1 U. S. Department of Transportation: Office of Inspector General Office of Investigations and Illinois Department of Transportation: Financial Review and Investigation Section Office of Quality Compliance & Review Shah Engineering Inc. Todd Kath Special Agent Telephone Gene Gansz Supervisory Auditor Telephone

2 Per FBI statistics dated between 2006 and 2008, the average dollar loss per offense for: Per FBI statistics dated between 2006 and 2008, the average dollar loss per offense for: Identity theft was $6,383 Identity theft was $6,383 Car theft was $6,751 Car theft was $6,751 Bank robbery was $4,854 Bank robbery was $4,854 Burglary was $2,079 Burglary was $2,079

How would you like to end your career after you caught: How would you like to end your career after you caught: 1,481 Car Thieves, or 1,481 Car Thieves, or 1,566 Identity Thieves, or 1,566 Identity Thieves, or 2,060 Bank Robbers, or 2,060 Bank Robbers, or 4,810 Burglars??? 4,810 Burglars??? 3

You might think that this might be that retiree... 4

In reality it could be any one of you!!! In reality it could be any one of you!!! Program managers, Program managers, Project executives, Project executives, Contracting officials, Contracting officials, Analysts, Analysts, Engineers, Engineers, Attorneys, Attorneys, Auditors, and Auditors, and Law enforcement personnel Law enforcement personnel The Shah Engineering Inc. investigation resulted in a settlement of $10 MILLION.... equaling 4,810 burglars or 160 burglars per year for a 30 year career, nearly one burglar caught every other day. The Shah Engineering Inc. investigation resulted in a settlement of $10 MILLION.... equaling 4,810 burglars or 160 burglars per year for a 30 year career, nearly one burglar caught every other day. 5

6 Shah Engineering, Inc. (SEI) Engineering firm located in Chicago, Illinois Engineering firm located in Chicago, Illinois Manu Shah was the sole shareholder and was solely responsible for the billing and management of contracts Manu Shah was the sole shareholder and was solely responsible for the billing and management of contracts SEI provided a full range of engineering and architectural services to public and private sector clients with over 20 years in Consulting/Engineering. SEI provided a full range of engineering and architectural services to public and private sector clients with over 20 years in Consulting/Engineering.

7 Illinois Department of Transportation (IDOT) Audit January 12, 2004 – IDOT audit January 12, 2004 – IDOT audit  Initial Conference/Conferences  Claimed no Job cost information  Partial records released to auditors  Field Testing  Timesheets unsigned or unapproved  Timesheet corrections not initialed  Shifting hours between jobs or office work  Invoices with little or no detail  Assets depreciated and leased by various Shah-owned companies  Employee lists did not match up with payroll summary

8 Example of shifting hours (with instructions)

9 No invoice support and child’s company

10 Payments to GCM at end of year (from warrant)

11 Illinois Department of Transportation (IDOT) Audit January 12, 2004 – IDOT audit – Continued January 12, 2004 – IDOT audit – Continued  Observations  Employee worker caught creating a timesheet  Blank timesheets found on copy machine  Related Companies – owned by children  Noticing number of alterations on timesheets  Accounting contact could not provide information without the owner’s review  Fresh copies of old invoices  Conclusion  Based on initial review, IDOT believed SEI had received in excess of $1,500,000 more than its entitlement and referred the audit to DOT/OIG, FBI, and the USAO

12 IDOT analysis of timesheet alterations

13 Search Warrant IDOT gave detailed information on search sites IDOT gave detailed information on search sites Simultaneous warrant of SEI corporate office and Manu Shah’s residence Simultaneous warrant of SEI corporate office and Manu Shah’s residence  Interviews of employees including Manu Shah at residence IDOT auditors brought in to sites as experts IDOT auditors brought in to sites as experts  Identification of relevant paperwork

14 Investigation / Analysis Investigation / analysis took approximately 2 years Investigation / analysis took approximately 2 years IDOT audit spent time calculating amount of fraud versus normal audit adjustments IDOT audit spent time calculating amount of fraud versus normal audit adjustments Agents used this information to extend the reach of the investigation Agents used this information to extend the reach of the investigation Interviews of relevant parties Interviews of relevant parties Review of banking documents Review of banking documents Multiple transfers to friends, family, personal contacts Multiple transfers to friends, family, personal contacts Checks endorsed by Manu Shah and deposited back into SEI or Manu’s accounts Checks endorsed by Manu Shah and deposited back into SEI or Manu’s accounts Extensive transfers into trust accounts for tax and disadvantaged business enterprise (DBE) purposes Extensive transfers into trust accounts for tax and disadvantaged business enterprise (DBE) purposes

Investigation / Analysis Obtained evidence of the following: Obtained evidence of the following:  Mail Fraud, 18 U.S.C. § 1341 Direct billing fraud Direct billing fraud Overhead fraud Overhead fraud DBE certification DBE certification  Money laundering, 18 U.S.C. § 1956 & 1957  False documents / statements, 18 U.S.C. § 1001  Witness tampering, 18 U.S.C., § 1512  RICO, 18 U.S.C. § 1962 Examples…. Examples…. 15

16 Original Invoice

17 Fake Invoice

18 SEI Outbound Check to Bipin

19 Manu’s Summary

20 SEI Inbound Checks from Bipin Total of $17,160.00

21 Summary of Dirigo Transactions

22 Original Invoice From Dirigo

23 Manu’s Fake Invoice

24 Investigative Results Manu Shah Manu Shah  Pled to 2 counts of mail fraud  Pled to 1 count of false statements  Initial escrow of $5.5 million stock toward loss  Sentenced to 41 months in prison, starting August 20, 2009 SEI SEI  Pled to 1 count of mail fraud  $500,000 fine Manu Shah and SEI debarred Manu Shah and SEI debarred $10 million restitution ordered to 12 State and municipal entities $10 million restitution ordered to 12 State and municipal entities Actual Overbilling = $12,366, Actual Overbilling = $12,366,947.45

Lessons Learned/Fraud Prevention Stay Alert!!! Stay Alert!!! Verify with sources (documents & people) Verify with sources (documents & people) Document Red Flags Document Red Flags Communicate with Audit or Investigative counterparts Communicate with Audit or Investigative counterparts 25

CATCH the Biggest Robbers & Thieves! CATCH the Biggest Robbers & Thieves! Contract fraud Contract fraud Grant fraud Grant fraud Embezzlement Embezzlement Etc. Etc. Remember..... You can “save” the taxpayer the equivalent of: Millions of $$$$$$ (Or More!) Thousands of cars Thousands of Identities 26

A little visual of the “savings” 27

28 Questions Todd Kath Special Agent Telephone U. S. Department of Transportation: Office of Inspector General Office of Investigations and Illinois Department of Transportation: Financial Review and Investigation Section Office of Quality Compliance & Review Gene Gansz Supervisory Auditor Telephone