U.S. ENVIRONMENTAL PROTECTION AGENCY

OFFICE OF INSPECTOR GENERAL

Early Warning Report: 

Internal Controls and 

Management Actions 

Concerning 

John C. Beale’s Travel 

Report No. 14-P-0037 December 11, 2013 

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Report Contributors: 

Abbreviations 

Michael Davis 

Jennifer Hutkoff 

Yeon Kim 

Heather Layne 

Edward Rivers

 Vanessa Rodriguez-Moya 

EPA U.S. Environmental Protection Agency 

OIG Office of Inspector General 

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U.S. Environmental Protection Agency Report No.14-P-0037 

December 11, 2013 Office of Inspector General 

At a Glance
 

Why We Did This Review 

John C. Beale, a former Senior 

Policy Advisor within the 

U.S. Environmental Protection 

Agency (EPA) Office of Air and 

Radiation, committed fraud 

against the EPA The EPA 

Office of Inspector General 

(OIG) concluded it would need 

to determine conditions that 

may have allowed Mr. Beale’s 

actions to take place. 

On August 27, 2013, the 

Ranking Member of the Senate 

Committee on Environment and 

Public Works requested that 

the EPA OIG initiate work to 

determine “the agency’s 

policies and processes that 

facilitated Mr. Beale’s fraud.” 

This report addresses the 

following EPA theme: 

 Embracing EPA as a high 

performing organization. 

For further information, 

contact our public affairs office 

at (202) 566-2391. 

The full report is at: 

www.epa.gov/oig/reports/2014/ 

20131211-14-P-0037.pdf 

Early Warning Report: Internal Controls and 

Management Actions Concerning John C. Beale’s 

Travel 

What We Found 

The EPA’s lack of management oversight and weak John C. Beale admitted 

internal controls that the EPA had in place enabled to $45,094 in fraudulent 

Beale’s travel abuse. Beale’s travel abuse included: travel expenses, and 

additional expenses are 

questionable.  Using premium class travel. 

 Incurring expenses above per diem amounts.
 

 Charging questionable travel and transportation costs. 

EPA’s management actions while Beale was working at the EPA that contributed 

to Beale’s fraudulent travel were: 

 Limited review of vouchers or receipts.
 

 Dismissed questions raised about Beale’s travel.
 

 Expenses not questioned because Beale’s reviewing official was also a 

Deputy Assistant Administrator (a peer to Beale). 

 Concern that Beale's “behavior and travel expenses” were supported by 

another senior executive.” 

Management Actions Taken 

The EPA Office of the Chief Financial Officer identified internal control 

improvements made or that will be made to prevent or detect travel-related 

issues, including: 

	 Since 2012, vouchers for other than coach travel must include an 

approved waiver supporting premium class travel, and 100 percent review 

of all vouchers before payment. 

	 Effective November 15, 2013, eligibility regarding medical documentation 

supporting premium class travel waivers are to be made by EPA’s Office of 

Reasonable Accommodation. 

	 Starting in the second quarter of fiscal year 2014, second line supervisors 

are to approve lodging amounts that exceed a designated percentage over 

per diem and require Senior Resource Official approval of any single trip 

exceeding $5,000. 

	 By February 2014, internal control assessments are to be completed for 

travel in the areas of premium class travel, above government rate travel 

reimbursement and executive travel approvals. 

The OIG has not verified the implementation and adequacy of the agency’s 

identified improvements. 
 

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY 

WASHINGTON, D.C. 20460 

THE INSPECTOR GENERAL 

December 11, 2013 

SUBJECT: Early Warning Report: Internal Controls and Management Actions Concerning 

John C. Beale’s Travel 

Report No. 14-P-0037 

FROM: Arthur A. Elkins Jr. 

TO: Gina McCarthy, Administrator 

This is our early warning report, prepared by the Office of the Inspector General at the request of the 

Honorable David Vitter, Ranking Member, Committee on Environment, and Public Works, United States 

Senate. This report addresses the area of travel in which John C. Beale, the former Senior Policy Advisor 

for the U.S. Environmental Protection Agency’s (EPA) Office of Air and Radiation, defrauded the EPA. 

If you or your staff have any questions regarding this report, please contact Richard Eyermann, Acting 

Assistant Inspector General for Audit, at (202) 566-0565 or at eyermann.richard@epa.gov; or Michael 

Davis, Director, Efficiency Audits, at (513) 487-2363 or davis.michaeld@epa.gov. 
December 2013

U S EPA U.S. EPA

Office of Inspector General

U.S. EPA 

Office of Inspector General

Internal Controls and Controls andManagement Actions Concerning

John C. Beale’s C. Beale’s Travel

December 11, 2013
Background

• John C. Beale committed fraud against the U.S. Envir

Protection Agency (EPA).

• OIG concluded it needed to determine the condition

may have contributed contributed to Mr. Beale’s actions. actions.

• August 27, 2013: Ranking Member of the Senate Com

on Environment and Public Works made request to r

matter.

• September 27, 2013: Beale pleaded guilty to theft of

government property and:

– Agreed to pay $886,186 in restitution to EPA.

– Agreed to a forfeiture money judgment of $507,207.

• Work completed in conjunction with an ongoing trav

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Beale Admitted Admitted Fraudulent Fraudulent T

• Beale claimed six trips to Los Angeles for wor

actually actually just visited visited family in Bakersfield Bakersfield, Calif

Calif

‐ Trips made October 2005, July 2006, Novemb

June 2007, January January 2009 and November November 2009

‐ Total estimated cost of trips was $45,094.

• Did not stay in lower cost hotel at per diem ra

‐ Trip in July 2008 at London, England, hotel.

‐ Total hotel cost – $ , 5 659 for 5 nights.‐ Maximum allowable lodging – $354 per night

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Assignment Objective

• Determine Determine the policies policies that facilitated facilitated B

fraud.

• This assignment assignment was conducted conducted in acco

acco

with Generally Accepted Government A

Standards (GAGAS).

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Scope of Report

• Report covers the policies that enabled 

fraud in connection with travel.

• The EPA Office of Inspector General (OI

review included:

– Examination of Beale’s travel authorization

vouchers.

– Interviews with agency management.

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Extent of Beale’s Tr vela

2003 to 2011

Activity Number Trips taken 33 $2Cancelled trips 12 Total Planned Trips 45 $2

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Summary Summary of Results Results

• Lack of management oversight and ine

internal controls that the EPA had in pl

enabled Beale's travel abuse regarding

– Premium class travel.

– Actual expenses expenses above per diem am

am

– Questionable travel and transportati

costs.

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Travel Oversight

Poor Management Oversight• Limited management review of vouchers or rec

• Dismissed questions raised about Beale’s trave• Expenses not questioned because Beale’s revie

official was a Deputy Assistant Administrator (a 

Beale).

• The Deputy Assistant Administrator for the Off

and Radiation at the time stated it was “hard toquestion Beale's behavior and travel expenses 

was supported by another senior executive.”

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Travel Internal Internal Controls Controls

Ineffective Internal Controls• Limited review and approval of Beale’s trave

‐ Acting Director, Dir ector Office of Program Program Management Management

Operations, Office of Air and Radiation, stated:

‐ Assumed Beale’s supervisor had approved th

‐ Vouchers were approved regardless of costs 

remarks and explanations authorized the cos

• EPA Travel Manual requires requires supervisors supervisors to au

au

review and approve travel documents.

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Beale Premium Premium Class Trav

• Beale obtained medical and EPA approval 

premium class travel for travel more than hours.

• B l ea e took two first class trips that were le

2 hours.

• Beale flew first class 70% of the time even 

required to use business class if available.

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Beale’s Premium Premium Class Travel by 

• Premium class travel – 23 of 33 trips (70

$60,000$70,000

Premium Class Travel $179,353*

$20,000$30,000$40,000$50,000

Total Prem

* Hi h t i $25 111 98 ( lti l d ti ti L A l d E l d S 

$‐

$10,000

2003 2004 2005 2006 2007 2008 2009 2010 2011

* Highest price: $25,111.98 (multiple destinations: Los Angeles and England, Sw

India). Lowest price: $1,319 (Boston/less than 2 hrs)

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Agency Identified Corrective

Measures *

• Effective Effective November November 15, 2013, eligibility eligibility

regarding medical documentation supp

premium class travel waivers to be mad

EPA’s Office of Reasonable Accommoda

• Since 2012, vouchers for other than coa

travel must include an approved waiver

supporting premium class travel.

* Agency corrective measures have not been confirmed and evaluated 

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
ctua o ed abo e de .

Actual Expenses Expenses Above Per D

• Actual lodging approved above per diem.

‐ 17 of 33 trips (52%).

• Most travel authorizations authorizations did not contain contain

documentation to justify expenses above 

diem.

• EPA’s travel manual requires reimburseme

actual expenses be justified and authorize

advance.

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
i O 

Examples Examples of Lodging Lodging Over Per D

Percen

Year Destination

Per Diem

Lodging

Claimed

Amount

Over Per

Diem

Over P

Diem

2004 London, UK $272 $414 $142 5

2006* Bakersfield, CA $70 $98 $28 4

2006 London, UK $307 $563 $256 8

2007 Ann A br or, MI $86 $206 $120 14

2008* London, UK** $354 $752

$904

$398$550

1115

2009 Sierra Vista, AZ $83 $120 $37 4

*Beale admitted fraudulent activity associated with these two trips.

**Different amounts charged per night for same trip.

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Agency Identified Corrective

Measures *

• Second quarter quarter of fiscal year 2014, requ

requ

second line supervisors to approve lodg

amounts amounts that exceed a designated designated perc

perc

over per diem.

* Agency corrective measures action has not been confirmed and eval t ua ed by t

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Questionable Travel – Londo

• Claimed lodging and meals & incidenta

expenses expenses while flying overnight overnight.

‐ On 1/11/09, departed for London from Los A

4:54 PM, arrived arrived in London on 1/12/09 1/12/09 at 11:

‐ For 1/11/09, claimed lodging expense of $279

lodging charged to hotel bill for 1/11/09.

‐ Claimed London rate of $137 for meals & inci

expenses for 1/11/09, but did not arrive in Lo

until 1/12/09 1/12/09. He sh ld ou have cl i a med the S 

a

Monica rate of $64.

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Questionable Transportation 

• Approved international trips plan identified one trip per d

• In London, on 11/17/03 and 11/18/03, claimed 12 taxi tri

$285 for the two days.

• In London, on 7/9/08 through 7/15/08:

‐ Arrived Arrived in London on 7/9/08 at 9:55 pm, claimed claimed taxi 

to the U.S. Embassy, also claimed $166 taxi cost to ho

‐ On 7/10/08, claimed 5 taxis totaling $254 and public t

costs of $310 with no explanation on travel voucher ( 

c 

service that was included on the hotel bill).

‐ In London, on 1/12/09 through 1/17/09, claimed pub

of $932 for 2 to 6 taxis per day (22 total taxi trips).

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Agency Identified Corrective

Measures *

• Since 2012, the Office of the Chief Financial Of

performed 100% voucher review before payme

• In second quarter of fiscal year 2014, agency is 

require require Senior Resource Resource Official Official approval approval of an

trip exceeding $5,000.

• By February 2014, agency is to complete

comprehensive comprehensive internal internal control control assessments assessments fo

– Premium class travel.

– Above government rate travel reimbursement.

– Executive travel approvals.

* Agency corrective action has not been confirmed and evaluated by t

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
Future OIG Report

• EPA travel report will be issued covering

covering

– Executive Level (ES, SES, SL, etc..) travel.– Trips by frequent frequent travelers travelers (5 or more trips 

– High‐cost travel ($5,000 or more).

– Length of time for travelers to sub it m vouc

U.S. ENVIRONMENTAL PROTECTION AGENCY OFFICE OF INSPECTOR GENERAL 
 

Appendix A 

EPA Distribution 

Administrator 

Deputy Administrator 

Office of the Administrator 

Chief of Staff 

Assistant Administrator, Office of Air and Radiation 

Chief Financial Officer 

General Counsel 

Agency Follow-Up Coordinator 

Associate Administrator for Congressional and Intergovernmental Relations 

Associate Administrator for External Affairs and Environmental Information 

Deputy Assistant Administrator, Office of Air and Radiation 

Audit Follow-Up Coordinator, Office of Air and Radiation 

Audit Follow-Up Coordinator, Office of the Chief Financial Officer 

Audit Follow-Up Coordinator, Office of General Counsel