2. Gerald M. Burke Assistant United States Attorney 9 Executive Drive Fairview Heights, Illinois 62208 (618) 628-3710 Fax (618) 622-3811 E-Mail: Gerald.Burke@usdoj.gov

4. Provides for recovery of treble damages Do not need to prove specific intent to defraud Only need to show reckless disregard or deliberate indifference Lower standard of proof than criminal cases Overview of the False Claims Act 31 U.S.C. Section 3729-33

5. Reaches individuals, corporations and partnerships Corporations can be liable for acts of employees even if they did not know about the conduct if the conduct benefits the corporation Liability is joint and several Statute of limitations is 6 years from date of fraud or three years from date of discovery (not to exceed ten years) Targets the incentive for fraud: Money

6. Provisions of the False Claims Act 31 U.S.C Sections 3729-33 Any person is liable who knowingly: Submits to the United States a false claim for payment or causes a false claim to be submitted to the United States (3729(a)(1)) Makes a false statement in support of a claim (3729(a)(2)) Conspires to get a false claim paid (3729(a)(3)) Makes a false statement or record to avoid an obligation to pay the government (reverse false claim) (3729(a)(7))

7. False Claims Act Amendments Eliminates any presentment requirement from 3729 (a)(1) Liability on any person who presents or causes to be presented, a false claim for payment or approval Claim includes any request for payment, including to a contractor, grantee or other recipient

8. False Claims Act Amendments Eliminates any requirement that the money or property falsely requested belong to the United States. The claim must request money or property to be spent on the government’s behalf or advance a government program or interest.

9. False Claims Act Amendments Changes the definition of obligation Obligation does not have to be fixed Obligation includes receipt of an overpayment

10. False Claims Act Amendments Eliminates the intent requirement Revises 3729(a)(2) to make it applicable so long as the statement is material. Material is defined as a natural tendency to influence or be capable of influencing the payment of money.

11. QUI TAM ACTIONS If a private party files the action, the complaint is filed under seal for at least 60 days while the United States investigates the complaint. The seal period can be extended for "good cause"

12. Internal Revenue Service The False Claims Act does not apply to "claims, records or statements made under the Internal Revenue Code of 1954" IRS violations are pursued exclusively by that agency

13. What is a False Claim Any request or demand, whether under contract or otherwise For money or property Which is made to a contractor, grantee or other recipient

14. If the United States provides any portion of the money or property which is requested or demanded, or if the United States will reimburse anyone for any portion of the money or property which is requested or demanded, the False Claims Act applies

15. Any false invoice Claims to Medicare Construction grants Fraudulent attempts to redeem food stamps Federal insurance claims Fraudulent negotiations of Treasury checks

17. TRUTH IN NEGOTIATIONS ACT 10 U.S.C. Section 2306 Submission of False cost and pricing data Data must be accurate complete and current TINA is typically incorporated in a government procurement contract Violation of TINA can be a violation of False Claims Act as well as a breach of contract

18. COMMON LAW REMEDIES  Breach of Contract  Unjust enrichment  Mistake of Fact  Conversion  Breach of Fiduciary Duty  Restitution  Single damages

19. BUY AMERICA ACT 41 U.S.C. Sections 10a-10d o Requires a certification by government contractors that goods are "manufactured" or "components" are from the U.S. o Final assembly complies with the Act United States v. Rule Industries, Inc., 878 F.2d 535(1st Cir. 1989)

20. FRAUD INJUCTION STATUTE 18 U.S.C. Section 1345 Designed to put a speedy end to fraud schemes Court can enter a restraining order, or take such action as is warranted to prevent a continuing and substantial injury to the United States Allows for very creative remedies

21. CIVIL RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS (RICO) ACT 18 U.S.C. 1964-1968 Civil remedies against racketeering activities Can order persons to divest an interest in an enterprise Provides for damages and equitable relief Requires prior DOJ approval

22. ANTI-KICKBACK ACT 41 U.S.C 51-58  Prohibits payment of any kind to or by a contractor for the purpose of receiving favorable treatment  Double damages plus a civil penalty

23. BRIBERY AND CONFLICT OF INTEREST 18 U.S.C 216 Both Payor and Payee are liable Rebuttable presumption that the U.S. was damaged in the amount of the bribe Civil penalties from recipient of bribe

24. OTHER CIVIL PENALTY STATUTES Mushroom Promotion, Research and Consumer Information Enforcement 7 U.S.C. 90 Foreign Investment Disclosure 7 U.S.C. 3502 Financial Record keeping 12 U.S.C. 1955 Over 100 other civil remedies

25. American Recovery & Reinvestment Act of 2009 $787 B. includes approximately $200 B. for procurements and $300 B. for grants / cooperative agreements Emphasis: Job Creation; Transparency; Accountability; and Oversight Multiple Oversight Mechanisms: 68 Federal OIG’s, Recovery Accountability and Transparency Board; OMB; GAO; 56+ State Administering Agencies

26. Recipients of Grants / Cooperative Agreements State and local units of government, individuals, non-profits, for-profits, Indian tribes Individual Assistance (i.e. FEMA Disaster Assistance), Social Programs, Research, Jobs, Medicaid Formula, Discretionary, & Earmarks*

27. Overview of the Grant Process Application Budget Assurances Grant Conditions Eligibility Performance Draw downs Monitoring Gov’t Management Financial Certifications INTEGRITY BASED SYSTEM Granting Agency Policies OMB Circulars

28. Process Safeguards Grant Management / Desk Audits On-Site Grant Monitoring OIG Audits A-133 / Single Audit Act Public Availability of Grant Reports*

29. Mistakes Gross Negligence Criminal Fraud

30. Common Grant Fraud Schemes Conflicts of Interest “Lying”/ Failing to Support Costs Embezzlement

31. Conflicts of Interest Typical Issues: –Related Party Transactions / Self-Dealing (equipment, services, rental agreements, hiring relatives…) –Grant / Sub Grant Award Decisions –Grant Writer Fees / Contingent Fees –Consultants: who, what, why, how, how much? Grants to For-Profit Entities = Potential Increased Risks Internal or External: Grantee, Federal Employee, Political or State Administering Agency Conflicts

32. “Lying” / Failing to Support Costs Typical Issues: –Unilaterally Redirecting the Use of Funds or Failing to Maintain Documentation About How Funds Were Used –Grantee’s Eligibility for Funding / False or Misleading Applications / False Program Compliance Certifications –“Fake Spending” –Indirect Cost Rates: Establishment & Application –Matching Fund / Program Income / Other Grants Fund the Same Program– other ARRA Funding / Commingling of Funds

33. Typical Civil Fraud Issues Related to Grants Careful assessment of allegations and fact analysis: many grant programs have flexibility in their actual use of funds Program rules and formulas can be complex Poor or non-existent documentation and accounting records: grantee or grantor Consultants: valuation issues; proving “no-show” jobs Audit Support / Damage Calculations Remedies Flexibility Ability to Pay Claims: many grantees rely heavily on grant funding