1. VA Office of Inspector General Criminal Investigations Division
Fraud Awareness Briefing

2. VA Office of Inspector General
Audit Division
Healthcare Inspections
Administrative Investigations Division
Criminal Investigations Division
In 1978, President Carter created independent audit and investigative offices in 12 Federal agencies when he signed into law the Inspector General Act of VA was one of these agencies.
IGs have the authority and responsibility to be independent voices for economy, efficiency and effectiveness within the federal govt
IGs protect
Integrity of govt
Improve program efficiency and effectiveness
Prevent and detect fraud, waste and abuse
Requirement to report results of our work to Congress
Weekly submissions to the IG
Semi Annual reports to Congress
VA OIG consists of four agencies AUDIT, Healthcare Inspections, Administrative and CID
Four Field Offices (Western, South Central, Central, Northeast), 22 local offices, ?? Agents nationwide
Computer Crimes Lab
Forensic Document Lab

3. Investigate violations of federal law involving VA Programs and facilities.
Special Agents
arrest authority, carry firearms, execute search warrants, conduct undercover operations
Primary resp is to conducting allegations into criminal activities related to the programs and operations of VA.
How do we get cases?
Referral from Dept, veterans, public, Congress, other law enforcement contacts
Proactive efforts (matching programs – ex: SSA Death Match)
Special Agents
Trained by the Federal Law Enforcement Training Center in Georgia (types of classes include interviewing/interrogation, constitutional law, criminal law, program/contract fraud, evidence processing)
Ongoing training during careers
Same law enforcement authority as FBI, DEA or ATF (can work jointly with them) - Make arrests, carry firearms, execute search warrants, conduct UC operations
We conduct the investigation, then refer to the USAO for criminal prosecution.
Also can go to the DA
Work with prosecutors to suitable conclusion (conviction, plea agreement, sentencing)

4. Subjects of Investigation
Veterans
VA beneficiaries
VA fiduciaries
VA employees
Healthcare
Benefits
VA contractors/vendors/grantees
Private citizens
Who are the subjects of our investigations?
Can range from (name them)
OIG Special Agents also conduct internal investigations of VA employees
Mainly criminal, and usually results in administrative actions (termination, suspension, etc)

5. Cases we investigate From complex contract fraud to homicide.
Prosecutable crimes that affect VA.
Federal Criminal/Civil Statutes
Washington State Penal Code
Local Regulations
OIG Special Agents can investigate many kinds of cases from contract fraud to homicide.
Crimes that occur in the city of Los Angeles (or name your city) can happen on VA property
VARO has some security measures in place, so safer than VAMC or Station:
No checkpoints, no guard gates, no magnetometers
Federal statutes we can use:
18 USC 371 Conspiracy to commit offense or to defraud the United States
18 USC 641 Theft of Public money, property or records
18 USC 666 Theft or Bribery concerning programs receiving federal funds
18 USC 1001 False Statements
18 USC 1341 Mail Fraud
18 USC 1343 Wire Fraud
18 USC 1344 Bank Fraud
Plus others
Civil False Claim actions
Work with local and state Law enforcement

6. Define “FRAUD”
Main Entry: fraud Pronunciation: 'frod Function: noun Etymology: Middle English fraude, from Middle French, from Latin fraud-, fraus 1 a : DECEIT, TRICKERY; specifically : intentional perversion of truth in order to induce another to part with something of value or to surrender a legal right b : an act of deceiving or misrepresenting : TRICK 2 a : a person who is not what he or she pretends to be : IMPOSTOR; also : one who defrauds : CHEAT b : one that is not what it seems or is represented to be
synonym see DECEPTION, IMPOSTURE
This is how Webster defines fraud.
Layman’s definition:
Lying, cheating and/or stealing.
An INTENTIONAL distortion of truth in an attempt to obtain something of value.
Distinction in Criminal investigations: Does not have to result in monetary loss.
Can be attempt to defraud the govt

7. Types of Crime Frauds General Crimes VBA Frauds VHA Frauds
primarily associated with VHA
Will the investigation determine that the offense was mismanagement, error or FRAUD?
We will discuss various types of fraud cases and general crimes (mainly with VHA)

8. Types of Fraud Cases/VBA
Embezzlement
Theft of Benefits
False Statements
Equity Skimming/Loan Guarantee
Construction Fraud
Embezzlement
1. Funeral home director indicted for fraudulently billed the VA for funeral services he never performed. VA purchase card was used for payment.
3. Veteran’s widow indicted for theft of govt money by embezzling over $37k in VA death pension benefits to which she was not entitled. Widow remarried but did not report this to VA.
False Statements
VA beneficiary sentenced to 37 months in prison. He collected VA pension benefits since 1991 claiming he could not walk without the use of braces, crutches or a wheelchair; also received special monthly compensation, compensation for special adaptive housing and assistance for the purchase of an automobile. Investigation disclosed that he could walk without the aid of assisting devices.
Equity Skimming - Person owned and operated a real estate business and represented to troubled homeowners that they would take over mortgage payments, find outside investor to purchase property and contact bank, but they did not. Affected homes guaranteed by VA. Stole almost $1m.
Fiduciary Fraud – Man arrested pursuant to a felony arrest warrant after being indicted for committing fraud against his uncle, a veteran and beneficiary. Stole $54k
Woman sentenced to prison after diverting $60k of VA funds for a disabled veteran to fund her own business
Disability and worker’s comp fraud – individual filed false statements to VA and OWCP in order to obtain workers comp benefits, while owning and operating a counseling service. Unlawfully recd $424k in workers comp

9. Types of Fraud Cases/VBA
Deceased Payee Cases
Credit Card Fraud
Fiduciary Fraud
Disability and Workers’
Compensation Fraud
Deceased payee cases – 1. family member of deceased beneficiary sentenced to 5 months in prison for concealing the death of parent and for 13 years, unlawfully cashed the VA benefit checks by forging the deceased parent’s signature.
Grandson falsified VA marital status questionnaire for his deceased grandparent in order to continue receiving the grandparent’s VA benefits. Also pretended to be the grandparent on the phone when telling VA to change benefits delivery to direct deposit. Sentenced to 24 months’ supervision.
Veteran pled guilty to wire fraud, sentenced to 18 months incarceration for falsely reporting he received NO income in order to receive VA pension, when in fact he was receiving monthly Social Security
Credit Card fraud - Five VA employee were indicted on 125 counts of using a govt purchase card to buy personal items such as jewelry, video equipment, clothes and tools. The employees then submitted fraudulent purchase orders to the VA to hide their activities.

10. Types of Fraud Cases/VHA
Embezzlement
Theft of Benefits
Identity Theft
Theft of Government Property
Procurement Fraud
Embezzlement - . Former employees of a credit union located at a VAMC pled guilty to bank fraud. Embezzled $68k from bank by fabricating withdrawal transactions.
Theft of Benefits- VAMC nurse filed compensation claim alleging severe allergy; allowed to work from home and receive full salary. Nurse then found another job at nursing home, failing to notify VA or OWCP
Former VAMC agent cashier unlawfully received funds after submitted over 400 false travel reimbursements. Sentenced to 5 years probation
Identity theft - Person used a veterans name, SSN and DD-214 to apply for VA medical benefits. Was found guilty and sentenced to 24 months incarceration
-person used his brother’s identity as a veteran to obtain credit and receive healthcare from two VAMCs. Sentenced to 36 years incarceration
Procurement Fraud
Contractor indicted for conspiracy to make false statements, installing used automotive adaptive equipment into veterans’ vehicles, but billed VA for new equipment and equipment he never provided.

11. General Crimes affecting VHA
Drug Diversion
For Profit
For Use
Theft of Property
Child Pornography
Patient Abuse
Homicide
patient by patient
patient by staff
Drug Diversion - VAMC pharmacist stole several hundred of thousand dosage units of schedule II and III controlled substances from VAMC. Transferred drugs to another for streetwide distribution. Loss to VA is $194k. Pharmacist sentenced to 8 years incarceration.
Theft of property – veterans or employees stealing medical equipment, computers, theft from VA patients
Electronic Crimes – former VA employee pled guilty to possessing child pornography
Patient Abuse – patient on patient, patient assaults staff, staff assaults patient, sexual assault
Homicide – stems from patient abuse

12. When you should call us.
Whenever you think something is wrong and there may be criminal conduct involved.
Call us early, when allegation first surfaces.
Many referrals don’t result in cases.
Encourage informal contacts.
What should you do when you suspect criminal activity?
Whenever you think something is wrong and there may be criminal conduct involved
Call us early, when allegation first surfaces.
Contact the OIG when you first become suspicious
Let us make the decision whether or not the activity warrants opening a criminal investigation
You can remain anonymous (however, its hard to contact you for further info) or confidential (better, more credibility)
90% of our referrals don’t result in cases.
Could be a misunderstanding or mistake
Encourage informal contacts
Listen to your customers, they might know something but don’t know where to report it
Department entrusts its employees to DO THE RIGHT THING!
We are tasked to hold people accountable for their criminal actions against the VA.
38 CFR Parts 1, 14, 17 AND VA employee handbook cites requirement for VA employees to report info to OIG about possible criminal activity
OIG Hotline # during this week is :

13. 38 CFR 1.201 Employee's duty to report.
38 CFR Information to be reported to VA Police.
38 CFR Information to be reported to the Office of Inspector General. Criminal matters involving felonies will also be immediately referred to the Office of Inspector General, Office of Investigations.
All VA employees with knowledge or information about actual or possible violations of criminal law related to VA programs, operations, facilities, contracts, or information technology systems shall immediately report such knowledge or information to their supervisor, any management official, or directly to the Office of Inspector General. (Authority: 5 U.S.C. App. 3, 38 U.S.C. 902)
Information about actual or possible violations of criminal laws related to VA programs, operations, facilities, or involving VA employees, where the violation of criminal law occurs on VA premises, will be reported by VA management officials to the VA police component with responsibility for the VA station or facility in question. If there is no VA police component with jurisdiction over the offense, the information will be reported to Federal, state or local law enforcement officials, as appropriate. (Authority: 38 U.S.C. 902)
VA management officials with information about possible criminal matters involving felonies will ensure and be responsible for prompt referrals to the OIG. Examples of felonies include but are not limited to, theft of Government property over $1000, false claims, false statements, drug offenses, crimes involving information technology systems and serious crimes against the person, i.e., homicides, armed robbery, rape, aggravated assault and serious physical abuse of a VA patient. (Authority: 5 U.S.C. App. 3)

14. VA Inspector General Hotline
VAOIG Hotline
VA Inspector General Hotline
P.O. Box 50410
Washington, DC 20091
FAX:
Names and #s of all Special Agents assigned to the Los Angeles office are on this sheet.
Main # and fax#
Mailing Address and physical address
Duty agent #
VA OIG Hotline (DC)

15. New Hours & Procedures:  The VA Office of Inspector General Hotline Call Center has changed its hours of operation. Patients, employees and the public reporting fraud, waste and abuse in the VA may contact a Hotline representative between 8:30 AM and 4:00 PM Eastern time, Monday through Friday excluding Holidays. During non-call-center hours, you may write to the VA Office of Inspector General Hotline (address above). You may also fax material to (202) or use our address.
Confidentiality of Mailed Documents: The VAOIG Hotline Post Office Box is separately maintained by the VAOIG. If you submit correspondence to that address, it will not be read by any Departmental mailroom staff.
How To Send Us Complaints:
Our Hotline address is
Important Notice:  Because of the variations in address styles among servers, we are not always able to respond to complainants using the system-provided address. IF YOU DESIRE A RESPONSE, you MUST include in your message either your complete address for Internet mail from outside your server or a valid address for mail via the U.S. Postal Service. We have changed systems (and our address) to help alleviate this problem. However, providing your return address will greatly assist us in responding to your complaint.
Even if you do not expect a response from us, please consider including your name and either your mailing address or a telephone number where you may be reached between 8:30am and 4:00pm Eastern Time.

16. North Western Field Office
Northern California
San Francisco
Fresno
Northern Nevada
Reno
Oregon
Washington State
Idaho
Montana
Special Agent in Charge
Michael Seitler
(510)
Western Field Office
Southern California
Los Angeles
San Diego
Bakersfield
Arizona
New Mexico
Sothern Nevada
Las Vegas
Utah
Asst. Special Agent in Charge
Lisa Mantione
Names and #s of all Special Agents assigned to the Los Angeles office are on this sheet.
Main # and fax#
Mailing Address and physical address
Duty agent #
VA OIG Hotline (DC)

17. UNITED STATES ATTORNEY'S OFFICE Western District of Washington
Donald Pepin
UNITED STATES ATTORNEY'S OFFICE Western District of Washington
November 20, 2009
CAMANO ISLAND MAN INDICTED FOR SCHEME TO STEAL AND SELL DIABETIC SUPPLIES
Former Pharmacy Employee Conspired with Florida Resident to Sell Stolen Insulin and Test Strips
According to the indictment, WORLEY worked as a Pharmacy Technician at Providence Medical Center’s Pacific Campus Pharmacy in Everett. Part of his job was to order insulin and other diabetic supplies for the pharmacy. WORLEY was placed on leave and ultimately terminated in November 2008, when an internal audit revealed large amounts of insulin being ordered for that pharmacy. The indictment alleges that WORLEY stole both insulin and diabetic test strips, used for checking insulin levels, and sold them on Ebay. After those initial sales, WORLEY was contacted via by PEPIN who wanted to directly purchase insulin and test strips. PEPIN even sent WORLEY lists of the insulin products he wanted and the price he was willing to pay. The prices were just a fraction of the wholesale cost of the items. Over the course of the conspiracy WORLEY is alleged to have stolen $366,054 worth of insulin from Providence Hospital. The retail value of that insulin was more than $1.2 million.

18. VA OIG Investigation Los Angeles VAMC Pharmacy Determined:
Incoming orders of test strips outpaced demand
Test strips had unique lot numbers
Unusually high warehouse activity by: ?

19. VA OIG Investigation

20. VA OIG Investigation

23. VA OIG Investigation Above Suspicion Doctor of Pharmacy Supervisor
Always volunteered for overtime
Had private office
Had all access - trusted

24. VA OIG Investigation Suspicious Supervisor - Not scrutinized
Always volunteered for overtime
– why? Money problems? - opportunity
Had private office
- Out of sight
Had all access – trusted
Had no job duties in the warehouse
- History of crimes against the VA

25. White-collar crime
Within the field of criminology, white-collar crime has been defined by Edwin Sutherland as "a crime committed by a person of respectability and high social status in the course of his occupation" (1949).

26. Motive Ability Opportunity Think about it…Hmmm
Motive – Money, Money, Money
Opportunity – given access to secure area, worked weekends, mornings, evenings
Ability – can you pick up a box? Computer savvy, networking, eBay, PayPal

27. Opportunity
Opportunity for fraud, bribery, insider trading, embezzlement, computer crime, identity theft, and forgery is more available to white-collar employees.

28. Estimated gross sales of $140,000
Think about it…Hmmm
Lost VA Job (Resigned in lieu of termination)
Facing criminal prosecution for thefts from 2005 – 2010:
Conspiracy - 5 years / $250,000 fine.
Wire Fraud years / $250,000 fine.
Transportation of Stolen Property – 10 years / $250,000
Receipt of Stolen Property years / $250,000
Estimated gross sales of $140,000
Fertility treatments
Motive – Money, Money, Money
Opportunity – given access to secure area, worked weekends, mornings, evenings
Ability – can you pick up a box? Computer savvy, networking, eBay, PayPal
Conspiracy is punishable by up to five years in prison and a $250,000 fine. Wire Fraud is punishable by up to 20 years in prison and a $250,000 fine. Both Transportation of Stolen Property and Receipt of Stolen Property are punishable by up to ten years in prison and a $250,000 fine.

29. Ounce of Prevention Physical Security Controls Management Controls
Need for access
Cop on the beat
Management Controls
Duty to report
Accountability
Inventory
Separation of duties
Mandatory Witness

30. Take Away! Call the VA OIG upon suspicion M – O – A
Don’t circumvent the controls
Don’t tolerate thievery

31. Thomas Oberhofer (310) 268 - 4788 Motive – Money, Money, Money
Opportunity – given access to secure area, worked weekends, mornings, evenings
Ability – can you pick up a box? Computer savvy, networking, eBay, PayPal
Conspiracy is punishable by up to five years in prison and a $250,000 fine. Wire Fraud is punishable by up to 20 years in prison and a $250,000 fine. Both Transportation of Stolen Property and Receipt of Stolen Property are punishable by up to ten years in prison and a $250,000 fine.