FRAUD AGAINST THE GOVERNMENT

One of the principal responsibilities of the federal criminal law is the protection of government property. The property holdings of the United States, its departments and agencies are extensive and include both real and personal property in this country and abroad. The serious problem of fraud and waste in federal programs is one of the most important pursuits of the federal law enforcement community, which includes not only the Federal Bureau of Investigation, other investigative agencies, and Department of Justice prosecutors, but also the audit and investigation staffs of the Inspectors General.

There are several federal statutes that can be used to investigate and prosecute various frauds against the government, including 18 U.S.C. § 1001 (false statements), 18 U.S.C. § 287 (false claims), and 18 U.S.C. § 371 (conspiracy to defraud the government).  In addition to those more generic statutes, there are many statutes that relate to specific circumstances.  It is the policy of the Department that in those instances in which the United States Attorney has a choice of statutes, charges normally should be brought pursuant to the more specific statute. In those cases in which special aggravating circumstances exist, the USA retains the discretion to charge a violation of the more serious general statute.

For example, Congress enacted 18 U.S.C. § 666 to protect the integrity of the vast sums of money distributed through Federal programs. Section 666 is designed to facilitate the prosecution of persons who steal money or otherwise divert property or services from state and local governments or private organizations that receive large amounts of Federal funds. In some cases, local prosecutors will have both a strong incentive and the ability to prosecute crimes involving local programs receiving Federal funding.

The Anti-Kickback Act of 1986, 41 U.S.C. § 51 et seq., modernized and closed the loopholes of previous statutes applying to government contractors. The 1986 law attempts to make the anti-kickback statute a more useful prosecutorial tool by expanding the definition of prohibited conduct and by making the statute applicable to a broader range of persons involved in government subcontracting.  The Act prohibits attempted as well as completed “kickbacks,” which include any money, fees, commission, credit, gift, gratuity, thing of value, or compensation of any kind. The act also provides that the inclusion of kickback amounts in contract prices is prohibited conduct in itself.  The Act requires that the purpose of the kickback was for improperly obtaining or rewarding favorable treatment. It is intended to embrace the full range of government contracting.

The 1988 Procurement Integrity Act, 41 U.S.C. § 423, is also used to prosecute fraud against the government. In August 1982, the Attorney General and the Secretary of Defense established the Defense Procurement Fraud Unit in the Criminal Division’s Fraud Section to help concentrate and coordinate the law enforcement resources of the Department in prosecuting significant procurement fraud cases involving the Department of Defense’s (“DOD”) multi-billion dollar procurement of equipment and services. That unit is now called the Federal Procurement Fraud Unit (Unit), and handles a variety of fraud cases affecting both civilian and defense agency procurements, including product substitution, false testing, cost mischarging, defective pricing, and kickback cases. In addition to conducting major procurement investigations, the Unit provides expertise and guidance on procurement fraud issues to investigative agencies and United States Attorneys’ Offices that request their assistance.

The government also aggressively pursues fraud aimed at federal benefit programs such Food Stamps, Social Security, Medicare, and Medicaid. As a result of the growing problem of theft, improper use and illegal trafficking of food stamps in violation of 7 U.S.C. § 2024, the 42 U.S.C. § 1395 et seq., created the Federal Medicare and Medicaid programs. Frauds executed against these aid programs may be prosecuted via a number of criminal statutes.  In recent years, especially with the establishment of federally funded Medicare Fraud Control Units in many states, fraud in the Medicaid program has come to be viewed as a state concern. The Federal government program has focused its attention more on its enforcement of fraud against its Medicare program.  Successful prosecution of a Medicare case will often require a sophisticated understanding of the reimbursement principles involved in that case. The reimbursement principles under Medicare have grown increasingly complicated over the years. Different entities are paid under different methodologies (e.g., cost-based, charge-based, or fee schedules) and may be subject to limits based on a number of factors. Some providers are paid directly, and some are paid by the patient, who is then reimbursed by Medicare.

The fraud or impairment of legitimate government activity may take any of several forms:  Bribery of a government employee, kickbacks to government employees or extortion of money or favors by government employees, misrepresentations of financial capability, alteration or falsification of official records, submission of false documents; and Obstructing, in any manner, a legitimate governmental function.

Section 201 of Title 18 is entitled “Bribery of public officials and witnesses.” The statute comprises two distinct offenses, however, and in common parlance only the first of these is true “bribery.”  The first offense, codified in section 201(b), prohibits the giving or accepting of anything of value to or by a public official, if the thing is given “with intent to influence” an official act, or if it is received by the official “in return for being influenced.”  The second offense, codified in section 201(c), concerns what are commonly known as “gratuities,” although that word does not appear anywhere in the statute. Section 201(c) prohibits that same public official from accepting the same thing of value, if he does so “for or because of” any official act, and prohibits anyone from giving any such thing to him for such a reason.

Fraud against the government is not just a matter of the criminal law.  The government often pursues its money by a parallel civil actions and private citizens are authorized to bring actions on behalf of the government; these are call qui tam actions. In 1986, Congress amended the False Claims Act, 31 U.S.C. §  3729 et seq.  One of Congress’s objectives in modifying the Act was to encourage the use of qui tam actions in which citizens are authorized to bring, as “private Attorneys General,” lawsuits on behalf of the United States alleging frauds upon the government. The private citizen plaintiff in such a lawsuit is often referred to as the “relator.” To this end, Congress increased the amount by which a relator would share in any money recovered, liberalized the circumstances under which a private citizen could bring a qui tam action, and increased the relator’s role in such litigation.