Federal Bureau of Investigation

1. Federal Bureau of Investigation

2. What is the FBI? • Investigates violations of federal law including the theft of federal funds • Works closely with the United States Attorney’s Office. • Coordinates with state and local agencies to investigate and prosecute crimes.

3. Public Corruption • The abuse of trust or position by an elected or appointed person • Personally profiting through schemes involving an elected or appointed position • Bribery, kickbacks, contracts to friends • Acting in your own best interest and not that of the public

4. Obstacles • Public corruption is not easily detected because it is secretive and the participants benefit with no clear victim • Corrupt activity can be part of routine business and not apparent without inside knowledge

5. Obstacles • Traditional White Collar Crime is uncovered through audits, reports from victims and routine investigations of bank transactions • Public corruption is different and we rely on the public to report problems that might not directly affect them.

6. Examples of Corruption • Sole source contracts for friends or relatives • Contracts that lack a competitive bid process • Kickbacks paid to contracting officers for issuing contracts

7. HONEST SERVICES FRAUD • “Scheme to Defraud” in Honest Services Context • Misuse of Position for Gain • The Function of State Law • Concealed Financial Interest

8. Bribery of Federal Officials18 U.S.C. § 201(b) • Payer must offer or give a thing of value to a public official with intent to influence. • Public Official must solicit or accept a thing of value in return for being influenced.

9. Gratuities to Federal Officials18 U.S.C. § 201(c) • A thing of value is offered or given to a public official “for or because of any official act performed or to be performed.”

10. Federal Program Fraud18 U.S.C. § 666 • Government or organization receives $10,000 in federal assistance • Bribery relates to a transaction or series of transactions involving $5,000 or more • Agent of the government/organization solicits or receives a thing of value • Acts corruptly, intending to be influenced or rewarded

11. Hobbs Act Extortion Under Color of Official Right, 18 U.S.C. § 1951 • “The Government need only show that a public official has obtained a payment to which he was not entitled, knowing that the payment was made in return for official acts.” • Effect on Interstate Commerce

12. Conflict of Interest18 U.S.C. § 208 • Executive Branch official or employee • Participates personally and substantially • In a matter in which any of the following has a financial interest: • the official, spouse, or minor child • A general partner, or an organization with whom the official is employed or is negotiating for employment

13. Federal Government Official • Jane is the GSA official in charge of procurement of construction services for all federal buildings in Texas. John runs Acme Construction Company, which specializes in small scale office renovations. Acme operates throughout the South and is respected for the quality of its work and known for its low prices. Several years ago when Jane was promoted to her current position, John remembered that they had gone to college together. John invited Jane to dinner at Houston’s most luxurious restaurant to celebrate Jane’s new job. At dinner, John asked Jane whether she could help Acme do more business renovating federal office buildings. Jane said she would see what she could do. • Over a five-year period, John made it a point to treat Jane to a nice dinner about once a month. Usually both Jane and John also brought their spouses. John also remembered Jane’s birthday each year – usually with a $200 Nordstrom gift certificate. On about 10 occasions during the same time period, John’s company submitted bids to renovate Texas federal buildings. On each of these occasions, John called Jane and told her he hoped that Acme would get the contract. Jane was the deciding official on these contracts. Acme was awarded 8 of the 10 contracts it bid on – – it was the low bidder on 4 of those contracts. The contracts awarded to Acme totaled $750,000 and Acme made $500,000 in profits from these. After the largest of the contracts was awarded – – for $300,000 – – John surprised Jane by telling her he had arranged a three day all expense paid golf trip for the two couples to Pebble Beach. Half of the contract awards took place more than five years ago. • On two occasions, John also asked Jane to recommend Acme to other prospective clients. Jane called her GSA counterpart in Alabama and a friend of hers who is a City of Houston procurement official, and sang the company’s praises. Acme then bid on, but did not win business in Alabama – it did get a $1 million sole source contract from Houston.

14. The Elements of Fraud The crime of mail [or wire] fraud has three elements: (1) The defendant knowingly devised or participated in a scheme to defraud; (2) The defendant did so knowingly and with the intent to defraud; and (3) For the purpose of carrying out the scheme or attempting to do so, the defendant used or caused the use of the United States mails or a private or commercial interstate carrier.

15. Concealed Financial Interest There are two types of honest services fraud – “either bribery of the official or failure to disclose a conflict of interest, resulting n personal gain.” Conflict of interest gives rise to fraud “when an official fails to disclose a personal interest in a matter over which they have decision-making power and the public is deprived of its right either to disinterested decision making itself or . . . to full disclosure as to the official’s potential motivation behind an official act.”

16. Concealed Financial Interest (cont’d) Where a public official conceals a financial interest in violation of state criminal law and takes discretionary official action . . . that . . . will directly benefit the concealed interest, the official has deprived the public of his honest services, regardless whether the concealed financial interest . . . influenced the official’s actions.”

17. Where to Report • Your local office of the Federal Bureau of Investigation Seattle Division (206) 622-0460 Olympia Resident Agency (360) 352-3234

18. What Can I Do? • Look at things differently • Get involved in your community • Report your suspicions early even if second-hand information

19. Most Common Myths • There is no corruption in Washington State • If I know something, then the FBI must already know it • The victim of corruption always reports the problem • “Business as Usual” mentality