VA Office of Inspector VA Office of Inspector GeneralGeneral

Criminal Investigations Criminal Investigations DivisionDivision

Fraud Awareness Fraud Awareness BriefingBriefing

VA Office of Inspector VA Office of Inspector GeneralGeneral

Audit DivisionAudit Division

Healthcare InspectionsHealthcare Inspections

Administrative Investigations Administrative Investigations DivisionDivision

Criminal Investigations DivisionCriminal Investigations Division

Investigate violations of federal law Investigate violations of federal law involving VA Programs and facilities.involving VA Programs and facilities.

Special AgentsSpecial Agents arrest authority, carry firearms, execute arrest authority, carry firearms, execute

search warrants, conduct undercover search warrants, conduct undercover operationsoperations

Subjects of InvestigationSubjects of Investigation

VeteransVeterans VA beneficiariesVA beneficiaries VA fiduciariesVA fiduciaries VA employeesVA employees

HealthcareHealthcare BenefitsBenefits

VA contractors/vendors/granteesVA contractors/vendors/grantees Private citizensPrivate citizens

Cases we investigateCases we investigate

From complex contract fraud to From complex contract fraud to homicide.homicide.

Prosecutable crimes that affect VA.Prosecutable crimes that affect VA. Federal Criminal/Civil StatutesFederal Criminal/Civil Statutes Washington State Penal CodeWashington State Penal Code Local RegulationsLocal Regulations

Main Entry: Main Entry: fraudfraud Pronunciation: 'frodPronunciation: 'frodFunction: Function: nounnounEtymology: Middle English Etymology: Middle English fraude, fraude, from Middle from Middle French, from Latin French, from Latin fraud-, frausfraud-, fraus1 a1 a : : DECEIT, , TRICKERY; ; specificallyspecifically :: intentional intentional perversion of truth in order to induce another to part perversion of truth in order to induce another to part with something of value or to surrender a legal right with something of value or to surrender a legal right bb :: an act of deceiving or misrepresenting an act of deceiving or misrepresenting : : TRICK2 a2 a :: a person who is not what he or she pretends to a person who is not what he or she pretends to be be : : IMPOSTOR; ; alsoalso :: one who defrauds one who defrauds : : CHEAT bb :: one that is not what it seems or is represented to beone that is not what it seems or is represented to be

synonymsynonym see see DECEPTION, , IMPOSTURE

Define “FRAUD”Define “FRAUD”

Types of CrimeTypes of Crime

FraudsFrauds VBA FraudsVBA Frauds VHA FraudsVHA Frauds

General CrimesGeneral Crimes primarily associated with VHAprimarily associated with VHA

Types of Fraud Types of Fraud Cases/VBACases/VBA

EmbezzlementEmbezzlement Theft of Benefits Theft of Benefits False StatementsFalse Statements Equity Skimming/Loan GuaranteeEquity Skimming/Loan Guarantee Construction FraudConstruction Fraud

Types of Fraud Types of Fraud Cases/VBACases/VBA

Deceased Payee CasesDeceased Payee Cases Credit Card FraudCredit Card Fraud Fiduciary FraudFiduciary Fraud Disability and Workers’ Disability and Workers’

Compensation FraudCompensation Fraud

Types of Fraud Types of Fraud Cases/VHACases/VHA

EmbezzlementEmbezzlement Theft of BenefitsTheft of Benefits Identity TheftIdentity Theft Theft of Government PropertyTheft of Government Property Procurement FraudProcurement Fraud

General Crimes affecting General Crimes affecting VHAVHA

Drug DiversionDrug Diversion For ProfitFor Profit For UseFor Use

Theft of PropertyTheft of Property Child PornographyChild Pornography Patient AbusePatient Abuse HomicideHomicide

patient by patientpatient by patient patient by staffpatient by staff

When you should call us.When you should call us.

Whenever you think Whenever you think something is wrong and something is wrong and there may be criminal there may be criminal conduct involved.conduct involved.

Call us early, when Call us early, when allegation first surfaces.allegation first surfaces.

Many referrals don’t Many referrals don’t result in cases.result in cases.

Encourage informal Encourage informal contacts.contacts.

38 CFR 1.38 CFR 1.201201 Employee's duty to report. Employee's duty to report. 38 CFR 1.38 CFR 1.203203 Information to be reported to Information to be reported to

VA Police.VA Police.

38 CFR 1.38 CFR 1.204204 Information to be reported to Information to be reported to the Office of Inspector General. Criminal the Office of Inspector General. Criminal matters involving felonies will also be matters involving felonies will also be immediately referred to the Office of immediately referred to the Office of Inspector General, Office of Investigations. Inspector General, Office of Investigations.

VAOIG HotlineVAOIG Hotline

1-800-488-82441-800-488-8244

VA Inspector General HotlineVA Inspector General Hotline

P.O. Box 50410P.O. Box 50410

Washington, DC 20091Washington, DC 20091

vaoighotline@va.govvaoighotline@va.gov

FAX: 202-565-7936FAX: 202-565-7936

North Western Field North Western Field OfficeOffice

Northern CaliforniaNorthern California• San FranciscoSan Francisco• FresnoFresno

Northern NevadaNorthern Nevada• RenoReno

OregonOregon

Washington StateWashington State

IdahoIdaho

MontanaMontana

Special Agent in ChargeSpecial Agent in Charge

Michael SeitlerMichael Seitler

(510) 637-6360(510) 637-6360

Western Field OfficeWestern Field Office

Southern CaliforniaSouthern California• Los AngelesLos Angeles• San DiegoSan Diego• BakersfieldBakersfield

ArizonaArizona

New MexicoNew Mexico

Sothern NevadaSothern Nevada• Las VegasLas Vegas

UtahUtah

Asst. Special Agent in Asst. Special Agent in ChargeCharge

Lisa MantioneLisa Mantione

310-268-4269310-268-4269

Donald PepinDonald Pepin

UNITED STATES ATTORNEY'S OFFICE UNITED STATES ATTORNEY'S OFFICE Western District of WashingtonWestern District of Washington

November 20, 2009November 20, 2009

CAMANO ISLAND MAN INDICTED FOR CAMANO ISLAND MAN INDICTED FOR SCHEME TO STEAL AND SELL DIABETIC SCHEME TO STEAL AND SELL DIABETIC

SUPPLIESSUPPLIES

Former Pharmacy Employee Conspired with Former Pharmacy Employee Conspired with Florida Resident to Sell Stolen Insulin and Florida Resident to Sell Stolen Insulin and

Test StripsTest Strips

VA OIG InvestigationVA OIG Investigation

Los Angeles VAMC Pharmacy Los Angeles VAMC Pharmacy Determined:Determined:

• Incoming orders of test strips outpaced Incoming orders of test strips outpaced demanddemand

• Test strips had unique lot numbersTest strips had unique lot numbers

• Unusually high warehouse activity by: Unusually high warehouse activity by:

??

VA OIG InvestigationVA OIG Investigation

VA OIG InvestigationVA OIG Investigation

VA OIG InvestigationVA OIG Investigation

Above SuspicionAbove Suspicion

Doctor of PharmacyDoctor of Pharmacy

SupervisorSupervisor

Always volunteered for overtimeAlways volunteered for overtime

Had private officeHad private office

Had all access - trustedHad all access - trusted

VA OIG InvestigationVA OIG Investigation

SuspiciousSuspicious

Supervisor - Not scrutinizedSupervisor - Not scrutinized

Always volunteered for overtime Always volunteered for overtime

– – why? Money problems? - opportunitywhy? Money problems? - opportunity

Had private officeHad private office- Out of sight- Out of sight

Had all access – trustedHad all access – trusted- Had no job duties in the warehouseHad no job duties in the warehouse

- History of crimes against the VA- History of crimes against the VA

White-collar crimeWhite-collar crime

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

Think about it…HmmmThink about it…Hmmm

MotiveMotiveAbilityAbilityOpportunityOpportunity

OpportunityOpportunity

Opportunity for Opportunity for fraud, , briberybribery, , insider insider tradingtrading, , embezzlementembezzlement, , computer computer crimecrime, , identity theftidentity theft, and , and forgeryforgery is is more available to more available to white-collarwhite-collar employees.employees.

Think about it…HmmmThink about it…Hmmm

Lost VA Job (Resigned in lieu of termination)Lost VA Job (Resigned in lieu of termination)

Facing criminal prosecution for thefts from 2005 – 2010:Facing criminal prosecution for thefts from 2005 – 2010: Conspiracy - 5 years / $250,000 fine. Conspiracy - 5 years / $250,000 fine. Wire Fraud - 20 years / $250,000 fine. Wire Fraud - 20 years / $250,000 fine. Transportation of Stolen Property – 10 years / Transportation of Stolen Property – 10 years /

$250,000$250,000 Receipt of Stolen Property - 10 years / $250,000Receipt of Stolen Property - 10 years / $250,000

Estimated gross sales of $140,000Estimated gross sales of $140,000

Fertility treatmentsFertility treatments

Ounce of PreventionOunce of Prevention

Physical Security ControlsPhysical Security Controls Need for accessNeed for access Cop on the beatCop on the beat

Management ControlsManagement Controls Duty to reportDuty to report AccountabilityAccountability InventoryInventory Separation of dutiesSeparation of duties Mandatory WitnessMandatory Witness

Take Away!Take Away!

Call the VA OIG upon suspicionCall the VA OIG upon suspicion M – O – AM – O – A Don’t circumvent the controlsDon’t circumvent the controls Don’t tolerate thieveryDon’t tolerate thievery

Thomas OberhoferThomas Oberhofer(310) 268 - 4788(310) 268 - 4788