09/18/2009

News / Potential Economic Stimulus Fraud

In today’s world, the most effective way for the FBI to serve the American people is to be intelligence-led and threat-driven. That means not only investigating violations of federal law after the fact, but also seeing potential threats and crimes on the horizon and being positioned to prevent them.

It’s for that reason that the FBI and the Department of Justice are working now—in concert with our federal, state, and local partners, including the Inspector General community—to get out in front of possible fraud and corruption associated with the American Recovery and Reinvestment Act (ARRA).

The ARRA, signed into law earlier this year, will inject $787 billion into the U.S. economy, providing jobs and other resources for states and local communities. While most of those receiving the funding are honest and dedicated individuals, experience tells us that there’s a good chance that some of the money could end up in the hands of a few unscrupulous government officials and others seeking to line their own pockets.

The ARRA does include oversight and reporting requirements. But past investigations have shown that much of the crime is likely to occur among those who have minimal or no reporting requirements and limited oversight—that amount of money may prove too tempting for some.

The use of intelligence is key. The bulk of the funds won’t be allocated until 2010 and 2011, so there hasn’t been a widespread outbreak of corruption and fraud in response to the ARRA. Still, we are working now to head off potential problems by strategically collecting and analyzing intelligence to identify where we should be focusing resources.

Based on the areas that the ARRA funding is targeting, we’ve pinpointed specific programs that could be the most vulnerable. They include:

Transportation and infrastructure: Schemes historically involve bribery of contracting officers and inspectors and fraudulent billing for inferior materials or work not performed.
Education: Funding and contracts for public schools are typically conducted by an independent board with full spending authority and little or no oversight.
Energy/Environment: The increased popularity of renewable or alternative forms of energy—coupled with stimulus efforts to promote environmentally-friendly energy sources and create “green jobs”—will result in more projects and more opportunities for corruption and fraud.
Housing: Funding to redevelop foreclosed or abandoned homes will be provided to state and local governments via grants, providing opportunities for public officials or grant recipients to manipulate the program for personal gain.
And when crimes like these do occur, we’ll use our arsenal of lawful investigative techniques—undercover operations, court-authorized electronic surveillance, informants, etc.—that have been so effective against other types of crimes to uncover the illegal deeds.

http://www.fbi.gov/page2/sept09/stimulusfraud_091709.html

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