In October 2006, Deputy Attorney General Paul J. McNulty announced a new national procurement fraud initiative established by the Justice Department’s Criminal Division to promote the early detection, prevention, and prosecution of procurement and grant fraud associated with increased contracting activity for national security and other government programs. In partnership with U.S. Attorneys’ Offices, the Justice Department’s Civil, Antitrust, Environmental and Natural Resources, National Security, and Tax Divisions, and other federal law enforcement agencies, the Department formed the National Procurement Fraud Task Force, chaired by Assistant Attorney General Alice S. Fisher of the Criminal Division, to intensify the government’s detection efforts and to continue prosecuting those who defraud taxpayers. The Executive Director of the Task Force is Steve A. Linick, who spearheaded a procurement fraud task force in the Eastern District of Virginia and is now a Deputy Chief in the Department’s Criminal Division, Fraud Section. Brian Miller, the IG for GSA, is the Vice-Chair of the Task Force.
What agencies are members of the Task Force?
TASK FORCE MEMBERS
The National Procurement Task Force includes the following members:
Air Force Office of Special Investigations (USAF-OSI);
Antitrust Division, DOJ;
Army Criminal Investigation Command (Army CID);
Army - Legal Services Agency;
Civil Division, DOJ;
Criminal Division, DOJ;
Defense Contract Audit Agency (DCAA);
Defense Criminal Investigative Service (DCIS);
Defense Contract Management Agency (DCMA);
Environmental and Natural Resources Division, DOJ (ENRD);
Executive Office for United States Attorneys, DOJ (EOUSA);
Office of Management and Budget (OMB) - Office of Federal Procurement Policy, Acquisition Policy (OFPP);
Tax Division, DOJ;
United States Attorneys’ Offices (USAOs);
United States Postal Inspection Service (USPIS); and
Inspectors General (OIG), including:
Agency for International Development (USAID);
Amtrak;
Central Intelligence Agency (CIA);
Corporation for National and Community Service (CNCS);
Defense Intelligence Agency (DIA);
Department of Agriculture (USDA);
Department of Commerce;
Department of Defense (DOD);
Department of Education (Education);
Department of Energy (DOE);
Department of Health and Human Services (DHHS);
Department of Homeland Security (DHS);
Department of Housing and Urban Development (HUD);
Department of Interior (Interior);
Department of Justice (DOJ);
Department of Labor (Labor);
Department of State (DOS);
Department of Transportation (DOT);
Department of the Treasury (Treasury);
Department of Veterans Affairs (VA);
Environmental Protection Agency (EPA);
General Services Administration (GSA);
Government Printing Office (GPO);
National Aeronautics and Space Administration (NASA);
National Geospatial Intelligence Agency (NGA);
National Reconnaissance Organization (NRO);
National Science Foundation (NSF);
National Security Agency (NSA);
Nuclear Regulatory Commission (NRC);
Office of the Director of National Intelligence (ODNI);
Small Business Administration (SBA);
Social Security Administration (SSA);
Special Inspector General for Iraq Reconstruction (SIGIR);
Treasury Inspector General for Tax Administration (TIGTA); and
United States Postal Service (USPS).
What are the stated objectives of the Task Force?
The Task Force has established the following objectives relating to procurement fraud:
1) Increase coordination and strengthen partnerships among all IGs, law enforcement, and DOJ to fight procurement fraud more effectively;
2) Assess existing government-wide efforts to combat procurement fraud;
3) Increase and accelerate civil and criminal prosecutions and administrative actions to recover ill-gotten gains resulting from procurement fraud;
4) Educate and inform the public about procurement fraud;
5) Identify and remove barriers to preventing, detecting, and prosecuting procurement fraud;
6) Encourage greater private sector participation in the prevention and detection of procurement fraud; and
7) Evaluate and measure the performance of the Task Force to ensure accountability
What are the significant accomplishments of the Task Force?
The Task Force has already held five full meetings with more than 125 representatives from more than 30 agencies in attendance. Overall, we now have more effective resource allocation in procurement fraud investigations, which has resulted in the acceleration of investigations and prosecutions. The Task Force has taken a coordinated and unified approach to combating procurement fraud related to the wars in Iraq and Afghanistan and reconstruction efforts in those countries. This combined effort of Task Force members has resulted in significant accomplishments, including those highlighted below:
The Task Force has created working committees chaired by a high-level member of the IG community or the FBI. These working committees, which consist of representatives from multiple agencies, address common issues such as training, legislation, intelligence, information sharing, private sector outreach, grant fraud, and international procurement fraud.
In order to improve coordination and information sharing in cases related to the global war on terror (GWOT), a Joint Operations Center (JOC) has been set up at FBI headquarters in Washington D.C. to serve as the nerve center for the collection and sharing of intelligence regarding corruption and fraud relating to funding for GWOT.
There has been an increase in specialized training for OIG agents and prosecutors on the investigation and prosecution of procurement fraud cases. In June 2007, the Task Force sponsored its first annual procurement fraud training course for prosecutors at the National Advocacy Center (NAC) in Columbia, South Carolina. It has also developed a training course for investigators which will be offered in Fall 2007.
The Task Force has established this website that has assisted suspension and debarment officials by listing in a single location, press releases related to recent procurement and grant fraud cases.
Since the Task Force was created, more than 200 procurement fraud cases involving approximately 300 defendants have resulted in criminal charges, convictions, civil actions, or settlements. These cases are summarized on the Task Force’s website.
The Task Force has formed numerous regional working groups, chaired by U.S. Attorneys to implement the Task Force’s goals regionally by working with their local federal law enforcement counterparts to bring about timely and effective procurement fraud prosecutions.
The Task Force has encouraged an unprecedented level of collaboration and coordination at all levels of government to combat procurement and grant fraud.
What are some of the significant cases brought during the Task Force’s first year of operations?
For information on the most current procurement fraud cases, go to the website Press Room. A representative group of significant 2007 cases are described below.
Case highlights:
United States v. Fischetti et al. (Antitrust Division)
On July 10, 2007, Robert Fischetti, former Sales Director of Peck & Hale LLC, located in West Sayreville, N.Y., was sentenced to ten months in prison for participating in two separate conspiracies to rig bids on military contracts for tie-down equipment and cargo securing systems to secure cargo on vehicles, vessels and aircraft, and for metal sling hoist assemblies that are used to transport items such as bombs and other munitions. In addition, Fischetti, a sub-contractor employee, solicited and accepted a kickback from another lower-tiered sub-contractor in 2002 in return for favorable treatment in the award of subcontracts for finishing work on products supplied to DOD. Previously, in February 2007, two Pennsylvania executives, Thomas Cunningham and Richard Barko, pleaded guilty to rigging bids on these contracts and currently await sentencing. DCIS investigated this case.
United States v. Affiliated Computer Services, Inc. (Northern District of Texas)
On July 3, 2007, Affiliated Computer Services, Inc. (ACS) headquartered in Dallas, Texas, agreed to pay the U.S. $2,645,987.30 to settle allegations that it violated the civil False Claims Act. The government contends that ACS submitted inflated claims for payment between 2002-2005 for programs run by and through the USDA, Labor, and the Administration for Children and Families of DHHS. This case was investigated by Labor OIG, DHHS-OIG, USDA-OIG, and the Texas Workforce Commission.
United States v. Shah (District of Maryland)
On June 12, 2007, Ketan R. Shah pleaded guilty to conspiracy to defraud the U.S. and obstruction of a federal audit in connection with false claims totaling more than $1.3 million submitted to the IRS. Through his company, Public Affairs International, Inc., the defendant overstated expenses and understated income on an IRS contract to organize informational programs concerning changes in federal tax law. In addition to the criminal charges, a civil complaint was also filed against Brosim S. Ekpone seeking damages of $4.2 million based on the same factual allegations. Ekpone is scheduled for trial on August 21, 2007. The investigation was conducted by TIGTA.
United States v. Bahel (Southern District of New York)
On June 7, 2007, Sanjaya Bahel, a former procurement supervisor at the United Nations, was convicted of honest services mail and wire fraud and for corruptly accepting payments as an official of an organization receiving federal funds. The evidence at trial established that a co-defendant, Nishan Kohli, who had previously pled guilty, provided the defendant with cash and other substantial benefits for his assistance in defrauding the United Nations Procurement Division. The defendant is scheduled to be sentenced on September 10, 2007. The case was investigated by the FBI.
United States v. Torres, et al. (Western District of Texas)
On May 18, 2007, six defendants, including Ignacio Ruelas Torres, an Infrastructure Coordinator/Project Officer with the U.S. Medical Command at Fort Sam Houston, were indicted in connection with a multimillion dollar bribery scheme to steer U.S. Army medical department contracts at Fort Sam Houston. The indictment alleges acts of bribery, kickbacks, and fraud to ensure that a company that employed one of the defendants, Sphinx Consultant and Associates, would receive government contracts. This case is being investigated by the FBI, IRS-CI, Army-CID, GSA-OIG, Interior OIG, DCIS, and SBA-OIG.
Does the Task Force provide procurement fraud training for prosecutors?
From June 13-15, 2007, the Task Force sponsored its first procurement fraud training conference. Over 80 civil and criminal prosecutors from across the country convened at the NAC in Columbia, South Carolina, and participated in a comprehensive training program over three days. Each attendee left the conference with an electronic procurement fraud manual and a comprehensive understanding of common fraud schemes and practice tips. The Task Force and the NAC are currently planning the second annual conference scheduled for June 2008.
How can prosecutors, investigative agents and auditors get involved in their respective geographic areas?
The Task Force has also formed numerous regional working groups to ensure that the Task Force encourages the investigation and prosecution of procurement and grant fraud nationwide. To date, there are 14 USAOs that have organized their own regional procurement fraud working groups and 13 other USAOs that are participating in those groups. Contact information for the coordinators of these groups can be found here.
The regional working groups, which are chaired by U.S. Attorneys, have implemented the Task Force’s goals regionally by working with their local federal law enforcement counterparts to bring about timely and effective procurement fraud prosecutions. These groups are facilitating the exchange of information among participant agencies and assisting them in developing new strategies to prevent, detect, investigate, and prosecute procurement fraud. Many of the groups meet routinely and have offered training on issues such as corporate criminal liability, data mining, and parallel proceedings, among others. In addition, some of the working groups have reported an increase in civil and criminal procurement and grant fraud referrals since the formation of their groups and are rotating meetings among participant agencies.
Is there a website that government contractors can use to cross-check whether potential employees have been convicted of defense contract-related fraud or any other felony?
Yes, The Defense Procurement Fraud Debarment Clearinghouse, located at http://www.ncjrs.gov/html/bja/defproc/ and operated by the Bureau of Justice Assistance (BJA), Office of Justice Programs, U.S. Department of Justice, was established by Section 815, Subsection 10, of the National Defense Authorization Act for fiscal year (FY) 1993 [Public Law 102-484, United States Code, Section 2408 (c)]. This provision required the U.S. Attorney General to establish a single point of contact for contractors or subcontractors of the U.S. Department of Defense (DOD) to promptly confirm whether potential employees have been convicted of defense contract-related fraud or any other felony. The clearinghouse serves as this point of contact.
DOD contractors and subcontractors must verify this information because individuals who have been convicted of fraud or any other felony arising out of a contract with DOD are prohibited from contracting with DOD under the National Defense Authorization Act of 1989 (Public Law 100-456).