The Office of Inspector General Working together to identify Waste, Fraud, and Abuse

1. The Office of Inspector GeneralWorking together to identify Waste, Fraud, and Abuse Office of Investigations

2. History and Authority • IG Act of 1978, Congress established the Office of Inspector General (IG) in each of the Government’s major departments. • IG Act, as amended, 5 U.S.C. App. 3, authorizes the conduct of criminal and other investigations, to serve subpoenas, and to administer oaths or affirmations in matters pertaining to DOE. • Homeland Security Act of 2002 (P.L. 107-296) provided statutory law enforcement authority to DOE IG agents.

3. Mission The OIG is mandated to detect and prevent Fraud, Waste, and Abuse . The OIG does this in three ways: • Audits • Inspections • Investigations

4. Investigations The Office of Investigations is responsible for investigating any fraudulent acts involving DOE, its contractors, sub-contractors, and grantees, or any criminal acts affecting the programs, operations, Government funds, or employees of those entities. The Office of Investigations mainly investigates so-called “white-collar” crimes.

5. What OIG’s Investigates • Procurement and Grant Fraud • Environmental Crimes • Technology Crimes • Qui Tams (civil lawsuit) • Conflicts of Interest • Purchase Card Abuse • Theft of Government Property

6. Stimulus Money Under the recently passed American Recovery and Reinvestment Bill of 2009, the Department of Energy will receive approximately $40 billion for various energy, environmental, and science programs and initiatives, including: • $16.8 billion for energy efficiency and renewable energy, including • $5 billion to weatherize low-income homes; • $3.2 billion for energy efficiency and conservation block grants; and • $2 billion for advanced vehicle batteries and battery systems; • $6 billion for new innovative technology loan guarantees; • $2 billion for science; • $5.6 billion for environmental cleanup; and • $4.5 billion for electricity delivery and energy reliability.

7. What is fraud? In simple terms, fraud is intentional wrongdoing usually involving “theft by deception” -the perpetrator knows what he or she is doing is illegal and does it none the less.

8. Three elements that Increase Potential for Fraud • Means • Motive • Opportunity

9. Means • The individual committing the fraud must have the means or access in order to carrying out the scheme • Examples: create/submit invoices, access to accounting systems, access to bank accounts

10. Motive • The motive for fraud is financial in nature and usually fueled by the perceived need or desires of the individual committing the fraud

11. Opportunity • Weak internal controls and poor management create the opportunity for the fraudster to carrying out the scheme.

12. Typical Fraud Violations • Conspiracy to Defraud • Collusion • Theft • False Claims • False Statements • Bribery • Kickbacks • Mail/Wire Fraud • Public Corruption

13. False Claims(18 USC § 287) Whoever knowingly submits to the government a false, fictitious, or fraudulent any claim upon or against the US Government.

14. False Statements(18 USC § 1001) • False statement (written or oral, sworn or unsworn) • Intent • Materiality • Federal jurisdiction

15. Bribery(18 USC § 201) • Offer made to a public official or someone acting for or on behalf of the U.S. • With intent to influence an act or the performance of official duties • Accepts, offers, or agrees to accept or offer “anything of value”.

16. Kickbacks (41 USC § 53) The term “kickback” means any money, fee, commission, credit, gift, gratuity, thing of value, or compensation of any kind which is provided, directly or indirectly, to any prime contractor, prime contractor employee, subcontractor, or subcontractor employee for the purpose of improperly obtaining or rewarding favorable treatment in connection with a prime contract or in connection with a subcontract relating to a prime contract.

17. Kickbacks (41 USC § 53) It is prohibited for any person— (1) to provide, attempt to provide, or offer to provide any kickback; (2) to solicit, accept, or attempt to accept any kickback; or (3) to include, directly or indirectly, the amount of any kickback prohibited by clause (1) or (2) in the contract price charged by a subcontractor to a prime contractor or a higher tier subcontractor or in the contract price charged by a prime contractor to the United States.

18. Product Substitution • Providing a lesser product than specified by the contract. • Considered a false claim/false statement.

19. National Wind Technology Center

20. National Wind Technology Center • Centric Jones was contracted by the National Renewable Energy Laboratory, National Wind Technology Center, to install three foot anchor bolts in the Dynamometer Spin Test Facility in September of 1999.

21. Dynamometer Spin Test Facility

22. Dynamometer Spin Test Facility

23. National Wind Technology Center • During a routine inspection of the DSTF in October 2006, it was found that the anchor bolts were not 3 feet into the ground. But just spot welded onto the frame. • Past Statue of Limitations (SOL), Company out of Business, went after construction bond. • Fireman’s Fund paid for the repairs • Recovered $139,635

24. The Actual Bolts

25. Theft of Government Property (18 USC § 641) Whoever: • Embezzles, steals, purloins, or knowingly converts to his use or the use of another, or • Without authority, sells, conveys or disposes of any record, voucher, money or thing of value of the United States, or • Receives, conceals, or retains, the same with intent to convert it to his personal use or gain knowing it to have been embezzled, stolen, purloined, or converted

26. Theft of Government Property DENVER Grand jury indicts 7 in financial fraud case A Denver grand jury indicted seven people on 70 felony counts involving financial fraud and stealing from the U.S. mail, Denver District Attorney Mitch Morrissey said Wednesday. Jonathan Moulton, 24; Patricia Aleman, 34; Andrew Matejka, 29; Melissa Larivers, 33; Kenneth Blau, 32; Clarisa Sepulveda, 24; and Jennifer Toscano, 25, were involved with stealing mail and using the information to commit financial fraud by targeting banks and area businesses, authorities said in a news release. The seven face charges of racketeering and conspiracy involving computer crime, theft, forgery and criminal impersonation, Morrissey said.

27. Purchase Card Fraud • NREL Administrative Assistant Pleads Guilty to Wire Fraud (Nov 2006) 10 Count Indictment Ordered to Pay $126K Restitution Used Government Purchase Card to Facilitate Scheme Collusion With Print Shop Owner (NREL Contractor)

28. Computer Crimes DOE OIG Technology Crimes Section • Intrusions and Misuse • Child Pornography • Forensic Analysis and Evidence Recovery

29. “Red Flags” The Fraud Indicators • Weak Management • Loose Internal Controls • History of Impropriety • Unethical Leadership • Failure to legal or technical advise • Unexplained decisions and/or transactions • Missing or altered documents

30. Your Roles & Responsibilities • In your work you are responsible for seeing that the American taxpayer gets as much value for his or her dollar as possible. • You are required to report crimes involving or affecting the DOE, its contractors or sub-contractors, to the Office of Inspector General. • DOE Notice 221.11 requires employees report fraud, waste, abuse, misuse, corruption, criminal acts, or mismanagement to the OIG. • DOE Order 221.2 requires cooperation with the OIG

31. Your Roles & Responsibilities FAR 3.1003 Contracting Officer Requirements: If the contracting officer is notified of a possible contractor violation of Federal criminal law involving fraud, conflict of interest, bribery, or gratuity violations, or a violation of the civil False Claims Act, the contracting officer shall coordinate the matter with the agency Office of Inspector General (Office of Investigations), or take action in accordance with agency (Office of Inspector General) procedures.

32. Investigative Process 1. Allegation received by OIG • Preliminary review and interviews • Request additional information • Determination to open investigation • Can refer to other OIG entities or back to management 2. Investigation stage • Non-substantiated allegations: Close 3. Report as necessary • Prosecutors/Managers

33. Remedies • Investigations are prosecuted criminally when guilt can be shown beyond a reasonable doubt • Civil prosecutions require a lesser degree of proof; a preponderance of the evidence

34. Remedies • Administrative action requires adequate evidence to show that a problem occurred • Suspensions and debarments of contractors can also result from investigations - these actions are not punitive, but are taken to protect the interests of the taxpayers

35. Office of Inspector General Hotline (800) 541-1625 or (202) 586-4073 http://www.ig.doe.gov U.S. Department of Energy 1000 Independence Avenue Washington, DC 20585

36. Denver Investigation Operations Special Agent Dotson (720) 962-7550 Fax (720) 962-7554 Department of Energy-OIG Office of Investigations 12155 W. Alameda Parkway Lakewood, CO 80228

37. Questions?