June 3, 2019 —
The DoD OIG newsletter summarizes the reports and investigations released by the Department of Defense Office of Inspector General in the previous month and those we anticipate releasing in the coming month. I encourage you to read these reports and to access our website, which lists reports and investigations by year, subject, and DoD component. You'll also find our project announcements and additional news releases highlighting investigations conducted by the Defense Criminal Investigative Service. Thank you for subscribing to our newsletter.
Significant reports expected to be issued within the next 30 days include:
Audit of Protection of DoD Controlled Unclassified Information on Contractor‐Owned Networks and Systems
This audit determines whether DoD contractors implemented adequate security controls to protect DoD‐controlled unclassified information maintained on their information technology networks and systems from internal and external cyber threats. Controlled unclassified information is a designation for unclassified information that requires proper safeguarding according to Federal and DoD guidance.
Audit of DoD's Implementation of the Joint Regional Security Stacks
This audit determines whether the DoD’s implementation of the Joint Regional Security Stacks is achieving the expected outcomes of the DoD’s Joint Information Environment objective to implement regional security. Joint Regional Security Stacks is a suite of equipment that includes assets, such as network routers, firewalls, and switches, that work together to provide network security capabilities, such as intrusion detection and prevention among other capabilities, to improve the DoD’s ability to defend its network against cyber attacks.
Audit of the Distribution of Preferred Munitions in Support of the Republic of Korea
This audit determines whether the U.S. Indo-Pacific Command and U.S. Forces Korea had a distribution network to deliver and receive preferred munitions that can support current operation plan requirements. An operation plan is a detailed Combatant Command plan for conducting joint military operations. This report is classified.
Evaluation of DoD Efforts to Combat Trafficking in Persons in Kuwait
This evaluation determines whether DoD contracts in Kuwait complied with
combating trafficking in persons requirements in statutes, the Federal Acquisition Regulation, the Defense Federal Acquisition Regulation Supplement, and other DoD guidance. Additionally, this evaluation determines whether DoD officials provided oversight of combating trafficking in persons requirements in accordance with command responsibility and contracting regulations, including addressing instances of noncompliance.
Evaluation of the DoD’s Management of Opioid Use Disorder for Military Health System Beneficiaries
This evaluation determines whether the DoD established policies and programs to treat opioid use disorder, and implemented opioid use disorder treatment outcome measures to inform quality care improvements, in accordance with DoD policy and national guidance. Opioid use disorder is a substance abuse disorder associated with the recurrent use of opioids that causes significant impairments, such as health problems, disability, and failure to meet major responsibilities at work, school, or home.
Evaluation of U.S. European Command Nuclear Command and Control
This evaluation determines whether U.S. European Command met DoD requirements for survivable and continuous nuclear command and control between the President and theatre nuclear forces. This report is classified.
Recently issued Reports of Interest (to view report, if available, please click on title)
Semiannual Report to the Congress October 1, 2018 through March 31, 2019
This report summarizes the significant oversight that the DoD OIG has performed over the past six months. Specifically, the DoD OIG issued 66 audit and evaluation reports, with 313 recommendations to the DoD for improvement. The DoD OIG also completed 241 criminal investigations, some conducted jointly with other law enforcement organizations, resulting in 153 arrests, 198 criminal charges, 135 criminal convictions, $885.3 million in civil judgments and settlements, and $72.7 million in criminal fines, penalties, and restitution ordered. In addition, the DoD OIG oversaw 224 senior official, reprisal, and restriction investigations completed by the Military Service and Defense agency OIGs. Several important DoD OIG initiatives were discussed in the Semiannual report, Just after the reporting period (April 1, 2019), the DoD OIG combined its three separate evaluations components into a single, consolidated evaluations component. Establishing a single evaluations component promotes consistency, provides the DoD and others a single point of contact for evaluations, and establishes a single leader to supervise evaluations products. Also, the DoD OIG’s Alternative Dispute Resolution team helped 36 complainants and their employers reach favorable outcomes to their whistleblower reprisal complaints through voluntary, self-determined Alternative Dispute Resolution processes.
Audit of the DoD’s Preparation for Natural Disasters
This audit determined that the DoD prepared for natural disasters by developing a framework for natural disaster preparedness. This framework includes guidance, recurring exercises in disaster scenarios, corrective action programs that incorporate lessons learned and after‑action reports, training, advanced contracts, and agreements. We determined that DoD’s support and resources are critical to supplement state, local, territory, and tribal response efforts, and that continuous preparation and process improvement are key to ensuring the DoD can rapidly deploy essential resources in support of Federal Emergency Management Agency mission assignments and requests for assistance from other Federal agencies.
Audit of the DoD’s FY 2018 Compliance With the Improper Payments Elimination and Recovery Act Requirements
This audit determined that the DoD did not fully comply with the Improper Payments Elimination and Recovery Act Requirements in reporting its improper payment estimates. The DoD complied with three of the six Improper Payments Elimination and Recovery Act requirements, but did not comply with the remaining six requirements. As a result, the DoD reported unreliable estimates and may not have promptly detected, prevented, and recovered improper payments from $11.4 billion in transactions. Furthermore, when key improper payment information is missing from the DoD Audit Financial Report and improper payment estimates are unreliable, DoD leadership and Congress cannot accurately determine whether the DoD has implemented necessary measures to reduce its improper payments.
Audit of the Defense Security Cooperation Agency – Security Assistance Accounts
This audit determined that the Defense Security Cooperation Agency (DSCA) and Defense Finance and Accounting Service (DFAS) ‑ Indianapolis misstated assets and liabilities on the September 30, 2017, DSCA’s financial statement. For example, DSCA and DFAS - Indianapolis personnel did not report up to $410.7 million in Special Defense Acquisition Fund inventory and did not transfer up to $745.5 million in available collections received in DoD Miscellaneous Receipt accounts to the Special Defense Acquisition Fund. In addition, without reliable accounting records, the DoD cannot be sure that the Special Defense Acquisition Fund inventory is readily available for its foreign customers to develop military capabilities that are consistent with U.S. strategy, priorities, and defense objectives. Without reliable data for Accrued Unfunded Annual Leave, the DSCA will also not be able to determine the amount the DoD should be reimbursed by foreign customers to recover the DoD’s security assistance personnel costs.
Lead Inspector General Quarterly Report to the Unites States Congress for Operation Inherent Resolve January 1, 2019 through March 31, 2019
This Lead Inspector General (Lead IG) report discussed the status of Operation Inherent Resolve (OIR), the overseas contingency operation to combat the Islamic State in Iraq and Syria (ISIS). The report summarizes the quarter’s key events and describes completed, ongoing, and planned Lead IG and partner agency oversight work related to OIR. During this quarter, the DoD reported that ISIS was re-constituting as an insurgency while continuing to carry out attacks in both countries. Also during this quarter, Lead IG agencies and oversight partners released 11 reports, had 39 ongoing and 17 planned oversight projects, and 116 open investigations related to OIR.
Lead Inspector General for Operation Freedom’s Sentinel Quarterly Report to the United States Congress January 1, 2019 through March 31, 2019
This Lead IG report discusses the status of Operation Freedom’s Sentinel, the overseas contingency operations in Afghanistan. The report summarizes significant events involving Operation Freedom’s Sentinel and describes completed, ongoing, and planned Lead IG and partner agency oversight work. This report includes new and updated information on several aspects of DoD’s train, advise, and assist mission, including training of Afghan National Army recruits, growth of the Afghan Air Force, the Afghan National Army Territorial Force, and Afghan aviation and ground vehicle maintenance capacity. Also during this quarter, the Lead IG agencies and oversight partners released 4 reports, had 31 ongoing projects, and 57 open investigations related to Operation Freedom’s Sentinel.
Lead Inspector General for Operation Pacific Eagle-Philippines Quarterly Report to the United States Congress January 1, 2019 through March 31, 2019
This Lead IG report discusses the status of Operation Pacific Eagle-Philippines, the overseas contingency operation to support the Armed Forces of the Philippines’ fight against ISIS affiliates and other terrorist organizations. The report summarizes significant events related to Operation Pacific Eagle-Philippines and describes ongoing and planned Lead IG and partner agency oversight work. In January, ISIS-Philippines carried out its deadliest attack since 2017. The bombing of a Roman Catholic cathedral during mass killed 20 and wounded 102. While armed conflict between ISIS-Philippines and the Armed Forces of the Philippines was limited to minor clashes, the violence displaced 50,000 Filipinos during the quarter. According to U.S. Indo-Pacific Command, ISIS-Philippines membership remained the same as last quarter with 300-550 fighters divided among at least five factions and with no overall leader. Also, during this quarter, the Lead IG agencies and oversight partners released 2 reports, had 4 ongoing and 3 planned oversight projects related to Operation Pacific Eagle-Philippines.
Evaluation of Operations and Management of Arlington and Soldiers’ and Airmen’s Home National Military Cemeteries
This evaluation examined operations and management of the two Army National Military Cemeteries: Arlington National Cemetery, and the Soldiers’ and Airmen’s Home National Military Cemetery. The DoD OIG determined that no gravesite accountability errors exist in the records at the Arlington National Cemetery. However, the evaluation identified 69 potential discrepancies in the Arlington National Cemetery records that did not affect gravesite accountability, in which one or more of the data elements were inconsistent among the Interment Services System database, the website, and the gravesite. The evaluation of gravesite accountability at the Soldiers’ and Airmen’s Home National Military Cemetery identified five accountability errors in its records. Additionally, the DoD OIG determined that the Army has not issued updated versions of its regulations, assigning and detailing responsibilities for the operation and management of Army cemeteries.
Evaluation of the Operations and Management of Military Cemeteries
This evaluation examined operations and management at 16 of the 36 cemeteries under the control of the Military Departments. The DoD OIG determined that 5 of the 16 Military Cemeteries evaluated did not have full gravesite accountability. The DoD OIG identified 15 gravesite accountability errors in the collective sample of 3,376 gravesites, and 108 discrepancies across 14 of the 16 cemeteries visited where one or more data elements were inconsistent among the database of record, supporting documentation, and the gravesite marker. Additionally, Service regulations and guidelines governing cemetery administration, operations, maintenance, and inspections were inconsistent across the Services due to the absence of DoD-wide policy governing the operation and management of Military Cemeteries. These deficiencies could result in poorly maintained cemeteries and incomplete gravesite accountability and could prevent family members, or other interested persons, from locating specific gravesites.
DEFENSE CRIMINAL INVESTIGATIVE SERVICE HIGHLIGHTS (to view DOJ press release, if available, please click on title)
Insulation Contractor Executive Pleads Guilty to Antitrust and Fraud Charges
On May 1, 2019, Michael S. Flynn, executive and co-owner of an insulation contractor, pleaded guilty in Bridgeport, Connecticut, for his role in multiple schemes to rig bids in violation of the antitrust laws and to engage in criminal fraud on insulation contracts. This was the second conviction in this ongoing investigation. From approximately October 2011 to March 2018, Flynn conspired with other insulation contractors to rig bids and engage in fraud on contracts for installing insulation around pipes and ducts on construction projects at universities, hospitals, and other public and private entities in Connecticut, New York, and Massachusetts. The conspirators discussed prices and agreed on bids that inflated prices to their customers by at least
10%. In order to conceal their actions, the conspirators perpetrated the bid-rigging and fraud schemes using burner phones and an encrypted messaging application. This was a joint investigation by the Antitrust Division’s New York Office, the U.S. Attorney’s Office for the District of Connecticut, the Federal Bureau of Investigation (FBI), and the Defense Criminal Investigative Service (DCIS).
Founder and Four Executives of Insys Therapeutics Convicted of Racketeering Conspiracy
On May 2, 2019, the founder and four former executives of Insys Therapeutics Inc. were convicted by a Federal jury in Boston in connection with bribing medical practitioners to prescribe Subsys, a highly-addictive sublingual fentanyl spray intended for cancer patients, and for defrauding Medicare and private insurance carriers. From approximately May 2012 to December 2015, Insys Therapeutics Inc. executives John Kapoor, Richard Simon, Sunrise Lee, Joseph Rowan, and Michael Gurry conspired to bribe medical providers, many of whom operated pain clinics, to induce the prescription of their fentanyl-based medications, often to patients that lacked the medical necessity for the drug. The conspirators also misled insurance companies about the true diagnosis of patients to qualify them for reimbursement for Subsys, despite not being diagnosed with cancer. This was a joint investigation by the FBI, DCIS, the Health and Human Services Office of Inspector General (HHS-OIG), the Food and Drug Administration, the Drug Enforcement Administration, the U.S. Department of Labor, the U.S. Postal Inspection Service and OIG, the Office of Personnel Management OIG, and the Department of Veterans Affairs OIG.
Former U.S. Army Range Operations Manager Pleads Guilty to Conspiracy
On May 2, 2019, former U.S. Army civilian, Franklin Raby, pleaded guilty in the Eastern District of Tennessee to conspiring to accept bribes and disclose sensitive Army procurement information while serving as range operations manager at Hawaii’s Schofield Barracks. Raby admitted that from March 2015 through May 2018, he accepted tens of thousands of dollars’ in bribes, including an antique automobile from a contractor that received government contracts from the Army. In return, while employed as a public official for the Army, Raby provided the contractor with sensitive, DoD procurement information and took other actions that benefitted the contractor during the procurement process. Raby’s sentencing is scheduled for August 5, 2019. This was a joint investigation with DCIS, FBI, and the U.S. Army Criminal Investigation Command.
Mississippi Couple Plead Guilty to Receiving $1.7 Million in Health Care Kickback Scheme
On May 2, 2019, a Mississippi couple, Kimberly and Richard Homrighausen, pleaded guilty to conspiracy to pay and receive kickbacks related to compounded medications reimbursed by TRICARE. Specifically, the defendants pleaded guilty to making illegal payments to TRICARE beneficiaries to induce them to obtain compounded medications, which totaled approximately $9 million in prescriptions to TRICARE. In return, the couple received approximately $1.7 million in kickbacks for referring the beneficiaries. Sentencing is scheduled for August 8, 2019. This was a joint investigation with DCIS, the Department of Homeland Security, Homeland Security Investigations, FBI, the Office of Personnel Management OIG, the Department of Veterans Affairs OIG, and the United States Postal Service OIG.
Fraudster Sentenced To 11 Years in Federal Prison for Stealing the Identities of Hundreds of Victims to Fraudulently Obtain More Than $2.2 Million in Tax Refunds
On May 3, 2019, Toyosi Alatishe, also known as Felix Victor Johnson, of Columbia, Maryland was sentenced to 11 years confinement followed by 3 years of supervised release for his role in a conspiracy to commit credit and debit card fraud, wire fraud, and aggravated identity theft in connection with schemes to obtain fraudulent tax refunds. Alatishe was also ordered to pay $2,287,959.67 in restitution. According to court documents, Alatishe misused his position as a caretaker for residents of a group home suffering from severe mental and physical disabilities by using their personal information to file fraudulent tax returns with the Internal Revenue Service and the state of Maryland. Alatishe also used a fraudulent Nigerian passport to set up a bank account using the name Felix Victor Johnson to receive the illegally obtained tax refunds. The evidence provided at trial also showed Alatishe used social security numbers of eight other victims in 2013 to file fraudulent tax returns, among other schemes. This was a joint investigation with DCIS, IRS-Criminal Investigation, U.S. Postal Inspection Service, and the Howard County Police Department.
Ten, including Pharmacy Owners, Pharmacist, and Nurse Practitioner, Charged in Over $200 Million Prescription Drug Fraud
On May 6, 2019, ten defendants were charged with a 103-count indictment, including a nurse practitioner and the owners, a pharmacist, managers, sales representatives, and billers of Northside Pharmacy, an Alabama based pharmacy, doing business under the alias Global Compounding Pharmacy (Global). The indictment charges the defendants with fraudulently billing health insurers and prescription drug administrators for over $200 million in prescription drugs. Global and the defendants allegedly engaged in a conspiracy to commit health care fraud and mail fraud by paying providers to issue prescriptions and directing employees to seek medically unnecessary prescriptions for themselves, their families, and their friends, which were to be filled by Global and other related pharmacies. The defendants allegedly targeted multiple health insurance plans, including TRICARE. This was a joint investigation with FBI, HHS-OIG, U.S. Postal Inspection Service, and IRS-Criminal Investigation.
Oahu Physical Therapist Sentenced To 42 Months for Multi-Million Dollar Health Care Fraud Scheme
On May 9, 2019, Garret Okubo, of Honolulu, Hawaii, was sentenced to 42 months imprisonment for committing health care fraud and was ordered to pay $3.7 million in restitution and $3.7 million in forfeitures. From January 2011 to October 2017, Okubo submitted millions of dollars of false claims for payment to TRICARE, among other insurance providers, involving physical therapy services. For example, Okubo claimed reimbursement for physical therapy services performed by him; however, the patients were actually serviced by members of his staff that were not appropriately licensed. Okubo also inflated the amount of time charged to insurance providers for patient visits by billing for the maximum allowable time that a health care benefit plan would pay for a single patient visit despite the fact the visit was for less time. The investigation determined that approximately 70% of Okubo’s billings over a six-year period were fraudulent. This was a joint investigation with DCIS, FBI, HHS-OIG, and the State of Hawaii, Department of the Attorney General, Medicaid Fraud Control Unit.
ANNOUNCED PROJECTS (to view the announcement letters, if available, please click on the title)
Followup Audit on Prior OIG Reports related to the Army’s Implementation of the Acquire-to-Retire and Budget-to-Report End-to-End Business Processes in the General Fund Enterprise Business System
The objective of this audit is to determine whether the Army has implemented corrective actions in response to seven open recommendations in DoD OIG Report No.DODIG-2013-130, “Army Needs to Improve Controls and Audit Trails for the General Fund Enterprise Business System Acquire-to-Retire Business Process.” In that report, the DoD OIG determined that the Army had inadequate controls over the recording of accounting transactions for the Acquire-to-Retire business process in the General Fund Enterprise Business System. The Acquire-to-Retire business process encompasses all business functions necessary to obtain, manage, and dispose of accountable and reportable property, such as land assets, through the property’s entire lifecycle.
Followup Audit of DoD and Military Department Corrective Actions Taken in Response to DoD OIG Reports on Military Housing
The objective of this audit is to determine whether the DoD corrected previously identified deficiencies in prior DoD OIG military housing reports, which found deficiencies in the maintenance of privatized housing at military installations. In addition, this followup audit will determine whether the DoD established adequate oversight procedures to ensure that service members and their families have access to safe housing.
Evaluation of Air Refueling Support to the U.S. Strategic Command's Nuclear Deterrence Mission
The objective of this evaluation is to determine whether the Air Force has mission capable aircraft and aircrew to meet U.S. Strategic Command’s Operation Global Citadel air refueling requirements.
Evaluation of DoD Processes and Procedures for Issuing Post Government Employment Opinion Letters in Compliance with Section 847 Requirements
The objective of this evaluation is to determine whether the DoD processes and procedures enable designated agency ethics officials to issue opinion letters required under Section 847 of the National Defense Authorization Act for Fiscal Year 2008, as amended. This evaluation will also determine whether DoD agencies and covered officials are complying with the requirements to request and complete opinion letters.
Evaluation of the Army's Tactical Signals Intelligence Payload Program
The objective of this evaluation is to determine whether the Army’s development and deployment of the Tactical Signals Intelligence Payload for unmanned aerial systems is meeting the intelligence requirements of the Army’s operational units. The Tactical Signals Intelligence Payload gathers intelligence by intercepting signals.
Evaluation of DoD Contracting Officer Actions on Questioned Direct Costs
The objective of this evaluation is to determine whether the actions taken by DoD contracting officers on questioned direct costs reported by the Defense Contract Audit Agency with federal regulations, DoD policy, and agency policy.
Evaluation of the DoD’s Handling of Incidents of Sexual Assault Against (or Involving) Cadets at the United States Military Academy
The objective of this evaluation is to determine whether the U.S. Military Academy at West Point’s (USMA) Sexual Harassment/Assault Response and Prevention Office personnel provided victim support services to cadet-victims, according to DoD and U.S. Army policies, and whether Army Criminal Investigation Command agents investigated reports of sexual assaults involving cadet-victims according to DoD and U.S. Army policies. This evaluation will also determine whether USMA commanders reprised against cadet-victims by disenrolling them from USMAs for reporting sexual assault, and whether the Under Secretary of Defense for Personnel and Readiness annually reported the correct number of USMA cadet-victim reports of sexual assaults to Congress. This evaluation is the second in the series of evaluations of the Sexual Assault Prevention and Response programs at U.S. Military Academies.