Saturday, July 9, 2005

The Thompson Memo and Corporate Compliance

For those interested in how the Department of Justice's policy on charging business organizations, known as the Thompson Memo, affects the way in which corporations now have to conduct their business, be sure to check out a series of posts by Paul McGreal on the Corporate Compliance Prof blog for an excellent summary of the issues (posts here in Compliance 101). (ph)

July 9, 2005 in Government Reports, Prosecutions, Prosecutors | Permalink | TrackBack (0)

Thursday, June 30, 2005

Does the Passport Office Meet the Requirements for Effective Corporate Compliance?

The Corporate Compliance Prof Blog has an interesting post (here) on the FBI's test of the Passport Office's control system, and asks whether companies should conduct their own tests of internal corporate control programs. (ph)

June 30, 2005 in Government Reports | Permalink | TrackBack (0)

Wednesday, June 8, 2005

Defense Department Inspector General's Report on Boeing Aircraft Lease Program

The Department of Defense's Inspector General issued a very extensive report on the acquisition program involving the leasing of 100 tankers from Boeing (at a total cost of over $23 billion) that involved what it termed an "inappropriate acquisition strategy."  Problems of favoritism shown to Boeing by Darleen Druyan, former Principal Deputy Assistant Secretary of the Air Force for Acquisition and Management, and her improper negotiations to obtain a job at the company, resulted in her pleading guilty to a conflict-of-interest charge and sentenced to a nine-month prison term; in addition, former Boeing CFO Michael Sears also entered a guilty plea related to the botched hiring of Druyan.  The IG report (available to download here -- like all things military, it is very long) notes that in the future, DoD "must not tolerate situations where senior officials use their positions to have contractors put pressure on other senior officialsto have them change their stance relative to a particular situation." (ph)

June 8, 2005 in Government Reports | Permalink | TrackBack (0)

Tuesday, May 24, 2005

An Independent Counsel Probe Mimics the Energizer Bunny

Who among us really misses the independent counsel statute?  An earlier post (here) discussed a D.C. Circuit case involving a former lower-level administrator at the White House who got caught up in the travel office investigation, a minor sideshow in the Whitewater investigation, and sought attorneys fees under the statute.  At least that investigation has ended, but it seems that the IC investigation of former HUD Secretary Henry Cisneros remains alive,  and with continuing support from Congress it may keep going, and going . . .  According to an AP story (here), a move to terminate funding for the investigation was killed in a closed-door Senate negotiation, which allows Independent Counsel David Barrett to remain on an investigation in which the initial target (Cisneros) entered a guilty plea to a misdemeanor in 1999 (he paid a $10,000 fine) and was pardoned in 2001, arising from lying to the FBI about payments made to a mistress.  Barrett estimates that it will take at least another ten months, and possibly longer, to complete the investigation and issue a report.  How has it taken so long, you might ask?  Well, the Wall Street Journal had reported back in 2000 that Barrett expanded his investigation to cover possible obstruction by the IRS and DOJ of the Cisneros investigation at the instigation of the Clinton White House, but not much has been heard recently (see National Review article here).

Barrett was appointed on May 24, 1995, so this is his tenth birthday, which I suspect is the record for the longest continuous service as an Independent Counsel -- he's been on the job longer than my youngest daughter has been around.  While being the Cal Ripken of the IC crowd is something to be proud of, one wonders how much longer the investigation will remain open, especially after the government's expenditures on it have exceeded $21 million and not much seems to have come out over the past couple years.  Nevertheless, Robert Novak had an article earlier this month (here) proclaiming that Barrett's report contains blockbuster information about IRS efforts to obstruct the Cisneros investigation, something likely to draw a yawn from most. (ph)

May 24, 2005 in Corruption, Government Reports, Investigations | Permalink | TrackBack (0)

Monday, May 23, 2005

NASD Funds Study About Why Investment Scams Target the Elderly

A story in the North County Times (San Diego) discusses the NASD's funding of a study to analyze why the elderly are the targets of investment scams.  George  Chamberlin sums it up (here): "I could have saved these guys a lot of money. The reason the elderly are targeted for investment scams is the same reason that Willie Sutton said he robbed banks: That's where the money is."  I'm always leery of criticizing studies based just on the title, and there is certainly value in determining whether there are particular schemes or pitches that work well on the elderly.  That said, scam artists focus on the elderly because of particular vulnerabilities of many of them, such as isolation and a lack of access to unbiased financial (and legal) advice; pressures from living on a fixed income in the face of increasing costs (especially medical and prescription costs), a lack of investing experience, and susceptibility to high-pressure sales tactics.  These traits are not exclusive to the elderly, and many scams also target immigrants and religious groups (the latter particularly fall prey to appeals based on trust of a fellow church member).  The elderly are like banks because they do have assets, and as the baby boomers age, the schemes targeting those near retirement age and the newly-retired will only increase.  Let's hope the NASD is investing its research dollars well. (ph)

May 23, 2005 in Fraud, Government Reports | Permalink | TrackBack (0)

Tuesday, May 17, 2005

Update On the (So-Called) Detroit Terrorism Trial

The so-called Detroit Terrorism trial, which ended with the government admitting that its theory of prosecution was unsupported by the evidence, resulted in an apology by outgoing Deputy Attorney General James Comey recently.  An AP story (here) quotes Comey as stating, "I think that the people we represent -- the people of the United States -- were owed an apology for the way the work was done in that particular matter."  While the government dismissed the terror-related charges against the two defendants convicted of those offenses in the earlier trial, it did subsequently indict both men on fraud charges related to an attempted insurance fraud involving a claim for $15,000 from a fake auto accident -- a claim that was never paid.  An AP story (here) reveals internal DOJ e-mails around the time of the trial regarding the fraud charge, expressing concern that bringing such a charge might be perceived as "vindictive" if brought after the defendants were acquitted or a mistrial declared.  The e-mails give a rare inside look at assessment of the charges by the prosecutors. One defendant entered a guilty plea to the fraud charge, a second one awaits trial.

An additional aspect of the case that remains active is the investigation of Richard Convertino, one of the prosecutors, and others for conduct related to the investigation and trial.  Convertino resigned on Monday from the Department of Justice, which will likely end the investigation by the Office of Professional Responsibility (see AP story here). (ph)

May 17, 2005 in Fraud, Government Reports, Prosecutions, Prosecutors | Permalink | TrackBack (0)

Monday, May 16, 2005

FBI Unable to Account for Health Care Fraud Funding

A New York Times story (here) discusses a report that will be issued this week by the Government Accountability Office (GAO) reviewing the FBI's spending of funds appropriated by Congress for health care fraud investigations.  According to the Times' discussion of the report, a portion of an annual appropriation of $114 million from the Medicare trust fund that is earmarked specifically for health care investigations may have been shifted over to counterterrorism projects.  While the money was not misappropriated, it raises questions about the Bureau's accountability for the use of resources targeted to a specific area of investigation and prosecution.  Given the sizable spending on Medicare and Medicaid ($474 billion), and persistent patterns of abuse in the field, health care fraud remains an area of considerable importance for federal law enforcement. (ph)

May 16, 2005 in Government Reports | Permalink | TrackBack (0)

Monday, February 21, 2005

U.S. Attorney White Paper on Procurement Fraud

The U.S. Attorney's Office for the Eastern District of Virginia issued a white paper on Feb. 18, "Combating Procurement Fraud: An Initiative to Increase Prevention and Prosecution of Fraud in the Federal Procurement Process."  The district is home to the Pentagon and, more importantly, thousands of government defense consulting firms in Crystal City, Rosslyn, and Alexandria; the revolving door spins rather quickly in D.C.  The recent scandal involving Boeing (see previous post here) that led to the sentencing of the company's former CFO and a senior Air Force procurement officer has led to a large-scale initiative by the U.S. Attorney's Office, which is already well-known for the Ill-Wind investigation of the 1980s.  The white paper discusses the reasons for the formation of a new Procurement Fraud Working Group:

In addition to increasing DoD contracts, these contractors are expanding operations to acquire and service contracts from the State Department, DHS, and other federal agencies. For example, the President and Chief Operating Officer of one of DHS's top ten contractors recently announced the company’s intent to grow 15 per cent each year. With increased procurement, including a rise in the outsourcing of particular services, there is also the potential for an increase in procurement fraud, which includes product substitution, defective pricing or other irregularities in the pricing and formation of contracts, misuse of classified or other sensitive information, labor mischarging, accounting fraud, fraud involving foreign military sales and ethical and conflict of interest violations. This puts the United States Attorney's Office, as chief law enforcement agency for this district, in a unique position to act.


February 21, 2005 in Corruption, Fraud, Government Reports, Investigations | Permalink | TrackBack (0)