U.S. Department of Justice Office of the Inspector General Investigations Division

1. U.S. Department of JusticeOffice of the Inspector General Investigations Division Grant Fraud Awareness Raymond Berry Special Agent Fraud Detection Office

2. Icebreaker

3. How Ethical Are You?

4. Objectives • Understand the purpose, authority and jurisdiction of DOJ-OIG • Understand fraud and identify the risk areas in your organization • Become more vigilant as a grant steward • Identify fraud indicators • Be empowered to pursue steps towards success

5. Agenda

6. What is the OIG’s Function? Established in 1989, the U.S. Department of Justice, Office of the Inspector General (OIG), conducts independent investigations, audits, inspections, and special reviews of Department of Justice personnel and programs to detect and deter waste, fraud, abuse, and misconduct, and to promote integrity, economy, efficiency, and effectiveness in the department’s operations.

7. Organizational Structure

8. Investigations Division • Special Agents/Criminal Investigators • Forensic Accountants • Computer Forensic/Information Technology Specialists • Investigative Analysts and Specialists • Support Staff

9. INV’s Jurisdiction Special Agents have statutory law enforcement authority to conduct investigations, execute arrest and search warrants, serve subpoenas, as well as perform undercover operations. These investigations involve alleged violations of fraud, abuse and integrity laws that govern DOJ employees, operations, grant award recipients and contractors. Special Agents develop these types of cases for appropriate resolution to include (1) criminal prosecution (2) civil legal action (3) and/or administrative action.

11. Agenda

12. When Does Fraud Occur?

13. Did you know? • Each year, the U.S. Government awards nearly $450 billion dollars in Federal Assistance Agreements, most commonly in the form of grants that help to: • Support national infrastructure programs in transportation, homeland security, criminal justice, agriculture, human health, and the environment. • Fund scientific research, studies, and analyses. • Further social sciences, art, literature, and promote cultural enrichment.

14. Recipient Responsibilities • Recipients of federal grants have been awarded funds to carry out the goals and objectives identified in the grant. These funds are subject to certain regulations, oversight, and audit. • Grant recipients are stewards of federal funds. • Grant dollars must be used for purposes intended. • Grant recipients must account for costs and justify expenditures. • Using federal grant dollars for unjust enrichment, personal gain, or other than their intended use is a form of theft, subject to criminal and civil prosecution under the laws of the United States.

15. Who Commits Grant Fraud? When business entities, individuals, communities, and other organizations receive federal grant funds, they are entrusted with their appropriate expenditure. Grant fraud is committed by: Grant recipients, company officers, business partners, board members, and managers. Bookkeepers, financial staff, and employees. Contractors and subcontractors engaged with the recipient. Recipient consultants.

16. Agenda

17. Lifecycle of a Grant

18. Grants Management

19. Grants Management (Continued)

20. Admin Grant Requirements

21. Agenda

22. Case Study 1 Jane Doe, owner and director of the non-profit Battered But Blessed Inc., was awarded a $400K grant from the Office on Violence Against Women. Jane’s daughter, Sarah, recently graduated with a Biology degree and has been in the job market but has not landed anything thus far. Sarah does not have any professional work experience so she finds it difficult to compete with other candidates in the job market. Jane decides to hire Sarah as a business consultant and pay her a salary of $110K each year under the OVW grant. Can you identify what, if anything, is of concern?

23. Common Fraud Scenarios • Falsifying information in grant applications • Influencing government employees to award a grant or contract to a particular company, family member, or friend. • Charging personal expenses as business expenses against the grant • Charging for costs which have not been incurred or are not attributable to the grant • Charging for inflated labor costs or hours, or categories of labor which have not been incurred (i.e. “ghost” employees, fictitious contractors or “consultants”)

24. Case Study 2 Two weeks ago, ABC University was notified that they were awarded a $725K OVW grant to further their efforts in victim services and advocacy. The department chair of Psychology thankfully was instrumental in this grant award after spending countless hours on it. With very few university staff involved in the process, the chair is left to manage the grant. Six months into the grant the chair begins to divert increments of the drawdowns to cover his mortgage payments and credit card payments, totaling $15K. Is this fraud?

25. Common Fraud Scenarios (Continued) • Falsifying information contained in contract proposals • Billing more than one grant or contract for the same work • Falsifying test results or other data • Substituting approved materials with unauthorized products • Misrepresenting a project's status to continue receiving government funds • Charging higher rates than those stated or negotiated for in the bid or contract

26. Case Study 3 Two weeks ago, ABC University was notified that they were awarded a $725K OVW grant to further their efforts in victim services and advocacy. The department chair of Psychology thankfully was instrumental in this grant award after spending countless hours on it. With very few university staff involved in the process, the chair is left to manage the grant. Six months into the grant the chair begins to divert increments of the drawdowns to cover his mortgage payments and credit card payments, totaling $15K. The chair intends to repay the grant funds he used once he receives his income tax refund. Is this fraud?

27. Case Study 4 The 2016 fiscal year has gone by so quickly and the grant administrator of Common View Associates Inc., a non-profit organization, suddenly noticed there is a $25K balance under the grant award. CVA has successfully implemented the associated program, met their objectives, and utilized grant funds in the process of doing so. Since it is near the end of the grant period of performance, the administrator draws the remaining funds although she no longer gas any other program-related expenses to charge to the grant. She would like to congratulate all of the employees in the organization by hosting an appreciation party and reward the deserving employees with small bonuses for their hard work throughout the year; she intends to pay for all of this with the remaining grant fund balance. Would this be acceptable?

28. Grant Fraud Statutes • Embezzlement • Theft or Bribery • False Statements • False Claims • Mail Fraud • Wire Fraud

29. Fraud’s Consequences Organizational Reputation Administrative Civil Actions Criminal Enforcement Fines, Fees, & Penalties Suspension and Debarment (if applicable)

30. Agenda

31. Breaking News

32. Breaking News

33. Breaking News

34. Grant Funds Gone Rouge Case Example

35. Agenda

36. OIG Hotline Report Fraud, Waste or Abuse

37. Whistleblower Protection Under the National Defense Authorization Act of 2013 (NDAA), it is illegal for an employee of a Federal contractor, subcontractor, or grantee to be discharged, demoted, or otherwise discriminated against for making a protected whistleblower disclosure. The Department of Justice Office of the Inspector General has jurisdiction to investigate allegations of reprisal for whistleblowing by employees of DOJ contractors, subcontractors, and grantees. For more information about whistleblower protections for DOJ contractors, subcontractors, and grantees, please consult the informational brochure provided by the OIG. Information about waste, fraud, abuse, misconduct, or whistleblower reprisal relating to a DOJ employee, program, contract, or grant may be reported to the OIG Hotline.

38. Achieving Success Prepare, Detect & Prevent As a grant recipient, you can protect your organization and the source of federal funds by detecting and preventing fraud: Establish an adequate and effective system of accounting, internal controls, records control, and records retention. Increase employees’ awareness about fraud, organizational risk, and schemes. Practice professional skepticism.

39. Achieving Success Prepare, Detect & Prevent Strictly adhere to the DOJ Financial Guide, Federal Acquisition Regulations, organizational policies and procedures as well as governing ethical standards. Conduct external audits. Implement an internal compliance and ethics program that encourages the recognition and reporting of fraud, waste, and abuse. Report suspected fraud to the U.S. Department of Justice, Office of the Inspector General.

40. Achieving Success Your Resources • There are a wealth of resources at your disposal. Remember to use them! • Title 2 Code of Federal Regulations Part 200/OMB Uniform Guidance for Grants • GRANTS.GOV • OWV Technical Assistance Program • OWV Grant Monitor/Liaison • Your Program Manager/Coordinator

41. Hotline Report Fraud, Waste or Abuse U.S. Department of Justice Office of the Inspector General Investigations Division Fraud Detection Office OIG.HOTLINE@USDOJ.GOV (800)869-4499 www.oig.justice.gov/hotline

42. Questions? Raymond Berry Special Agent (703)413-1867 Raymond.l.berry@usdoj.gov U.S. Department of Justice Office of the Inspector General www.oig.justice.gov @justiceOIG