Transcript DBE Program Fraud FAA DBE Workshop U.S. Department of Transportation

FAA DBE Workshop
DBE Program Fraud
U.S. Department of Transportation
Office of Inspector General
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Overview
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Mission and Priorities
Fraud Discovery, Schemes, and Indicators
Detection and Deterrence of DBE Fraud
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OIG Criminal
Investigative Regions
Alaska
Maine
Vermont
North Dakota
Washington
Minnesota
Montana
NH
Mass
South Dakota
Oregon
Idaho
Wyoming
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Nevada
Nebraska
Utah
Wisconsin
5
New York
Michigan
Iowa
Indiana
New Jersey
Ohio
Maryland Delaware
Missouri
Kentucky
West
Virginia
Virginia
California
Arizona
Oklahoma
New Mexico
6
Hawaii
Arkansas
Tennessee
Mississippi
Texas
Rhode Island
Connecticut
Pennsylvania
Illinois
Kansas
Colorado
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1
4
3
North Carolina
South
Carolina
Washington, DC
Alabama
Georgia
Louisiana
OIG Regional Office
Florida
(Includes Puerto Rico,
Virgin Islands)
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Why Employees Do Not
Report Fraud
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According to a 2005 Business Ethics Study,
employees do not report fraud because they:
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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.
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Difficulties in Prosecuting
DBE Fraud Cases
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Project completed to owner’s satisfaction
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Unpopular program → unsympathetic jury
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Government loss is amount paid to DBE front → below
threshold for prosecution
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Government prosecutor does not understand DBE program
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“Red Flag” Indicators
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Owner lacks background, expertise, or equipment to
perform subcontract work
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Employees shuttle back and forth between prime
contractor and minority-owned business payrolls
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Business names on equipment and vehicles are covered
with paint or magnetic signs
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Orders and payment for necessary supplies are made by
individuals not employed by minority-owned business
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Minority-Owned Business
“Red Flag” Indicators
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Prime contractor facilitated purchase of minority-owned
business
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Minority-owned business owner never present at job site
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Prime contractor always uses the same minority-owned
business
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Settlement for $11.75 M and
Compliance Agreements
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DBE Fraud Schemes
False Eligibility
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The DBE does not belong to one of the recognized socially
or economically disadvantaged groups
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The DBE provides false information concerning size or
financial status
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Hidden assets or false statements concerning origination
of capital
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DBE Fraud Schemes
Conduit Companies
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DBE firm does not complete any of the contracted work
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The DBE sells his status to another company who
completes the work
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Usually allows the use of the DBE name on invoices,
trucks, equipment
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Prototype
Fraud Card
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Simple Recipe for
Fraud Detection
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Identify selected big ticket items on big-dollar
DOT projects.
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Closely examine supporting documentation for
irregularities and discrepancies.
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Interview third parties concerning project details.
Ask simple questions to detect fraud. Distribute
fraud cards.
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DOT/OIG Hotline
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Call:
1-800-424-9071
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E-Mail: [email protected]
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Write:
U.S. DOT/OIG
P.O.Box 23178
Washington, DC 20026-0178
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Questions?
OIG’s web site:
www.oig.dot.gov
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