The following summaries highlight some of the Office of the Inspector General’s (OIG) audits, evaluations, inspections, special reviews, and investigations, which are discussed further in this report. As the highlights illustrate, the OIG continues to conduct wide-ranging oversight of Department of Justice (Department) programs and operations.
|April 1, 2011 – September 30, 2011|
|Allegations Received by the Investigations Division||5,985|
|Audit Reports Issued||52|
|Recommendations for Management Improvements||225|
|Single Audit Act Reports Issued||14|
|Recommendations for Management Improvements||53|
Audits, Evaluations, Inspections, and Special Reviews Highlights
Examples of OIG audits, evaluations, inspections, and special reviews completed during this semiannual reporting period are:
- Administration of Complex Asset Team Management and Oversight. The OIG issued a report finding significant deficiencies in how the U.S. Marshals Service (USMS) managed complex assets, including those seized as part of financial crime cases, between 2005 and 2010. Since 2005, the Complex Asset Team — responsible for helping USMS district offices manage and dispose of unique and complicated assets that have been seized or forfeited to the federal government — had disposed of over $130 million in complex assets, including business and financial interests seized during investigations into several multi-million dollar financial crimes perpetrated by individuals including Ponzi-scheme operator Bernard Madoff, investment lawyer Scott Rothstein, banker and political fundraiser Hassan Nemazee, and organized crime figure James Galante. The OIG audit found that the USMS’s lack of pre-seizure planning exposed the government to unnecessary risk, such as seizing assets with significant liabilities or limited equity, or becoming involved in protracted litigation with third parties who have interests in the assets. The audit report made 20 recommendations to help the USMS and the Justice Management Division (JMD) better manage and account for seized and forfeited complex assets. The USMS concurred with the recommendations and has already begun to implement recordkeeping, reporting, and valuation procedural improvements.
- Efforts to Combat National Security Cyber Threats. The OIG conducted a review of the Federal Bureau of Investigation’s (FBI) efforts to develop the National Cyber Investigative Joint Task Force (NCIJTF), an FBI-led, multi-agency task force responsible for ensuring that the U.S. government coordinates its efforts to combat national security cyber intrusions, and the capabilities of FBI field offices to investigate national security cyber intrusion cases. The audit found that the FBI has completed many of the interim goals for the NCIJTF. In addition to developing an operational plan for the NCIJTF, the FBI incorporated many intelligence community and law enforcement agencies in day-to-day NCIJTF operations, formed threat focus cells comprised of NCIJTF participants’ expertise to target specific cyber threats, and had some operational successes in mitigating cyber threats against the United States. The NCIJTF could improve its capabilities to defend against cyber attacks by sharing relevant information about cyber threats among the task force’s partner agencies. In addition, the FBI could improve the capabilities of its field offices so that new cyber agents are equipped to assume responsibility of a national security intrusion investigation. The OIG made several recommendations to help the FBI implement the NCIJTF and strengthen its cadre of field agents assigned to investigate national security cyber intrusions, and the FBI concurred with the recommendations.
- Convicted Offender, Arrestee, and Detainee DNA Backlog. The OIG examined the FBI’s efforts to eliminate its backlog of DNA samples collected from federal convicted offenders, federal arrestees, and non-U.S. citizen detainees, and determined that the FBI has effectively eliminated its backlog to a manageable monthly workload. In December 2009, the FBI Laboratory reported a backlog of over 312,000 convicted offender, arrestee, and detainee DNA samples waiting to be processed. The OIG audit determined that as of May 2011, the FBI had reduced its backlog to approximately 14,000 samples by hiring additional personnel and contractors, using high-throughput robotics, implementing software for a semi-automated review of DNA profiles after completion of analysis, and reconfiguring laboratory space for more efficient processing. However, the OIG audit found that the FBI Laboratory lacked documented policies, procedures, and reporting methods to ensure backlog and workload levels are accurately identified and reported. In addition, the FBI Laboratory had over 712,000 DNA samples that required storage, and it anticipates having 1 million samples by the end of the calendar year, which could present storage issues in the future. The OIG made recommendations to assist the FBI in more accurately identifying, reporting, and projecting its convicted offender, arrestee, and detainee DNA sample workload, and to develop a long-term plan to store DNA samples, and the FBI concurred with these recommendations.
As shown in the statistics at the beginning of this section and in the chart below, the OIG investigates many allegations of misconduct involving Department employees, contractors, or grantees who receive Department money. Examples of such investigations are:
- On August 29, 2011, a retired naval officer was found guilty by a jury in the U.S. District Court for the District of Columbia for filing a false claim with the September 11th Victim Compensation Fund and stealing approximately $151,000 from the government. The evidence at trial showed that the retired naval officer was stationed at the Pentagon on September 11, 2001, and claimed that he was injured during the terrorist attack on the building. He claimed the injuries that he suffered prevented him from playing competitive lacrosse and doing home improvement work. The evidence showed that the retired naval officer continued to play competitive lacrosse, ran the New York City Marathon in November 2001, and falsified documents submitted to the Victim Compensation Fund. The investigation was conducted by the OIG’s Fraud Detection Office.
- On August 23, 2011, the mayor of Kinloch, Missouri, Keith Conway, was arrested and pled guilty to charges of wire fraud and theft of funds from a federal program. Kinloch received $90,000 in American Recovery and Reinvestment Act of 2009 (Recovery Act) funds from an Office of Community Oriented Policing Services (COPS) grant. In entering his guilty plea, the mayor admitted that he used city funds to pay for several luxury items.
- On April 11, 2011, a Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Special Agent assigned to the Washington Field Division pled guilty to charges of theft of public property, possessing or receiving stolen firearms, false statements, wire fraud, and money laundering. In pleading guilty, the Special Agent admitted that in his official capacity, he converted ATF seizures of firearms, tobacco, and currency to his personal use. Also, the Special Agent admitted that he falsified official ATF documents relating to the disposition of the firearms and made unauthorized sales of tobacco product inventory and retained the proceeds. The Special Agent was subsequently sentenced in the Eastern District of Virginia to 37 months’ imprisonment followed by 2 years of supervised release and ordered to pay $10,210 in restitution as well as forfeiture of $4,860 in recovered government funds. The Special Agent resigned from the ATF. The investigation by the OIG’s Washington Field Office was conducted with the assistance of ATF and the City of Hampton, Virginia, Police Department.
- On August 10, 2011, an FBI Supervisory Senior Resident Agent was arrested and pled guilty on charges of making false statements. The Supervisory Senior Resident Agent admitted in pleading guilty that in 2010 he prepared a false evidence inventory and receipt form claiming that he had removed cash seized in a drug investigation in 2009 from FBI evidence and then placed it back into evidence at a local drug task force office. He admitted that he forged the signatures of two law enforcement officers as witnesses of the alleged transfer of cash on the evidence inventory and receipt form. The Supervisory Senior Resident Agent is no longer an FBI employee.
- On May 3, 2011, the Federal Express Corporation agreed to pay $8 million to settle allegations that the company and its affiliates violated the federal False Claims Act related to a contract with the government. In the wake of the 2001 terrorist attacks in New York and Washington, D.C., Federal Express couriers used “delivery exception codes” to reflect that increased security measures at government facilities were causing delays in the timely delivery of overnight Federal Express packages. A joint investigation conducted by the Department’s OIG Fraud Detection Office, the General Services Administration OIG, and the Department of Agriculture OIG determined that, even after heightened security measures subsided or became routine procedures for entering government locations, Federal Express couriers used “delivery exception codes” in order to excuse their own failures to deliver Priority Overnight packages by the specified time, thus avoiding the obligation to reimburse government customers under the company’s money-back-guarantee policy.
- On September, 1, 2011, a former Bureau of Prisons (BOP) contractor and her husband were arrested and pled guilty to conspiracy to commit false statements relating to health care matters. The BOP contractor and her husband were operators of a company funded in part by Medicaid and which provided services to persons with developmental disabilities. In pleading guilty, the BOP contractor, who was a licensed psychologist working in the Education Department of a BOP facility in Texas, admitted that she obtained the personally identifiable information of inmates and used this information in a scheme to defraud Medicaid. In total, the BOP contractor and her husband fraudulently obtained $1,820,359 from the Texas Medicaid program. BOP had previously terminated the contract. The investigation was conducted by the OIG’s Dallas Field Office and the Texas State Attorney General’s Office, Medicaid Fraud Control Unit.
- On September 12, 2011, the U.S. District Court for the Southern District of New York ordered Mario Mastellone to pay a civil judgment of $3,241,367 for violating the False Claims Act. Following the September 11, 2001, terrorist attacks on New York, Mastellone submitted an application to the Department of Justice September 11th Victim Compensation Fund. In his application, he claimed that he was totally and permanently disabled in connection with the terrorist attacks. In June 2008, following a joint investigation by the OIG’s Fraud Detection Office and the New York Field Office, Mastellone pled guilty to stealing $1,076,789 from the fund and was sentenced to 30 months’ incarceration followed by 3 years of supervised release. The civil judgment against Mastellone ordered him to pay triple the amount stolen from the government.
- On April 1, 2011, an FBI financial analyst assigned to the FBI Tampa Division in Tampa, Florida, was arrested and pled guilty to charges of theft of government property. In pleading guilty, the financial analyst admitted submitting fraudulent requests for disbursement of government funds through the FBI Tampa Division draft office. The financial analyst was sentenced in the Middle District of Florida to 60 months’ probation and was ordered to pay $1,190 in restitution. The financial analyst retired from the FBI. The investigation was conducted by the OIG’s Miami Field Office.
- In our March 2011 Semiannual Report to Congress, the OIG reported on an investigation that led to the arrest and guilty plea of a former USMS administrative officer to theft of $104,000 in government funds. The former administrative officer admitted that she unlawfully used a USMS credit card for personal expenses, created a fictitious employee in the USMS payroll system and submitted falsified time and attendance records for the employee, facilitated the issuance of checks, and disguised the theft with fraudulent business invoices. Prior to this investigation, the former administrative officer had left the USMS in November 2008 and obtained employment with the Drug Enforcement Administration (DEA) in a similar capacity. During this reporting period, the former USMS administrative officer was sentenced in the U.S. District Court for the District of Columbia, Washington, D.C., to 21 months’ imprisonment followed by 36 months’ supervised release and ordered to pay $104,000 in restitution.
- In our March 2011 Semiannual Report to Congress, the OIG reported on an investigation that led to the arrest of a former Supervisory Deputy U.S. Marshal, previously assigned to the USMS Northern District of Illinois, Chicago Office, based on an indictment returned in the Northern District of Illinois charging him with making false statements to the OIG. The investigation by the OIG’s Chicago Field Office determined that the Supervisory Deputy U.S. Marshal provided criminal history, motor vehicle, and driver license information obtained from restricted law enforcement databases to a friend who was under investigation by the FBI for staging fake accidents to collect insurance proceeds. The Supervisory Deputy U.S. Marshal provided false and misleading information regarding these actions during his OIG interview. During this reporting period, the Supervisory Deputy U.S. Marshal was sentenced to 36 months’ probation and fined $5,000 pursuant to his guilty plea to charges of making false statements to the OIG. The Supervisory Deputy U.S. Marshal retired from the USMS.
- In our September 2010 Semiannual Report to Congress, the OIG reported on an investigation that led to the arrest of an FBI Special Agent on charges of wire fraud, bank fraud, and bankruptcy fraud charges. The investigation by the OIG’s Miami Field Office developed evidence that the Special Agent provided false information to obtain mortgage loans. In his mortgage applications, the Special Agent falsely claimed that he was employed by an alleged music company. Additionally, the Special Agent secured a home equity line of credit. The FBI Special Agent filed for bankruptcy in July 2009, and he failed to include properties the Special Agent owned or transferred on the bankruptcy application. During this reporting period, he was found guilty at trial on 15 counts of wire fraud and 3 counts of bankruptcy fraud and sentenced in the Middle District of Tennessee to 48 months’ incarceration followed by 36 months’ supervised release and was ordered by the court to pay $675,143 in restitution.
This report also describes ongoing OIG reviews, including reviews of:
- The ATF’s firearms trafficking investigation known as Operation Fast and Furious, and other investigations with similar objectives, methods, and strategies.
- The Civil Rights Division’s enforcement of civil rights laws by its Voting Section.
- The FBI’s management of terrorist watchlist nominations and encounters with watchlisted subjects, which includes evaluating the effectiveness of the FBI’s initiatives to ensure the accuracy, timeliness, and completeness of its watchlisting practices.
- The Department’s role in the transfer of foreign national inmates incarcerated in federal prisons through the international prisoner treaty transfer program.
- The FBI and National Security Division’s (NSD) efforts to appropriately handle and coordinate shared responsibilities for identifying, investigating, and prosecuting persons and entities who provide financial support to terrorist organizations.
- The FBI’s ongoing development and implementation of the Sentinel information technology project, which is intended to upgrade the FBI’s electronic case management system and provide the FBI with an automated workflow process.
- The Department’s Integrated Wireless Network program to evaluate the Department’s cost, schedule, and performance and assess progress in resolving concerns identified in our previous audit.
- The FBI’s activities under Section 702 of the FISA Amendments Act of 2008 (Act).
- The FBI’s use of national security letters, Section 215 orders, and pen register and trap-and-trace authorities under the Foreign Intelligence Surveillance Act of 1978 (FISA) from 2007 through 2009.