in action. New software that was monitoring Webster's use of his travel card didn't like what it saw — six fuel purchases in a single day — and it put a hold on the card.

Turns out, Webster's fuel purchases were legit: He rode his Harley Davidson from Washington to Florida, requiring the numerous refueling stops.

But Webster now cites the incident as an example of how feds are making greater use of technology to reduce fraud and abuse of federal fleet, travel and purchase cards.

Much of that improved oversight capability began in 2008 with GSA's transition to a new contract for the cards called SmartPay 2. Under that 10-year contract, GSA asked the banks operating the cards to employ cutting-edge tools to help agencies monitor card use with greater detail and speed.

Officials at GSA and the agency's inspector general's office believe these improvements — combined with a stepped-up effort to hold cardholders more accountable — is helping reduce the amount of fraud occurring on federal card programs.

"We really don't have a lot of bad stuff happen," Webster said. "The controls we have in place are stopping it."

GSA recognized the need to crack down nearly a decade ago, as more government spending moved over to the agency's purchase, travel and fleet cards, Webster said. From 1999 to 2009, the volume of spending on federal purchase, fleet and travel cards doubled from roughly $15 billion to $30 billion.

Amid that increase, there were problems: The Government Accountability Office issued reports in 2002 and 2004 criticizing GSA and other federal agencies for poor oversight that led to spending abuses and waste. Some government workers were found to be using cards to buy lap dances, luxury cruises and high-end stereo systems.

The SmartPay 2 program offers agencies far more detail on what feds are using their cards for. That information not only helps spot fraud, it also helps agencies see where it can buy items in bulk at greater discounts.

The SmartPay software sifts through the 100 million transactions conducted on government credit cards each year, and it produces spending reports and flags questionable items. That information then makes its way to cardholders' direct supervisors, who can investigate the purchases.

Transactions that might raise red flags include purchases made on the weekend or at locations far from an employee's home base, or sales from unusual vendors such as jewelers, liquor stores, sports-ticket outlets or classic car parts dealers. Of course, a human still has to check out specific transactions — for instance, that liquor store purchase might have been a military chaplain buying sacramental wine.

In cases where someone makes multiple similar purchases in a short time, as Webster did on his trip to Orlando, banks may shut off the card to prevent more potential fraud, rather than simply flagging the items.

GSA Inspector General Brian Miller said his office has also invested in new technology and personnel in the last two years to mine this wealth of data and catch and prosecute those who abuse government cards. Those efforts include a new forensic auditing unit to analyze data on transactions, as well as new video-surveillance technology. In the first eight months of fiscal 2010, the IG's office opened 12 investigations into misuse of government purchase cards — up from an average of 3.5 a year from 2006 to 2009.

The ability under SmartPay 2 to quickly identify suspicious activity lets investigators set up stings to gather evidence while crimes are still being committed. Another, more low-tech innovation helps in this effort — a large diagonal green stripe on the back of fleet cards so investigators can see from a distance whether someone's swiping a GSA-issued card at the gas pump.

The inspector general's office issued a report June 1 that highlighted 11 arrests, 12 indictments and 11 people who pleaded guilty in cases of fraud related to the fleet-card program between Oct. 1 and March 31.

"It's all about deterrence," Miller said. "If they are misusing a card, they are going to get caught."

David Shea, head of GSA's office of charge card management, said that cardholders are now noticeably more reluctant to try to game the system.

"I think we have a much more robust capability, but it relies on people following through," Shea said. "The IG did some fine work. When people read these things, it makes them think twice about abusing the cards."

The number of purchases flagged as questionable under SmartPay 2 has declined recently, indicating that federal employees are being more careful, according to Gregory Rowe, GSA's assistant inspector general for investigations.

Veterans of past government purchase-card programs said SmartPay 2 has led to major improvements in oversight.

Agencies can design their own specifications to identify fraud on cards their employees use, said Eva Robinson, director of the public-sector commercial cards division at J.P. Morgan and a former manager of the Navy's purchase-card program.

"I remember … when you were part of a procurement team looking for fraud, waste and abuse, how difficult it was to manually go through paper and records to identify instances and connect the dots," Robinson said. "With the tools now augmenting the card, there are very few instances that could not be caught or at least flagged."

GSA Inspector General Brian Miller warned that those who abuse federal fleet, travel and purchase cards will be caught. (Chris Maddaloni / Staff)

Source: http://www.federaltimes.com/article/20100615/AGENCY05/6150302/1001

GSA OIG Strategic Plan for 2010-2014 has been posted to the web site. Click here to go to the page.

NEWS RELEASE

OFFICE OF THE UNITED STATES ATTORNEY

WESTERN DISTRICT OF MISSOURI

BETH PHILLIPS

Contact Don Ledford, Public Affairs ● (816) 426-4220 ● 400 East Ninth Street, Room 5510 ● Kansas City, MO 64106

www.justice.gov/usao/mow/index.html

MAY 6, 2010

FOR IMMEDIATE RELEASE

CALIFORNIA MAN PLEADS GUILTY TO $225,000 SCHEME

TO DEFRAUD THE FEDERAL GOVERNMENT

KANSAS CITY, Mo. – Beth Phillips, United States Attorney for the Western District of Missouri, announced that a California man pleaded guilty in federal court today to his role in a conspiracy to defraud the federal government of more than $225,000.

Michael Morand, 50, of California, waived his right to a grand jury and pleaded guilty before U.S. District Judge Ortrie D. Smith this afternoon to a federal information that charges him with conspiracy to defraud the government with respect to claims.

Morand worked as a contract employee for M & A Supply, which was an approved vendor to provide goods and services to the federal government. Morand admitted that, from May 2005 to September 2006, he conspired with others to defraud the government by obtaining more than $225,000 in payments for fraudulent claims based on inflated invoices for shipping expenses.

M & A Supply, through its contract with the General Services Administration, filled numerous orders for GSA customers, including several agencies within the Department of Defense. M & A Supply would have the material shipped to the customer, then the transportation company would send an invoice to M & A Supply for the cost of shipping. Instead of forwarding these legitimate shipping invoices to GSA for reimbursement, Morand admitted, conspirators caused a fraudulent and falsely inflated invoice to be created with a substantial mark-up added to the shipping expense. These fraudulent invoices were submitted to GSA, along with an invoice from M & A Supply falsely indicating that the company had already paid the inflated amount for shipping expenses.

In fact, Morand admitted, in several incidents, the actual items had not even been shipped by the time the invoices were submitted to GSA for reimbursement.

As a result of this conspiracy, GSA paid in excess of $225,000 in falsely and fraudulently inflated shipping expenses to M & A Supply.

Under federal statutes, Morand is subject to a sentence of up to 10 years in federal prison without parole, plus a fine up to $250,000. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by First Assistant U.S. Attorney David Ketchmark. It was investigated by the General Services Administration – Office of Inspector General and the Defense Contract Audit Agency.

WASHINGTON – Learning Tree International Inc. has agreed to pay the United States $4.5 million to resolve allegations that it violated the False Claims Act when it improperly invoiced federal agencies in advance for information technology training courses and kept federal funds for training courses that were never actually provided, the Justice Department announced today.

Under its contract with the General Services Administration ("GSA"), Learning Tree sells information technology training courses to the federal government in multi-course packages known as "vouchers" or "passports." To prevent the United States from paying for training services that are not actually rendered, the contract specifically requires that Learning Tree invoice the government only after services are provided.

The settlement resolves allegations that Learning Tree knowingly invoiced federal agencies in advance for multi-course training packages before employees of the purchasing agencies had attended the full number of courses available under each. The government further alleged that upon expiration of the training packages, Learning Tree retained federal funds that the company received in connection with unused courses without providing a refund or credit. As a result, Learning Tree received federal funds for training courses that were not, in fact, provided.

"Government contractors must deal fairly and honestly with the United States," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "When federal funds are being misused, we will take action to protect the taxpayers."

This matter was investigated by the General Service Administration Office of Inspector General, the Department of Agriculture Office of Inspector General, the Department of Commerce Office of Inspector General, and the Department of Justice, Civil Division.

On March 24, 2010, three U.S. Army Sergeants, all of them Retention Specialists, were sentenced in Federal court for theft of Government property.  Sergeant First Class Earl Smith, Sergeant First Class Harold Grady, and Sergeant First Class Gregory Murray were each sentenced in U.S. District Court for the Northern District of Georgia, for violating Title 18, United States Code, Section 641, Theft of Government Property, as a result of their role in the theft of thousands of Government computers.    

Smith was sentenced to serve 1 year, 6 months in prison, to be followed by 3 years of supervised release, and was ordered to pay $163,000 in restitution.  Grady was sentenced to 6 months of home confinement, 3 years probation, 200 hours of community service, and ordered to pay $10,187 in restitution.  Murray was sentenced to 2 months of home confinement, 2 years probation, 100 hours of community service, and was ordered to pay $12,124 in restitution.

Smith, Grady, and Murray falsely represented to Government agencies that they were collecting the surplus equipment for a legitimate Army program.  Investigative agencies were able to recover a significant number of the computers that were sold to private entities.   

All three subjects previously entered negotiated guilty pleas to one count of Title 18, United States Code 641, Theft of Government Property, in the Northern District of Georgia.

On March 8, 2010, Jonathan A. Acosta of St. Louis, MO, was arrested by the St. Louis County Sheriff’s Office for violating two counts of Missouri State Statute 570.030, Theft of a Credit Card.  An arrest warrant was issued for Acosta on March 5, 2010.  

GSA OIG’s Mid-West Regional Office had been contacted by GSA Human Resources.   Citibank suspected that a GSA purchase card and travel card issued to a GSA Budget Analyst in St. Louis was used to make fraudulent purchases and to receive non-work related cash advances. 

On March 10, 2010, Lawanda Gail Boldwarrior, former secretary for Indian Child Welfare for the Ponca Tribe, was sentenced to two years probation, 104 hours of community service, and was ordered to pay a $100.00 assessment and $9,533.72 in restitution.  As a condition of her probation, Boldwarrior will be required to attend a substance abuse aftercare program and to abstain from alcohol and intoxicants both during and after completion of the program.  In addition Boldwarrior shall not possess a firearm, ammunition, destructive device, or any other weapon.

On April 30, 2008, GSA OIG’s Greater Southwest Regional Office investigators received information from a GSA official indicating that there were several over-the-tank capacity and back-to-back purchases made with the Voyager Fleet Credit Card (Fleet Card) assigned to a Government vehicle. 

On September 18, 2009, Lawanda Gail Boldwarrior pled guilty to one count of felony violation of 18 U.S.C. § 1163 – Embezzlement and Theft from Indian Tribal Organizations in US District Court, Western District of Oklahoma.  On August 26, 2009, Boldwarrior’s husband, Justin “Joe” Boldwarrior, was sentenced for one count misdemeanor violation of 18 U.S.C. § 1163 – Embezzlement and Theft from Indian Tribal Organizations.
 

On March 8, 2010, Lawrence A. Veres, owner of Hose-Mart Incorporated, was convicted of violating Title 18 USC 1001, False Statements. The Honorable Gary Allen Feess, U. S. District Court Judge, U.S. District Court, Central District of California, Los Angeles, CA, accepted Veres' guilty plea, sentenced him to six months probation, and ordered him to pay an $1800 fine.

This investigation was initiated based on information developed during a previous investigation by General Services Administration (GSA), Office of Inspector General (OIG), Western Regional Investigations. During the investigation of GSA vendor BJC Sales, Incorporated, it was revealed that the subject of that investigation conspired with Hose-Mart, and its owner, Lawrence A. Veres, to provide inferior products to GSA under several GSA Multiple Award Schedule contracts via product substitution. Then, during an investigation by Defense Criminal Investigative Service and GSA OIG into Hose-Mart , evidence indicated that Veres knowingly made a false and material statement to the United States Government regarding his knowledge of the identity of Silver.

The matter was prosecuted by Assistant U.S. Attorney Lawrence S. Middleton, U.S. Attorney’s Office, Central District of California, Los Angeles, CA.

BAE Systems plc (BAES) pleaded guilty today in U.S. District Court in the District of Columbia to conspiring to defraud the United States by impairing and impeding its lawful functions, to make false statements about its Foreign Corrupt Practices Act compliance program, and to violate the Arms Export Control Act and International Traffic in Arms Regulations.  BAES was sentenced to pay a $400 million criminal fine, one of the largest criminal fines in the history of ongoing efforts to combat overseas corruption in international business and enforce U.S. export control laws.

BAES admitted that, as part of the conspiracy, it knowingly and willfully failed to identify commissions paid to third parties for assistance in soliciting, promoting or otherwise securing sales of defense items.

The criminal case was investigated by the special agents of the FBI and the U.S. Immigration and Customs Enforcement’s Counter Proliferation Unit. Investigative assistance also was provided by the Defense Criminal Investigative Services and the General Services Administration, Office of Inspector General.

For additional details:  http://www.justice.gov/opa/pr/2010/March/10-crm-209.html .

On February 12, 2010, Lincoln Fabrics Ltd., a Canadian weaver of ballistic fabrics, and its American subsidiary, agreed to pay the United States $4 million to settle a lawsuit against Lincoln for violations of the False Claims Act in connection with their role in the weaving of Zylon fabric used in the manufacture and sale of defective Zylon bulletproof vests.

Lincoln wove ballistic Zylon fabric for the body armor industry, and it was used in the manufacture of Zylon bulletproof vests sold by several GSA contractors including: Second Chance Body Armor Inc., First Choice Armor Inc. and Point Blank Body Armor Inc. These vests were purchased by the United States, and by various state, local, and/or tribal law enforcement agencies, which were partially reimbursed by the United States.

It was alleged that the Zylon in these vests lost its ballistic capability quickly, especially when exposed to heat and humidity. It was also alleged that Lincoln was aware of the defective nature of the Zylon by December 2001, but it continued to sell Zylon for use in ballistic armor until August 2005, when the National Institute of Justice issued a report that Zylon degraded quickly in ballistic applications.

In October 2009, the United States filed suit against Lincoln for violations of the False Claims Act and related claims.

This settlement was a result of an ongoing investigation by the General Services Administration Office of the Inspector General, the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Columbia, the Department of Homeland Security Office of Inspector General, the Treasury Inspector General for Tax Administration, the Defense Criminal Investigative Service, the U.S. Army Criminal Investigative Command, the Air Force Office of Special Investigations, the Department of Energy Office of the Inspector General, the U.S. Agency for International Development Office of the Inspector General and the Defense Contracting Audit Agency.

Click here (http://www.justice.gov/opa/pr/2010/February/10-civ-136.html) for the DOJ article.

On February 9, 2010, Gerald Robert Broomfield was indicted in the Western District of Texas on one felony count of violating Title 18, U.S.C., § 641, Theft of Government Property.  The indictment charged that Broomfield stole property from the Federal Government worth approximately $400,000.  This is a joint investigation with the United States Army, Criminal Investigative Division, Major Procurement Fraud Unit.

On January 26, 2010, Horace Gholston, Jr., former Materials Handler with the U.S. Department of Veterans Affairs (VA), was sentenced to one year supervised release; ordered to pay restitution in the amount of $1,734.49 and a $25 special assessment fee by Magistrate Judge Dale A. Drozd, U.S. District Court/Eastern District of California for violating 18 USC 641, Theft of Government Monies.  He had unlawfully possessed and knowingly utilized two government fuel credit cards, without authorization, to purchase fuel, tobacco products, food and beverages for his personal use and the personal use of his associates.   

Previously, on November 17, 2009, Gholston pled guilty to one-count Information charging him with violating 18 USC 641, Theft of Government Monies.  

On January 13, 2010, Tony Mawyin was arrested for using a stolen  government fuel credit card number to purchase thousands of dollars worth of  diesel fuel on a daily basis. Mawyin was taken into custody to the San  Bernardino County jail and charged with violating California Penal Code 484  (Access Card Fraud), 530.5 (Identity Theft), and 487 (Grand Theft).

On January 15, 2010, Edwardo Alavarado, Senior Project Manager for GSA contractor, Omega Service Maintenance Corporation (OMEGA), appeared in United States District Court/Eastern District of New York (USDC/EDNY), and was sentenced to three years supervisory release; 300 hours of community service; $100 special assessment fee and restitution to be determined within 90 days of sentencing.

Previously, on August 13, 2009, Alvarado pled guilty to a one-count Information charging him with violating 18 USC 1341, Mail Fraud.

On May 5, 2009, Alvarado was arrested without incident by Special Agents from GSA OIG’s Northeast and Caribbean Regional Office, the U.S. Postal Service (USPS) OIG, and Investigators with the Port Authority of New York & New Jersey OIG, pursuant to an arrest warrant issued on April 27, 2009, charging Alvarado with violating 18 USC 1343, Wire Fraud and 18 USC 1341, Mail Fraud.

This joint investigation revealed a fraudulent scheme by Alvarado to submit concrete test results on construction projects funded by the USPS and GSA that he knew contained false and fraudulent information.  As a result, OMEGA received approximately $360,000 in payment from GSA for substandard concrete work on the loading dock renovation at the Mitchell H. Cohen Federal Building & U.S. Courthouse, Camden, NJ.

On January 7, 2010, Army Sergeant First Class, Earl Smith and Army Sergeant First Class, Harold Grady entered negotiated guilty pleas to one felony count each of Title 18, United States Code, Section 641, Theft of Government Property, in Federal District Court, Northern District of Georgia for their role in a fraudulent scheme to obtain and sell hundreds of surplus Government computers to computer retailers and private individuals.   

On January 14, 2010, Sergeant First Class, Gregory Murray, entered a negotiated guilty plea to one felony count of Title 18, United States Code, Section 641, Theft of Government Property, in the Northern District of Georgia for his role in the fraud scheme.  Sentencing is scheduled for all defendants on March 24, 2010. 

Smith, Grady and Murray falsely represented to Government agencies that they were collecting surplus computer equipment for a legitimate Army program.  The defendants used this fraudulent scheme in several states to obtain surplus Government computers through the GSA surplus property program and directly from Government agencies over a five year period.  Investigative agencies were able to recover a significant number of the computers that were sold to private entities.

On December 14, 2009 the U.S. Department of Justice entered into a $1 million civil settlement agreement with Johnson Controls, Inc., a GSA contractor. 

This case was initiated by GSA OIG’s Mid-Atlantic Regional Office based on a qui tam complaint alleging that Johnson Controls, Inc., Johnson Controls Building Automation Systems, LLC, and Adecco USA, Inc., violated the False Claims Act (31 U.S.C. 3729) by knowingly submitting, causing to be submitted, or facilitating the submission of false and fraudulent documents to Federal agencies, as well as to general contractors and subcontractors, for a period of several years on construction contracts they were performing.

On September 8, 2009, the U.S. Department of Justice executed a $1.2 million settlement agreement with GSA contractor, OCE North America (OCE), for alleged false claims violations. OCE denied the contentions of the United States but compromised to avoid continued litigation and its associated risks. The GSA OIG investigation was initiated after a qui tam was filed. The complaint alleged that OCE made false claims and used the GSA Advantage program to sell products in violation of the Trade Agreements Act and the pricing requirements of the GSA contract. It was further alleged that OCE did not offer the government the best price and that it was common practice to offer lower prices to nongovernmental customers without offering the price to the government and/or reporting it to the contracting officer.

On December 29, 2009, Benjamin Clayton, a former Federal employee, pled guilty to theft and was sentenced to 36 months confinement with all but 25 days suspended, five (5) years supervised probation, and ordered to pay $12,985.95 in restitution.

This case was initiated by the GSA OIG’s Mid-Atlantic Regional Office based on information developed under a proactive investigation concerning the misuse of Voyager Fleet Credit Cards (VFCC).  A data review disclosed that the VFCC assigned to a Government vehicle was making multiple, same-day purchases of gasoline and receiving more fuel than its tank capacity.  The VFCC was assigned to the Department of Energy (DOE) located in MD.  The majority of the transactions occurred at a local gas station in Germantown, MD.  Investigation revealed that a newly issued vehicle at the DOE facility, which had replaced an older vehicle was involved, but records showed the scheme began with the VFCC issued to the older vehicle in October 2005.

This case was worked jointly with the DOE OIG, and was prosecuted by the Montgomery County State's Attorney’s Office.

On December 29, 2009, Roger Ward, Veterans Affairs Medical Center (VAMC) Program Support Clerk, pled guilty in Harris County Criminal Court Number 6, Houston, TX, to violating Texas Penal Code 31.03, Theft. Ward received deferred adjudication with two years probation, 30 hours community service, and fines.

Previously, on September 30, 2009, the Harris County District Attorney’s Office filed an Information against Ward. An arrest warrant was issued, and Ward was arrested by local law enforcement on October 6, 2009.

On February 10, 2009, the GSA OIG’s Greater Southwest Regional Office received information from GSA Fleet Management regarding the suspected fraudulent use of a Wright Express fuel card assigned to a Government vehicle leased by the VAMC in Houston, TX. Evidence showed that Roger Ward was making the fraudulent charges.

The U.S. Department of Homeland Security’s Federal Protective Service and the VA OIG assisted in this investigation. The case was prosecuted by the Harris County District Attorney’s Office.

On January 5, 2010, GSA OIG’s Mid-Atlantic Regional Office was notified that Violet Williams, a Government contractor, was debarred from federal contracting based on Williams’ guilty plea and the facts underlying the guilty plea.  The debarment was administered by GSA’s Office of Acquisition Integrity.

This case was initiated based on the conviction of Violet Williams on May 19, 2009, in U.S. District Court for the District of Columbia charging Williams with one count of theft of government property. 

Williams received a sentence of 36 months probation and was ordered to pay $94,494.95 in restitution and $100 special assessment fee.

On December 14, 2009, Hon. Brian Miller, GSA Inspector General, addressed a meeting of the Association of Government Accountants’ Chicago Chapter. Mr. Miller was in Chicago to meet with staff of the GSA OIG’s Chicago Office. For his AGA presentation Mr. Miller reviewed activities of the U.S. Department of Justice’s National Procurement Fraud Task Force of which he is Vice Chair. Comprised of representatives from various Offices of Inspectors General and Federal law enforcement agencies, the Task Force focuses on common challenges for improving oversight of Federal procurement and grants and prosecuting fraud. Embraced by the new leadership at the Justice Department, the Task Force will meet, again, on January 12, 2010. AGA officials expressed their thanks to Mr. Miller for his presentation, and noted the excellent membership turnout.

Brian Miller, Inspector General GSA and Heath Wolfe, President AGA, Chicago Chapter

On December 23, 2009, the President of Systems Integration Management, Incorporated (SIM) was ordered to pay the United States $525,000 by District Judge Cynthia M. Rufe, U.S. District Court, Eastern District of Pennsylvania.

In November 2006, the government alleged that SIM submitted approximately $1,614,426 in false claims to GSA under multiple task orders administered by GSA, Federal Technology Service, Region 2. According to the civil suit, SIM submitted multiple invoices to GSA that contained inflated labor hours/cost, fraudulent "Other Direct Costs", and work that was never performed by SIM.

The United States has reached a $6.75 million settlement with Itochu Corp. of Japan and its American subsidiary, Itochu International Inc., to resolve claims under the False Claims Act in connection with the companies’ importation and sale of defective Zylon fiber used as the key ballistic material in bullet-proof vests purchased by the United States for federal, state, local and tribal law enforcement agencies, the Justice Department announced today.

The Itochu companies imported the Zylon fiber on behalf of the Zylon manufacturer, Toyobo Co. Ltd. of Japan. The United States alleged that the Itochu companies were aware that the fiber degraded quickly over time and that the companies knew that this degradation rendered bullet-proof vests containing woven Zylon unfit for use. The government further alleged that, despite this knowledge, Itochu personnel actively participated in the marketing of the Zylon fiber and downplayed the extent of the degradation problem.

"We will not tolerate companies that put the lives of law enforcement officers at risk by providing defective material for bullet-proof vests," said Tony West, Assistant Attorney General for the Justice Department’s Civil Division. "This agreement resolves our allegations that these defendants wasted taxpayers dollars by failing to address problematic vests even after they were aware of them."

This settlement is part of a larger government investigation of the industry’s use of Zylon in body armor. As part of today’s agreement, Itochu has pledged its cooperation in the government’s ongoing investigation. The United States has previously settled with five other participants in the Zylon body armor industry for over $47 million. Additionally, the United States has pending lawsuits against Toyobo Co., Honeywell Inc., Lincoln Fabrics, Ltd., Second Chance Body Armor Inc., and First Choice Armor Inc. Several former executives of Second Chance and First Choice are also named in those suits.

Assistant Attorney General West acknowledged the contributions of the many federal agencies assisting the government’s ongoing investigation of the Zylon body armor industry, including the Justice Department’s Civil Division; the U.S. Attorney’s Office for the District of Columbia; the General Services Administration, Office of the Inspector General; the Department of Homeland Security, Office of Inspector General; the Department of the Treasury’s Inspector General for Tax Administration; the Defense Criminal Investigative Service; the U.S. Army Criminal Investigative Command; the Air Force Office of Special Investigations; the Department of Energy, Office of the Inspector General; the U.S. Agency for International Development, Office of the Inspector General; the Defense Contracting Audit Agency; and the Federal Bureau of Investigation.

On November 20, 2009, Richard B. Eldreth was sentenced in U.S. District Court in Baltimore, MD to six months home confinement, three years of probation, ordered to pay $57,863.73 in restitution and a $100 special assessment. 

Previously on January 9, 2009, Eldreth entered a plea of guilty to one count of Theft of Government Property (18 USC 641) for using stolen GSA Voyager Fleet Credit Cards (VFCC’s) to make approximately $57,424.70 in unauthorized fuel purchases.

This investigation was initiated based upon information received through a proactive fleet investigation by GSA OIG’s Mid-Atlantic Regional Office, which showed possible fraudulent purchases being made with the VFCC for a vehicle assigned to the AMTRAK Automotive Group, Region 3.  A review of pertinent information confirmed the suspected misuse of multiple AMTRAK-assigned VFCC's in the Elkton, MD, area.  From late June 2008 through September 2008, approximately 8 AMTRAK-assigned VFCC's showed multiple same-day transactions for amounts of fuel which exceeded the vehicles' tank capacities.

The evidence showed Richard Eldreth used multiple VFCC's to fill several vehicles and large containers with fuel.  On September 9, 2008, three of the stolen VFCC’s were found during a search warrant at Eldreth’s residence and Eldreth was arrested.  The total amount of the unauthorized transactions made with the eight VFCC’s is approximately $83,000.

On November 17, 2009, a loan agreement for 15 New Deal Era artworks was signed by GSA’s Fine Arts Program Office (FAP).  An updated agreement was developed between the Blanden Memorial Art Museum in Fort Dodge, Iowa and the FAP for the care and display of the artwork.  The previous agreement had been signed in 1935 by the Museum and the Federal Emergency Relief Agency.  The collection of artwork was unknown to the FAP prior to this investigation and is valued at approximately $19,000.  The artwork also has significant historical value.

On October 7, 2009, investigators in GSA OIG’s Mid-Atlantic Regional Office received information from an art enthusiast in Fort Dodge, Iowa about an auction scheduled for October 10, 2009, by the Blanden Memorial Art Museum in Fort Dodge, Iowa.  The art enthusiast had concerns about how the museum directors were handling the auction, and believed some of the artworks were federally owned Works Progress Administration (WPA) items that were going to be publicly released at the auction.  The art enthusiast asked if GSA could stop the auction.

A letter was sent by GSA OIG investigators to the director of the Blanden Memorial Art Museum, advising her of GSA's ownership of any federal art at the museum and asking her to remove any federally owned art pieces from the auction.  The director sent a reply listing 15 pieces of federally owned artwork and advised that none of them would be sold.  Eight of the 15 were on the publicly available list of items to be auctioned.

GSA OIG investigators notified the FAP staff and forwarded them copies of the 1935 loan agreement that had been received from the museum.  The FAP was not aware of the artwork and had no record of the 1935 loan agreement.  GSA OIG investigators put the FAP in contact with the museum in order to facilitate updating the loan agreement.

On November 12, 2009, Glen F. Hunter was sentenced in U.S. District Court in Baltimore, MD, to three years probation with a special condition that Hunter continues to reside in a half-way house for an additional 10 months. Additionally, Hunter was ordered to pay $17,000 in restitution. 

On August 25, 2009, Hunter pled guilty to one count of aiding and abetting, theft of government property (18 USC 641 and 2) for his role in assisting Richard B. Eldreth in obtaining stolen GSA Voyager Fleet Credit Cards (VFCC’s).  From June 2008 through September 2008, Eldreth made approximately $57,424.70 in unauthorized fuel purchases.  Previously, Eldreth pled guilty in this matter and is awaiting sentencing. 

This investigation was initiated based upon information received through a proactive fleet investigation by GSA OIG’s Mid-Atlantic Regional Office, which showed possible fraudulent purchases being made with the VFCC assigned to a vehicle in use by the AMTRAK Automotive Group, Region 3.  A review of pertinent data confirmed the suspected misuse of multiple AMTRAK-assigned VFCC's in the Elkton, MD, area.  From late June 2008 through September 2008, at least eight AMTRAK-assigned VFCC's showed multiple same-day transactions for amounts of fuel which exceeded the vehicles' tank capacities.

Several video surveillances in the Elkton, MD area captured Richard Eldreth using multiple VFCC's to fill several vehicles and large containers with fuel.  On September 9, 2008, three of the stolen VFCC’s were found during a search warrant at Eldreth’s residence and Eldreth was arrested.  The total amount of the unauthorized transactions made with the eight VFCC’s is approximately $83,000.

Hunter is a former AMTRAK employee who was arrested by Special Agents from GSA OIG’s Philadelphia Office in February 2007 for his involvement in a separate theft of multiple VFCC’s and their subsequent misuse.  Hunter pled guilty, was sentenced to six months incarceration, and was fired by AMTRAK.

On October 16, 2009, David Safavian, former GSA Chief of Staff, was sentenced in U.S District Court in Washington, DC to 12 months of incarceration and 24 months of supervised probation. 

This case was initiated based upon information sent to the GSA OIG Hotline.  The information alleged that David Safavian, then GSA Chief of Staff, attended a 2002 golf trip to Scotland sponsored by Washington D.C. lobbyist Jack Abramoff.  Also along on the golf trip was then-U.S. Congressman Robert “Bob” Ney (Ohio 18th District.) To date, the ongoing investigation into the lobbying activities of Abramoff and his associates has resulted in 13 guilty pleas by various lobbyists and public officials, including Ney and a former Deputy Secretary at the U.S. Department of the Interior.

Safavian was originally convicted on June 20, 2006, on three counts of Title 18, U.S. Criminal Code, Section 1001, False Statements, and one count of U.S. Criminal Code, Section 1505, Obstruction.  Safavian was sentenced to 18 months incarceration, but remained free upon appeal.

On June 17, 2008, the United States Court of Appeals for the District of Columbia reversed and vacated his convictions.  However, on October 8, 2008, a Federal grand jury for the District of Columbia returned a superseding Indictment of Safavian.

Safavian was subsequently found guilty on December 19, 2008, on three counts of U.S. Criminal Code, Section 1001, False Statements, and one count of Title 18, U.S. Criminal Code, Section 1505, Obstruction (of the GSA OIG investigation.)  Safavian was convicted by a jury in the U.S. District Court for the District of Columbia.

Click here for DOJ article.

On October 21, 2009, Swift’s Packing House, a painting from the Works Progress Administration (WPA) was received by GSA’s Fine Arts Program Office. The painting will be restored by GSA prior to allocation to a museum in Connecticut. The painting is valued at approximately $800.00 and maintains significant historical value.

On April 7, 2009 GSA OIG’s Mid-Atlantic Regional Office received information regarding an eBay auction of a possible WPA painting from an art collector who had previously provided information leading to recovery of WPA artwork through proactive investigation. The eBay listing contained photographs of a clearly legible WPA label.

After verifying that the painting was a WPA piece, GSA investigators obtained the possessor’s information from eBay. The possessor was advised of the Government’s ownership of the painting, and surrendered the painting to the Lyman Allyn Art Museum in New London, CT. GSA OIG coordinated with the Museum and the Fine Arts Program Office for the painting’s return to the Government.

The link to the presentation from today's DOJ - GSA/OIG Joint Recovery Act Fraud Awareness Briefing is posted below. The briefing took place at GSA Central Office Auditorium on July 23 at 9:30AM.

On June 17, 2009, GSA OIG investigators were notified by GSA’s Fine Arts Program Office (FAP) that the transfer of custody of a Works Progress Administration (WPA) painting, Duchess Apple Blossom by artist Reathal Keppen had been completed.  The painting was turned over to the Minnesota Historical Society by the possessor after he was contacted by GSA-OIG.  FAP has entered into a loan agreement with the Minnesota Historical Society, giving the Society permission to display the painting for an indefinite period of time.  The painting valued at approximately $5,000 has significant historical value.

BACKGROUND

On January 28, 2008, GSA OIG investigators received notice of an online auction of a Works Progress Administration (WPA) painting.  The notice was received from GSA’s Fine Arts Program Office (FAP) in relation to the ongoing proactive investigation to recover lost and stolen WPA artwork.  

A painting was listed on the auction web site of eBay with the title "PAINTING MINNESOTA FEDERAL ART PROJECT R KEPPEN".  The item description on eBay included the following wording:

"at the top of the paper label are the words ‘Federal Works Progress’ but some of the words are missing.   At the bottom of the label are the words ‘property of the’ but again some of the words are missing. To this end, nearly half of the paper label is no longer present."

The listing also contained photos of the label as well as photos of a brass plate on the front of the frame which read "WPA FEDERAL ART PROJECT".

GSA OIG investigators obtained the seller information from eBay and contacted the possessor of the painting.  The possessor brought the painting to the Minnesota Historical Society.  The FAP worked with the Minnesota Historical Society to document the painting and finalize its loan.

On May 29, 2009, Booz, Allen & Hamilton, Inc. signed a Release and Settlement Agreement with the U.S. Attorney’s Office, Eastern District of Virginia, to pay the United States $325,000. 

Booz, Allen, & Hamilton, Inc. (BAH) is a GSA-schedule provider of information services.  A NASA contract specialist, who requested anonymity, alleged that BAH was billing for employees at higher job categories than would have been justified by their experience, inflating their monthly hours and submitting excessive billing at their off-site rate.   

The case was prosecuted by the Civil Division of the U.S. Attorney’s Office, Eastern District of Virginia.

On March 6, 2009, a Works Projects Administration (WPA) painting, titled “Flowers” by William Hazelton, was surrendered to GSA OIG investigators in New York.

On May 22, 2008, a search of eBay's website disclosed a painting being offered for sale by an individual as being a WPA painting.  The eBay listing titled the painting "William Hazelton listed WPA Painting, Rockport, WPA Label."  The seller of the painting was contacted by a GSA OIG investigator on May 23, 2008, during which time the seller stated he would need extensive documentation before relinquishing the painting to the government, and added he may take it to court if the government did in fact want to recover the painting.  The seller stated he purchased the painting sometime in 2008 at the Brimfield Antique Show, Brimfield, MA, and that he did not believe the painting was a legitimate WPA painting.  GSA OIG obtained documents from the National Archives, College Park, MD, and forwarded them to GSA’s Fine Arts Specialist in the Fine Arts Program Office of the Office of The Chief Architect for review.  That review determined that the painting was an authentic WPA produced painting.  Copies of the documentation were also forwarded to the seller at his request.  The seller reluctantly agreed to surrender the painting to the GSA OIG.  GSA OIG investigators in New York and Washington, DC assisted in the recovery of the painting. 

On February 17, 2009, Mitel, Inc. (formerly Inter-Tel, Inc.) signed a civil settlement agreement with the U.S. Department of Justice (DOJ), and agreed to pay $1.3 million to resolve allegations that the company violated the False Claims Act by selling office products manufactured in non-TAA compliant countries to the Government under GSA contract GS-35F-0318L. This settlement agreement was signed after lengthy negotiations.

BACKGROUND:
On June 16, 2005, a complaint was forwarded from the GSA Office of General Counsel to the OIG Office of Investigations. The complaint alleged Inter-Tel, Inc. (Inter-Tel) sold products from China under their GSA Multiple Award Schedule contract number GS-35F0318L. This constituted a violation of the Trade Agreement Act (TAA). In June 2005, a voluntary disclosure of TAA problems uncovered at Inter-Tel was made to the Counsel to the GSA IG. This disclosure listed products manufactured in China and sold to the Government under Inter-Tel's GSA/MAS contract between the years 2000 to 2005. 

This case was prosecuted by DOJ, Civil Division, Commercial Litigation Branch, Washington, DC.

On January 29, 2009, AMEC Construction Management, Inc. (AMEC), formerly known as Morse Diesel International, Inc. (MDI) signed a Settlement Agreement in the Court of Federal Claims.  AMEC agreed to pay GSA $11,710,335 and forfeit $7,329,921, for a total of $19,040,256.  The $11,710,335 consisted of $8,010,335 for fraud counterclaims and $3,700,000 for re-procurement costs. 

In 1996, GSA awarded AMEC a construction contract in which GSA withheld $7,329,921 from AMEC to off-set the re-procurement claim against the St. Louis Courthouse.  AMEC agreed to forgo its claim of this money pursuant to the Settlement Agreement.

AMEC/MDI was awarded four GSA Federal construction contracts between 1994 through 1995.  These contracts were for construction relative to Federal Courthouses in St. Louis, MO, San Francisco, CA, and Sacramento, CA. 

GSA OIG auditors at the Heartland Field Office in Kansas City audited AMEC’s construction claims, and suspected fraud regarding payment of construction bond invoices.  This matter was referred to the OIG’s Office of Investigations.

AMEC provided falsified invoices to GSA and those false documents allowed AMEC to receive payments for work that had not been accomplished both in Missouri and California.  According to the investigative report, MDI front-loaded over 2 million dollars in contract value using falsified invoices, false documents and false statements.  Pursuant to the St. Louis Courthouse, AMEC pled guilty for presenting a false bond claim and was sentenced on December 12, 2000.  AMEC later pled guilty on December 4, 2001 for false claims in California and was sentenced on March 19, 2002.

On May 5, 1999, AMEC filed a complaint with the General Services Board of Contract Appeals, claiming they were owed money, and this case was later transferred to the U.S. Court of Federal Claims.  On October 28, 1999, GSA filed its answer along with civil fraud counterclaims for the false bond claims. 

During civil proceedings it was also discovered that AMEC was getting a kickback from their bonding agent’s commissions.  On July 15, 2005, the Court issued an opinion granting summary judgment on the Government’s claim for violation of the Anti-Kickback Act, 41 U.S.C 51-58. 

On January 26, 2007, the Court issued an opinion granting summary judgment on GSA’s claim under the Special Plea in Fraud, 28 U.S.C 2514 and the False Claims Act, 31 U.S.C, 3729-33, for the false bond documents submitted for payment.  On October 31, 2007 and November 16, 2007, the Court issued a decision assessing penalties and damages against AMEC for the False Claims and Anti-Kickback Acts.

Subsequently, AMEC and the Government entered into negotiations to resolve amicably the claims of both parties relating to these matters.

Pursuant to the Settlement Agreement, moneys held by GSA in retainage owed to AMEC were forfeited in the amount of $10,560,139.88 resulting in a cost recovery.   AMEC also forfeited all pending claims against GSA for the above projects resulting in approximately $83.5 million dollars in cost avoidance.

AUGUSTA, GA: Edmund A. Booth, Jr., United States Attorney for the Southern District of Georgia, announced that Tifco Industries, Inc., based in Houston, Texas, has agreed to pay the United States over $1.6 million to settle allegations that it violated the Trade Agreements Act, 19 U.S.C. § 2501 et seq., and the False Claims Act, 31 U.S.C. § 3729 et seq...

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Washington, D.C. - infoZine - Barrday Inc. and two related companies have agreed to pay the United States more than $1 million to resolve allegations that they violated the False Claims Act in connection with their role in the weaving of Zylon fabric used in the manufacture and sale of defective Zylon bullet-proof vests, the Justice Department announced today. Barrday, headquartered in Cambridge, Ontario, Canada, is a weaver of ballistic fabrics and designs and produces specialty industrial textiles.

The United States alleged that Barrday’s woven Zylon fabric was used in the manufacture of bullet-proof vests sold by Second Chance Body Armor Inc., Point Blank Body Armor Inc. and Gator Hawk Armor Inc. These vests were purchased by the United States, and by various state, local, and/or tribal law enforcement agencies, which were partially reimbursed by a Justice Department program. The government alleged that the Zylon in these vests lost its ballistic capability quickly, especially when exposed to heat and humidity.

Barrday was reportedly aware of the defective nature of the Zylon by at least December 2001, but continued to sell Zylon for use in ballistic armor until approximately 2003, when two police officers were shot through their Second Chance Zylon vests. In 2003, Barrday was the first weaver to permanently withdraw from the Zylon market.

"When a supplier of a component part distributes its product with knowledge of latent defects, that company violates the False Claims Act" said Michael F. Hertz, the acting Assistant Attorney General for the Civil Division. "This settlement will help ensure that component suppliers are held responsible for materials that put our first-responders at risk."

This settlement is part of a larger investigation of the body armor industry’s use of Zylon in body armor. As part of today’s agreement, Barrday has pledged its cooperation in the government’s on-going investigation. The United States previously has settled with four other participants in the Zylon body armor industry for over $46 million. Additionally, the government has pending lawsuits against Toyobo Co., Honeywell Inc., Second Chance Body Armor Inc. and four former Second Chance executives.

Today’s settlement with Barrday was the result of an ongoing investigation by the Justice Department’s Civil Division, the U.S. Attorney’s Office for the District of Columbia, the General Services Administration Office of the Inspector General, the Department of Homeland Security Office of Inspector General, the Treasury Inspector General for Tax Administration, the Defense Criminal Investigative Service, the U.S. Army Criminal Investigative Command, the Air Force Office of Special Investigations, the Department of Energy Office of the Inspector General, the U.S. Agency for International Development Office of the Inspector General, and the Defense Contracting Audit Agency.

INFOZINE(KANSAS CITY, MO) - January 24, 2009

On January 14, 2009 GSA OIG investigators received notice from the Office of the Chief Architect, Fine Arts Program Office (FAP) that transfer of custody of a Works Progress Administration (WPA) sculpture by artist Leonard Jungwirth had been completed.  The sculpture, recovered from possessor Shailesh Saigal, was loaned by the FAP to Michigan State University (MSU) for permanent display.  Jungwirth was a prominent artist of the WPA era who created MSU's mascot, Sparty the Spartan.

BACKGROUND

On September 18, 2007 while conducting a proactive investigation into lost/stolen Works Progress Administration (WPA) artwork (V07-0001), GSA OIG investigators noted a sculpture on the internet auction site of eBay.  The auction for the sculpture was titled "leonard jungwirth michigan wpa fap sculpture rare", and the item description read, "leonard d. Jungwirth (1903-1963) w.p.a. plaster painted sculpture signed j.d. jungwirth w.p.a. a world famous sculpture from michigan - specifically michigan state university and creator of sparty the spartan."  Photos of the sculpture showed markings similar to those of WPA produced sculptures.  The auction listed a "buy it now" price of $5,000.

This information was forwarded to fine arts specialists in the Office of The Chief Architect, GSA/Public Buildings Service, for review, who confirmed that the Fine Arts Program Office believed the sculpture to be an authentic WPA produced sculpture.

GSA OIG investigators contacted the possessor and coordinated communication between the possessor and GSA to arrange for the return of the sculpture to the US Government.

When most people think of forensics, they think of the TV show “CSI” where fibers can unravel a suspect’s alibi in 60 minutes flat, less commercials.

Now, federal auditors are starting to use forensic methods to root out fraud.

Inspector general criminal investigators have used forensics techniques for years to investigate fraud, embezzlement, cyber espionage and other crimes. But not IG auditors — until recently.

Forensic auditing combines advanced computer investigative work — such as data mining and analysis, combing the content of computer hard drives, and conducting in-depth Web searches — with traditional auditing and accounting techniques to investigate fraud.

The General Services Administration inspector general’s office last summer rolled out a five-person team devoted to using forensic auditing techniques to dig up evidence of fraud. Other agencies, such as Defense Department agencies, NASA and the Environmental Protection Agency, are doing the same. And still other agencies are considering starting new forensics auditing teams at the urging of the National Procurement Fraud Task Force, an interagency group that promotes the prevention, early detection and prosecution of fraud.

“Forensic auditing is the way of the future,” said Brian Miller, GSA’s inspector general and co-chair of the National Procurement Fraud Task Force.

Forensics auditing represents a new approach to auditing because it attempts to find — through forensic methods — improper activity.

Traditional audits don’t do that. They can uncover fraud, but they don’t seek it out. Instead, they look at records to check if prices charged on contracts were reasonable or if contractors have compliant accounting systems in place, said Conan Albrecht, a professor who teaches forensic auditing techniques at Brigham Young University in Provo, Utah.

As new computer-based data-mining techniques have evolved, new possibilities have emerged for auditors to be more proactive in looking for improper activity such as fraud. Now, auditors have tools that can allow them to more easily and regularly analyze and compare vast sets of data to reveal patterns of behavior that would evade traditional audit reviews.

“Forensic auditing is a new way of going about it that will find both anomalies and fraud,” Albrecht said. “It allows auditors to be more proactive about their work, rather than reactive and waiting for someone to give us a tip.”

Forensic auditors try to match symptoms of fraud and they think about how perpetrators might defraud the system and then run tests to see if the symptoms of that kind of fraud show up.

Most fraud investigation cases start with a tip called in on a hot line, said Ted Stehney, who directs the forensic auditing team at the GSA IG’s office. By being more proactive —through regular forensic audits — auditors can help keep some fraud from ballooning into multimillion-dollar cases, he said.

Connecting the dots

Forensic techniques allow auditors to compare various sets of data more easily and to connect the dots that point to a possible crime more easily, Stehney said.

For example, an auditor applying traditional auditing methods might examine a database of vendor payments and not find much. An auditor using forensic techniques, however, could view that database alongside other databases and spot anomalies of interest. For instance, examining a database of vendor payments alongside a database of employee bank accounts where paychecks are deposited might find that a vendor payment was directed to an employee’s personal account. By regularly examining and comparing various databases like that, auditors can find red flags that could indicate fraud — and not have to wait for tips to be called into a hot line, he said.

Stehney admits that drilling for fraud is a bit like drilling for oil: Auditors are likely to come up with a lot of dry wells.

“I think we’ll have the opportunity to find more fraud, but I also think one of the byproducts of it is a lot of waste will surface in the dry holes we drill,” Stehney said.

One challenge auditors face is that government databases don’t often mesh for easy data mining, said Tom Caulfield, assistant IG for investigations at the National Reconnaissance Office. In addition, privacy regulations prevent some databases from being linked for this kind of a search, said Caulfield, who lectures on using forensic techniques for the National Procurement Fraud Task Force.

Some successes

The GSA IG’s forensics auditing team has one success already: a case of employee embezzlement involving a phony company used to mask 13 illicit transfers of government funds. The GSA employee, a supervisory accountant named Michael Harrington, was indicted in October on charges he stole nearly $600,000 while working at GSA’s office in Kansas City, Mo.

Stehney declined to give details on how forensic auditing was used because the case is ongoing and it would reveal methodologies that could help criminals avoid detection.

The emergence of forensics auditing likely will impact the way auditors are trained in the future, Stehney said.

Traditional auditors are not expected to proactively seek out fraud. Instead, they try to ensure the government gets a good price, that government accounts are accurate, that internal controls are in place to ensure verifiable and accurate financial transactions and records, and that contractors’ financial systems comply with government standards.

Forensic auditors, on the other hand, are seeking out fraud. So they need training on a different set of skills and techniques: data mining, technology skills, statistics and investigation skills, Albrecht said. They also must ask different types of questions said Steve Linick, deputy chief of the Justice Department’s fraud division and director of the National Procurement Fraud Task Force.

By ELISE CASTELLI, Federal Times