1. Many Faces of Fraud Seminar 12 October 2017
US Army Criminal Investigation Command Major Procurement Fraud Unit
Hartford Ct fraud resident agency
Many Faces of Fraud Seminar
12 October 2017
SA Jesse Zander
Office:

2. Major Procurement Fraud Unit
Mission: conduct criminal investigations into allegations of fraud associated with major acquisition programs to recover Army funds, insure the integrity of the Army procurement process, and deter future crimes in order to preserve Soldier Safety and Army Readiness.
Frauds involving major systems acquisition contracts include the activities of contractors, consultants, and Army and DOD employees

3. Detection Internal Reviews and Audits Hotline Tips
Proactive initiatives
Outside Agency Referrals
Registered/Open Sources
Whistleblowers / Qui Tam Suits
Contracting Personnel

4. Investigative Techniques
Undercover/Covert
Task Force Operations
/Phone Records
Forensic Data Recovery/Examinations
Financial Records
Extradition

5. Trends Less military deployed=less military contract $$$
Accounting Frauds (cost-mischarging)
“Steering Contracts”
Exploitation of Public Trust Positions
Bogus Small Business Status Claims
Counterfeit Parts
Counter-proliferation efforts

6. Fraud in Contracting False Statement/False Claims
The supply of materials or services that do not conform to contract requirements, and which are supplied by means of intentional misrepresentations and/or concealment of material facts.
False Statement/False Claims
Cost mischarging (Cost plus contracts)
Defective Pricing/TINA violation
Nonconforming deliverables
Product Substitution
Defective Products
Graft & Related Crimes
Improper Sole Source Justifications & “steering” of contracts (Conflict of Interest)
Bribery/Procurement Integrity Act violations
Acceptance of Illegal Gratuities
Post Employment Restrictions
Money Laundering/Mail Fraud/Bulk Cash Smuggling
Wire Fraud

7. Contract Award Indicators of Fraud
Acceptance of questionable bid (late/non-responsive/non-responsible)
“Lost” bids
Improper Sole Source Justifications
Improper disqualification
Vague specifications/evaluation criteria
Contractor drafting Specs or SOW
Identical or similar bids from competitors (Bid Rigging)
Sudden, Unexplained wealth
Contractor favoritism/favorable treatment over a period of time without justification

8. Post-Award Indicators of Fraud
COR/COTR approving a modification (Lead Agency Discussion)
Items accepted that are of lesser value but contract cost is not reduced
Invoices paid without signed receiving docs/DD250/MIRR
Unapproved modifications
Large claims for additional work
Vague or no invoices to support costs/claims

9. Historical Cases
Can cost lives, not just money-MARSOC Marines and K9 killed in fire caused by nonconforming electrical parts and substandard wiring in Afghanistan

10. Recent MPFU Cases: Total Recoveries since 2015: 41 Million
Manhattan U.S. Attorney Files and Simultaneously Settles False Claims Act Lawsuit Against Defense Contractor and its President for Multi-Year Fraud Involving Sale of Defective Weapon Sights to U.S. Military and Other Agencies.

11. Recent MPFU Cases
Independent Contractor in Afghanistan Sentenced to 48 Months For His Role in Offering $54,000 in Bribes to a U.S. Government Official.

12. The Threat of Counterfeit Parts Integrated into U. S
The Threat of Counterfeit Parts Integrated into U.S. Army Weapon Systems

13. Harry Krantz & Bay Components Investigation Counterfeit Integrated Circuits & the Kiowa Warrior Helicopter

14. Recent Investigative Focus
Buy American and Berry Amendment/DFARS Clause Preference for Certain Domestic Commodities

15. s of Interest

16. Remedies Criminal Civil (recovery of funds back to Army)
Contractual /Administrative (You Have The Power!)
Not all bad contracting is Fraud!

17. Contractual & Administrative Remedies
Termination for Default
Termination for Convenience
Disallowance of Costs
Removal from automated pay system
Extended Warranties
Withholding Payments
Offset of Payments
Price Reduction
Correction of Defect/Re-work
Refusal to Accept
Denial of Claims
Also disallowance of questionable costs
Removal from automated pay system

18. CONCERNS ABOUT REPORTING FRAUD
What if I am wrong?
My supervisor may be involved.
It’s none of my business (willful neglect) )
Ways to avoid these concerns.
I Believe this is happening right next to me

19. Report it! United States Army CID Major Procurement Fraud Unit
700 South Quaker Lane, Suite 65
West Hartford, CT 06110
Link for the DOD IG Hotline Form:
Phone Number:
You can remain anonymous

20. QUESTIONS ?