Source: http://slideplayer.com/slide/1557611/
Timestamp: 2018-04-25 04:50:32
Document Index: 417268931

Matched Legal Cases: ['§ 1097', '§ 287', '§ 371', '§ 641', '§ 666', '§ 1001', '§ 1341', '§ 1343']

U.S. Department of Education Office of Inspector General - ppt download
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Presentation on theme: "U.S. Department of Education Office of Inspector General"— Presentation transcript:
1 U.S. Department of Education Office of Inspector General
PREVENTING FSA FRAUD Chance Jones Special Agent Nashville Field Office
2 OIG MISSION STATEMENT To promote the efficiency, effectiveness, and integrity of the Department's programs and operations, we conduct independent and objective audits, investigations, inspections, and other activities.
4 U.S. Department Of Education Facts
ED disbursed approximately $141 billion in Title IV aid for the award year Over 22 million students had their federal financial aid applications processed Over 15 millions students submitted their federal financial aid applications online During this last year approximately 15 million students were delivered Federal Student Aid funds through more than 6,200 colleges or career schools More than $80 billion in ED funding was disseminated amongst more than 142 different educational programs
5 Benjamin Franklin “There is no kind of dishonesty into which otherwise good people more easily and frequently fall than that of defrauding the government.”
6 FRAUD DEFINED An intentional distortion of the truth in an attempt to obtain something of value. Does not have to result in monetary loss. Layman’s terms: Lying, cheating, or stealing. We speak about fraud. What is fraud?
7 OIG Components Investigation Services
Audit Services Investigation Services Evaluation, Inspection and Management Services Information Technology Audits and Computer Crime Investigations Briefly describe each component.
8 IT/Computer Crimes Investigate intrusions into Education network
Check/monitor network for vulnerabilities Computer forensics Provide support to investigative services staff Data mine
9 The Threat Actors Tools State Sponsored
Botnet Keylogger Targeted Viruses The usual Internet attack tools Phishing, Spam, etc… State Sponsored Organized Cyber Crime International Organizations Professional Hackers Spammers Inside Threat Disgruntled Employees.
10 Examples of What to Report
Compromise of Systems Privileges Compromise of Information Protected by Law. Unauthorized Access of IT Systems or Data. Exceeding Authorized Access. Denial of Service of Major IT Resources. Malicious Destruction or Modification of data/information.
11 Is Your System a Victim? Immediate Reporting is Necessary!
Have the facts. Why you think there is an issue. Date/Time of the Incident System Information. Location Type and Purpose of the System. Point of Contact. Actions Already Taken.
12 Common Identity Theft Practices
Obtain or take over financial accounts Take out loans for large purchases Open new lines of credit Sign lease agreements Establish services with utility companies Write fraudulent checks Purchase goods and services on the Internet
13 Avoiding Identity Theft
Shred sensitive information Only carry what you use Photo copy all cards in your wallet Select hard to guess PINs and passwords Don’t leave mail sitting in an unprotected box Don’t give out private information over the phone Order your credit reports Use caution when providing ANY sensitive information
14 Protecting Others From Identity Theft
Properly handle documents Shred sensitive information Use key identifiers instead of the SSN Password protect sensitive information Audit access Review access privileges Verify who you are talking to in person or on the phone. Clean desk policy
15 Fraud Indicators One person in control No separation of duties
Lack of internal controls/ignoring controls No prior audits High turnover of personnel Unexplained entries in records Unusually large amounts of payments for cash Inadequate or missing documentation Altered records Inventories and financial records not reconciled Unauthorized transactions Related Party Transaction Repeated audit findings These are the conditions that contribute to fraud. In many situations, fraud is a crime of opportunity. The presence of anyone of these may not mean there is a problem. However, if more than two are present…the hair on the back of your neck rises and something doesn’t feel right. There might be a problem.
16 I was only borrowing the money. I was underpaid and deserve it.
Weak controls Little or no oversight Lax rules Debt Addictions Status Greed Opportunity Motivation Fraud Triangle Rationalization Everyone does it. I was only borrowing the money. I was underpaid and deserve it.
17 Red Flags to Investigators
Vices such as substance abuse and gambling. Extravagant purchases or lifestyle. Lack of documents (the ‘big flood’ destroyed…) Common Addresses (mailing, , and IP) Pin number and password information the same. Personal information that does not fit the norm. Bank information that is the same.
18 Sources of Allegations
OIG Hotline ED Program Offices School Employees and Officials Guarantee Agencies Citizens and Students Competing Vendors/Schools Other Federal Agencies U.S. Attorney’s Offices Other ED OIG Investigations Federal Bureau of Investigation State and Local Education Agencies
19 Examples of Title IV Fraud Schemes
Ghost students Leasing of eligibility Loan theft/ forgeries Fraud/Theft by School Employees Default rate fraud 90/10 rule Financial statement falsification ATB fraud Falsified last date of attendance FAFSA fraud- enrollment Falsification of entrance exams Falsification of GEDs/HS Diplomas Falsification of attendance Falsification of grades Failure to make refunds Obstruction of a federal audit or program review
20 Who Commits Fraud Involving Education Funds?
School Employees, Officials, Owners, Financial Managers, and Instructors Lenders and lender servicers Guarantee Agencies Award Recipients Grantees and Contractors ED Employees Others
21 Common Criminal Statutes
20 U.S.C. § 1097 FSA Fraud 18 U.S.C. § 287, False Claims 18 U.S.C. § 371, Conspiracy 18 U.S.C. § 641, Theft of Public Funds 18 U.S.C. § 666, Theft/Bribery 18 U.S.C. § 1001, False Statement 18 U.S.C. § 1341, Mail Fraud 18 U.S.C. § 1343, Wire Fraud
22 How You Can Help Ensure that staff receive necessary training
Review documents thoroughly Question documents/Verify authenticity Request additional information from the vendors or administration Compare information on different documents Contact ED-OIG
23 Don’t Try To Investigate Suspicious Activity Yourself!
25 OIG Investigation Results
Conspiracy and Aggravated Identity Theft Case Brian Salyer was sentenced to 45 months incarnation and 3 years supervised release for one count of aggravated identity theft and 1 count of conspiracy to commit fraud. Miranda Salyer was sentenced to 4 months incarceration and 3 years supervised release for 1 count of conspiracy to commit fraud. The Salyer’s submitted 15 fraudulent student loan applications, for which, they received approximately $173,668. Additionally, the Salyer’s forged Miranda Salyer’s grandfather’s signature on several promissory notes. The court ordered the Salyer’s to each pay $103,227 in restitution, for a total of $206,454.
26 OIG Investigation Results
“Falsified ATB” and “Failure to Make” Refund Case The three former owners of the Moler Beauty College (MBC), located in Louisiana, were sentenced and fined for conspiracy to commit student financial aid fraud. Our investigation disclosed that the three owners, along with a financial aid administrator and a contracted Ability-To-Benefit (ATB) tester, engaged in a scheme to fraudulently obtain Title IV funds by falsifying student and school records. MBC officials also engaged in a scheme to prevent the return of Title IV funds to the Department. The owners received prison sentences ranging from 12 to 27 months, and were ordered to jointly pay over $164,000 in restitution to the Department.
27 OIG Investigation Results
Former assistant registrar at Southern University sentenced. Cleo Carroll, former Assistant Registrar at Southern University (SU), Baton Rouge, LA was sentenced to 5 months in a halfway house, 5 months home confinement, 5 years probation, a $3,000 fine and a $100 special assessment fee for his role in the grade-buying scheme at SU. Carroll pled guilty to bribery concerning programs receiving federal funds. Carroll, a 30-year SU employee, made fraudulent grade changes and additions. Carroll manipulated SU’s student records system to alter academic transcripts and manually created transcripts using blank transcript paper in exchange for compensation.
28 OIG Investigation Results
29 OIG Investigation Results
Former collection agency owner sentenced to prison. Robert Hazlett, the former CEO of a collection agency, Valley Acceptance Corporation, was sentenced to 8 months in prison, to be followed by 36 months of supervised release, and ordered to pay restitution of $744,376. Hazlett conspired with four of his employees to submit 537 applications for consolidated education loans that contained fraudulent information and misrepresentations in order to generate over $1 million in commissions for the company.
30 OIG Investigation Results
“Embezzlement” Case The former financial aid director of the Troy School of Beauty Culture (TSB), located in New York, was sentenced to 18 months in jail and two years of supervised release for embezzlement. Our investigation disclosed that the former director embezzled over $410,000 in Pell Grant funds over a four-year period. The former director used the identities of at least 25 individuals, including a co-worker, to substantiate draw downs of funds into the TSB Pell Grant account. The former director then wrote checks to “cash” and converted them for personal use.
31 OIG Investigation Results
32 OIG Investigation Results
33 OIG Investigation Results
34 Who is Responsible for Reporting Fraud?
35 Mandatory Reporting to the Inspectors General
Why Report Fraud? OMB Guidance on ARRA Accountability and Reporting Requirements: Mandatory Reporting to the Inspectors General Agencies must include in all grants “the requirement that each grantee or sub-grantee awarded funds made available under the Recovery Act shall promptly refer to an appropriate inspector general any credible evidence that a principal, employee, agent, contractor, sub-grantee, subcontractor, or other person has submitted a false claim under the False Claims Act or has committed a criminal or civil violation of laws pertaining to fraud, conflict of interest, bribery, gratuity, or similar misconduct involving those funds.”
36 Why Report Fraud? Ethical responsibility
To deter others from committing fraud and abuse To protect the integrity of the Federal, State and Local programs To avoid being part of the fraudulent/criminal activities
37 Information for Financial Aid Professionals (IFAP) website:
Link to OIG’s Distance Education Fraud Ring Investigative Program Advisory Report (IPAR) Information for Financial Aid Professionals (IFAP) website: Dear Colleague Letter GEN-11-17:
38 IPAR/Dear Colleague Letter
39 IPAR/Dear Colleague Letter
Obtains identifying information from straw students “individuals who willingly provide the information.” Completes multiple financial aid applications using the information collected. Applies for admission under the institution’s open admissions program, where little or no third-party documentation is required. Participates in the amount of on-line interaction necessary to establish participation in the academic program and secure disbursements under an institution’s procedures.
40 IPAR/Dear Colleague Letter
Detecting fraud before funds have been disbursed is the best way to combat this crime. We therefore seek the help of institutions and advise that you take the following additional actions to identify and prevent the kind of student aid fraud identified in the IG’s report: Implement automated protocols that monitor information in your student information data system to identify instances where a number of students –
41 IPAR/Dear Colleague Letter
Use the same Internet Protocol (IP) address to complete and submit an admissions application. Use the same IP address to participate in the on-line academic program. Use the same address to submit an admissions application. Use the same address to participate in the on-line academic program Appear to reside in a geographic location that is anomalous to the locations of most students in the program.
42 IPAR/Dear Colleague Letter
Modify your disbursement rules for students participating exclusively in distance learning programs, which would immediately reduce the amount that fraud ring participants can receive. Institutions have the authority to: Delay disbursement of Title IV funds until the student has participated in the distance education program for a longer and more substantiated period of time (e.g., until an exam has been given, completed, and graded or a paper has been submitted). Make more frequent disbursements of Title IV funds so that not all of the payment period’s award is disbursed at the beginning of the period.
43 Management Information Report
School-based student aid fraud ring activity is a rapidly growing problem. The population of school-based recipients considered as potentially participating in this activity has increased 82 percent from award year (A Y) 2009 (18, 719 students) to A Y 2012 (34,007 students). Over 85,000 recipients may have participated in this type of student aid fraud ring activity and received over $874 million in Federal student financial aid during this period. It is estimated that $187 million of this $874 million in Title IV funds are probable fraud loss.
44 QUESTIONS? SA Chance Jones Nashville Field Office Cell 202-345-0522
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