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FAA DBE Workshop

FAA DBE Workshop . DBE Program Fraud U.S. Department of Transportation Office of Inspector General. Overview. Mission and Priorities Fraud Discovery, Schemes, and Indicators Detection and Deterrence of DBE Fraud. OIG Criminal Investigative Regions. Alaska. Maine. Vermont. North Dakota.

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FAA DBE Workshop

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  1. FAA DBE Workshop DBE Program Fraud U.S. Department of Transportation Office of Inspector General

  2. Overview • Mission and Priorities • Fraud Discovery, Schemes, and Indicators • Detection and Deterrence of DBE Fraud

  3. OIG Criminal Investigative Regions Alaska Maine Vermont North Dakota Minnesota 1 Washington Montana NH Mass 2 SouthDakota Wisconsin 5 Rhode Island Oregon Idaho New York Connecticut 9 Wyoming Michigan Nebraska Iowa Pennsylvania New Jersey Ohio Indiana Illinois Nevada Utah Kansas Maryland Delaware Colorado Missouri 3 West Virginia Kentucky Virginia California Oklahoma Arkansas Arizona New Mexico Tennessee 6 4 North Carolina Washington, DC Hawaii South Carolina Mississippi Texas Alabama Georgia Louisiana OIG Regional Office Florida (Includes Puerto Rico, Virgin Islands)

  4. Why Employees Do Not Report Fraud • According to a 2005 Business Ethics Study, employees do not report fraud because they: • Believe nothing will happen. • Don’t know who to contact. • Think the report will not be kept confidential, so supervisors or co-workers might retaliate. • Believe the situation has no personal impact on them.

  5. Difficulties in Prosecuting DBE Fraud Cases • Project completed to owner’s satisfaction • Unpopular program → unsympathetic jury • Government loss is amount paid to DBE front → below threshold for prosecution • Government prosecutor does not understand DBE program

  6. “Red Flag” Indicators • Owner lacks background, expertise, or equipment to perform subcontract work • Employees shuttle back and forth between prime contractor and minority-owned business payrolls • Business names on equipment and vehicles are covered with paint or magnetic signs • Orders and payment for necessary supplies are made by individuals not employed by minority-owned business

  7. Minority-Owned Business “Red Flag” Indicators • Prime contractor facilitated purchase of minority-owned business • Minority-owned business owner never present at job site • Prime contractor always uses the same minority-owned business

  8. Settlement for $11.75 M and Compliance Agreements

  9. DBE Fraud Schemes False Eligibility • The DBE does not belong to one of the recognized socially or economically disadvantaged groups • The DBE provides false information concerning size or financial status • Hidden assets or false statements concerning origination of capital

  10. DBE Fraud Schemes Conduit Companies • DBE firm does not complete any of the contracted work • The DBE sells his status to another company who completes the work • Usually allows the use of the DBE name on invoices, trucks, equipment

  11. Prototype Fraud Card

  12. Simple Recipe for Fraud Detection • Identify selected big ticket items on big-dollar DOT projects. • Closely examine supporting documentation for irregularities and discrepancies. • Interview third parties concerning project details. Ask simple questions to detect fraud. Distribute fraud cards.

  13. DOT/OIG Hotline • Call: 1-800-424-9071 • E-Mail: Hotline@oig.dot.gov • Write: U.S. DOT/OIG P.O.Box 23178 Washington, DC 20026-0178

  14. Questions? OIG’s web site: www.oig.dot.gov

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