News | July 2, 2020

DoD OIG Newsletter - July 2020

Newsletter

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.

                                                                                                            

UPCOMING REPORTS

Significant reports expected to be issued within the next 30 days include:

Evaluation of Mental Health Access to Care in the DoD
This evaluation determines whether the DoD meets outpatient mental health access to care standards for active duty service members and their families, in accordance with Federal requirements and applicable DoD policies.

Followup Evaluation of Report DODIG-2016-078, Evaluation of the Department of Defense’s Biological Select Agents and Toxins Biosafety and Biosecurity Program Implementation
This followup evaluation determines whether recommendations from Report No. DODIG-2016-078, “Evaluation of DoD Biological Safety and Security Implementation,” April 27, 2016, were implemented and whether the actions taken by the Office of the Under Secretary of Defense for Acquisition and Sustainment and the Secretary of the Army as the Executive Agent for DoD Biological Select Agents and Toxins Biosafety and Biosecurity Program met the intent of the recommendations.

Audit of the Department of Defense's Sustainment, Restoration, and Modernization of Military Medical Treatment Facilities
This audit identifies issues that the Defense Health Agency will need to address after it assumes responsibility for the sustainment, restoration, and modernization of all military medical treatment facilities within the Military Health System.  

Followup Audit of the Implemented Recommendations at the Naval Station Great Lakes Fire Station
This followup audit determines whether Navy officials corrected deficiencies identified in Report No. DODIG-2012-132, “Project Planning Resulted in Outstanding Building Deficiencies and Decreased Functionality of the Main Fire Station at Naval Station Great Lakes,” September 14, 2012, and determine whether Navy Region Mid-Atlantic established oversight procedures to ensure that firefighters have access to safe and compliant facilities. 

Audit of Core Inventory Management System Implementation
This audit determines whether the DoD's implementation of the Core Inventory Management System improved weapons and vehicle accountability.  The Core Inventory Management System is used by the Afghan National Defense and Security Forces to manage equipment provided by the DoD to support the Afghan government.  The system provides accountability of equipment and assists in shipping, receiving, and inventory for warehouse operations. 

Audit of Security Assistance Program Assets
This audit determines whether the DoD Components recovered their costs from foreign customers for executing security assistance programs and distinguished components assets from those of the security assistance programs.  The Arms Export Control Act and the Foreign Assistance Act authorize the U.S. Government to provide security assistance to foreign customers in the form of defense articles, military education and training, and other defense‐related services.  The DoD charges administrative fees to foreign customers on the articles and services provided to cover the DoD’s overhead costs.

Quality Control Review of the Tate & Tryon Fiscal Year 2016 Single Audit of the American Society for Engineering Education
This quality control review determines whether Tate & Tryon, P.C. performed the FY 2016 single audit of the American Society for Engineering Education in accordance with auditing standards and Federal requirements.

Recently issued Reports of Interest (to view report, if available, please click on title)

Special Report on Best Practices and Lessons Learned for Department of Defense Contracting Officials in the Pandemic Environment
This special report identified best practices and lessons learned that DoD officials should consider following to minimize opportunities for fraud, waste, and abuse in awarding and overseeing the large amount of contracts needed to respond to the coronavirus disease- 2019 pandemic.  Some emergency response actions include the use of indefinite-delivery indefinite-quantity or requirements contracts, having sufficient contract planning and lead times in place to prevent gaps in coverage, and the use of multiple teams that are geographically dispersed to award and administer contracts.  The lessons learned are related to communication and coordination, documentation, consistency in contracting processes, staffing and training as well as the use of undefinitized contract actions that DoD contracting officials should consider now and for future disasters or pandemic response efforts.  These best practices, and lessons learned from past reports can assist DoD officials in avoiding fraudulent activity and provide better contractor oversight.

Followup Audit on Department of Defense and Military Department Corrective Actions Taken in Response to Department of Defense Office of Inspector General Reports on Military Housing
This followup audit determined that although the DoD improved military housing with the implementation of corrective actions related to recommendations from eight previous DoD OIG inspection reports, additional improvements and full implementation of agreed-upon corrective actions are needed to ensure that service members and their families have access to safe housing.  If DoD management does not address previous recommendations made to improve military housing, the DoD will continue to expose military families to health and safety hazards at military installations around the world.

Audit of Government Protection of Department of Defense Artificial Intelligence Data and Technology
This audit determined that as of March 2020, the Joint Artificial Intelligence Center had taken some steps to develop and implement an Artificial Intelligence governance framework and standards; however, additional actions are needed.  An effective governance framework should result in the ability to enforce compliance with decisions about technology use and procurement, and enable the DoD to develop strong partnerships with commercial, academic, and international allies to help address global defense challenges.  Additionally, without consistent application of security controls, malicious actors can exploit vulnerabilities on the networks and systems of DoD Components and contractors and steal information related to some of the Nation’s most valuable artificial intelligence technologies.  The disclosure of artificial intelligence information developed by the DoD could threaten the safety of the warfighter by exposing the Nation’s most valuable advanced defense technology and causing the United States to be at a disadvantage against its adversaries.

Audit of Protective Security Details in the Department of Defense
This audit determined that protection‑providing organizations protected high‑risk personnel based on position rather than specific threats to the high‑risk personnel.  In addition, protection-providing organizations did not provide protective security details consistently throughout the DoD and inconsistently provided protection to high‑risk personnel when advancing agents, using security control rooms, and using local field office personnel or other protection‑providing organizations agents for assistance.  Further, the Army Criminal Investigation Command assigned more personnel to protective security details to protect high‑risk personnel than the other protection‑providing organizations and assigned more personnel than authorized.  As a result, the Army Criminal Investigation Command spends more resources to provide protection than other protection‑providing organizations.

Audit of Coalition Partner Reimbursement of Dining Facility Services at Resolute Support Headquarters, Kabul, Afghanistan
This audit determined that U.S. Forces–Afghanistan did not seek full reimbursement for dining facility services provided to Coalition partners at Resolute Support Headquarters through the Logistics Civil Augmentation Program contract.  Acquisition and Cross-Servicing Agreement coordinators did not initiate the billing of Coalition partners for 349 months of dining facility services between January 2016 and September 2019; or consistently calculate the amount owed in accordance with U.S. Forces–Afghanistan guidance when bills were initiated.  As a result of U.S. Forces–Afghanistan not initiating billing, DoD contractors provided an estimated $6.3 million in dining facility services to Coalition partners that were never billed.  In addition, by not using correct rates, U.S. Forces–Afghanistan underbilled Coalition partners $2.9 million.  Records indicate that Acquisition and Cross-Servicing Agreement coordinators initiated bills for only $4.7 million, as of October 2019, Coalition partners had reimbursed the DoD only $880,000.  Unless U.S. Forces–Afghanistan establishes terms and conditions with Coalition partners before providing services, develops training specific to Afghanistan, and performs oversight, the DoD will continue to not receive the full reimbursable amount for dining facility services provided under the Logistics Civil Augmentation Program contract.

Audit of Army Contracting Command–Afghanistan’s Award and Administration of Contracts
This audit determined that the Army Contracting Command–Afghanistan did not award and administer any of the 15 contracts in our sample in accordance with applicable Federal regulations and Army Contracting Command procedures.   Additionally, Army Contracting Command–Afghanistan contracting officials did not have the required knowledge, training, or experience needed to perform contract award and administration in accordance with regulations and procedures.  In addition, Army Contracting Command–Afghanistan contracting officials could not always access the Army’s contract award and administration systems to perform their duties, which resulted in missed deadlines for mission‑critical functions.  As a result, Army Contracting Command–Afghanistan did not have reasonable assurance that it successfully mitigated contingency contracting risks, such as nonperformance, improper payments, and mismanagement of Government property.

Audit of the Department of Defense’s Processes to Identify and Clear Munitions and Explosives of Concern During Construction on Guam
This audit determined that DoD personnel did not properly plan and manage the Munitions and Explosives of Concern program at Joint Region Marianas on Guam.  Munitions and explosives of concern are unexploded ordnance, discarded military munitions, and munitions constituents present in concentrations high enough to pose an explosive hazard.  DoD personnel did not consistently implement safety standards and quality assurance controls during military construction projects.  In addition, DoD personnel did not establish adequate plans and processes for managing munitions and explosives of concern clearance requirements and safety concerns for military construction projects on Guam.  As a result, Joint Region Marianas personnel incurred cost increases of about $100 million directly related to the clearance of munitions and explosives of concern for military construction projects, and DoD officials experienced difficulty completing projects within the planned costs and schedules, and were therefore unable to conduct joint exercises in the region—decreasing readiness and negatively impacting DoD operations. 

Evaluation of Regional Centers for Security Studies
This evaluation determined that Regional Centers were in compliance with regulations governing vetting of foreign faculty, non-disclosure agreements, and the payment of honoraria, from 2014 through 2018. However, Regional Centers did not have measures of effectiveness to indicate progress toward achievement of their stated goals, objectives, or strategic outcomes.  In addition, Regional Centers did not follow regulations for the management of their travel programs.  As a result, Regional Centers could not quantify their contributions to DoD strategic objectives, and the DoD was unable to assess the Regional Centers’ progress in supporting DoD and geographic combatant command priorities.  Moreover, certifying officers at the Regional Centers assumed financial liability for travel payments without proper authority or training—increasing the risk of improper payments. 

Audit of Contractor Employee Qualifications for Defense Health Agency-Funded Information Technology Contracts
This audit determined that the sample of contractor employees reviewed did not meet minimum labor qualifications required by Defense Health Agency Information Technology and Telecommunications contracts.  In addition, the Defense Health Agency contracting office could not demonstrate whether an additional 143 contractor employees met the minimum labor qualifications.  Finally, four contractor employees may not have been qualified for key personnel positions in the Army Medical Research Acquisition Activity contract.  As a result, the Defense Health Agency and Naval Information Warfare Center Atlantic contracting officers authorized approximately $3.52 million in questioned costs between April 2018 and March 2019 for work performed by 76 contractor employees who did not meet minimum qualifications.  Furthermore, a Defense Health Agency contracting officer may have authorized an additional $5.3 million in questioned costs for 143 of the 147 contractor employees that were not reviewed.  Having unqualified contractor employees on information technology service contracts could disrupt health care for service members and their beneficiaries.

Summary Evaluation on External Peer Reviews at the Department of Defense Audit Organizations
This evaluation summarized systemic deficiencies in peer reviews of DoD audit organizations completed between April 4, 2017, and January 15, 2020, and determined whether improvements were made since the previous summary Report No. DODIG-2016-031, “Summary Report on Audit Quality at the DoD Audit Organizations,” December 14, 2015.  Of the 21 audit organizations that were reviewed during this time period, 16 received a rating of pass, 4 received a rating of pass with deficiencies, and 1 received a rating of fail.  Five audit organizations improved since the previous peer review, and one audit organization’s peer review rating declined.  Deficiencies reported in the DoD audit organizations peer review reports related to policies and procedures, continuing professional education, independence, planning, evidence and documentation, supervision, and quality control policies and procedures. 

Summary of Reports and Testimonies Regarding Department of Defense Cybersecurity From July 1, 2018, Through June 30, 2019
This summary report determined that DoD Components implemented corrective actions necessary to close 200 of the 530 cybersecurity‑related recommendations issued in 46 previous DoD cybersecurity-related reports and the content of three testimonies provided to Congress by the DoD OIG, Government Accountability Office and other DoD oversight organizations.  Corrective actions are intended to mitigate or remediate risks and weaknesses to the DoD systems and networks.  However, as of September 30, 2019, the DoD had 330 cybersecurity‑related recommendations that remained open.  Additionally, despite improvements made by the DoD, recently issued cybersecurity reports demonstrate that the DoD continues to face significant challenges in managing cybersecurity risks to its systems and networks.

Audit of the Safety and Security of Radioactive Materials at Department of Defense Medical Treatment Facilities
This audit determined that DoD medical facility management properly trained personnel, conducted inspections and program reviews, and accounted for inventory levels for the safety and security of radioactive materials at the eight facilities visited.  Because the Defense Health Agency administers and manages all medical facilities, management officials requested that the DoD OIG identify best practices for DHA’s consideration.  The DoD OIG identified some areas where Defense Health Agency management could implement process changes and improvements to further strengthen controls over the safety and security of radioactive materials and gain potential cost savings and resource efficiencies. 

Audit of Training of Mobile Medical Teams in the U.S. Indo-Pacific Command and U.S. Africa Command Areas of Responsibility
This audit determined that Military Departments provided team, environmental, and equipment training to mobile medical team members before they deployed to U.S. Indo-Pacific Command and U.S. Africa Command areas of responsibility.  However, improvements in surgical and tactical training are needed to better prepare mobile medical teams for deployment to austere environments.  As a result of gaps in surgical training and a lack of exposure to trauma cases prior to deployment, mobile medical team personnel are at risk of not gaining and maintaining essential surgical experience necessary for medical readiness.  Additionally, without better tactical training, medical teams may not be able to defend themselves and their patients and they may become a liability to the forces they are intended to support.

DEFENSE CRIMINAL INVESTIGATIVE SERVICE HIGHLIGHTS (to view DOJ press release, if available, please click on title)

Harvard University Professor Indicted on False Statement Charges
On June 9, 2020, the former Chair of Harvard University’s Chemistry and Chemical Biology Department was indicted on charges of making false statements to federal authorities regarding his participation in China’s Thousand Talents Program.  Dr. Charles Lieber was indicted by a Federal grand jury on two counts of making false statements and was arrested on January 28, 2020, after being charged by criminal complaint.  According to charging documents, since 2008, Dr. Lieber served as the Principal Investigator of the Lieber Research Group at Harvard University, specializing in the area of nanoscience.  Lieber’s research at the Lieber Research Group was funded by more than $15 million in research grants from the National Institutes of Health (NIH) and the DoD.  Among other things, these grants required the disclosure of all sources of research support, potential financial conflicts of interest and all foreign collaboration.  Allegedly in 2011, Lieber became a “Strategic Scientist” at Wuhan University of Technology (WUT) in China.  He later became a contractual participant in China’s Thousand Talents Plan from at least 2012 through 2015.  According to court documents, these talent recruitment plans seek to lure Chinese overseas talent and foreign experts to bring their knowledge and experience to China, and they often reward individuals for stealing proprietary information.  Under the terms of Lieber’s three-year Thousand Talents contract, WUT allegedly paid Lieber a salary of up to $50,000 per month, living expenses of up to 1 million Chinese Yuan (approximately $158,000 USD at the time) and awarded him more than $1.5 million to establish a research lab at WUT.  In return, Lieber was obligated to work for WUT “not less than nine months a year” by “declaring international cooperation projects, cultivating young teachers and Ph.D. students, organizing international conference[s], applying for patents and publishing articles in the name of [WUT].”  On or about April 24, 2018, during an interview with Federal investigators, it is alleged that Lieber falsely stated that he was never asked to participate in the Thousand Talents Program, but that he “wasn’t sure” how China categorized him.  In November 2018, NIH inquired of Harvard about whether Lieber had failed to disclose his then-suspected relationship with WUT and China’s Thousand Talents Plan.  Lieber allegedly caused Harvard to falsely tell NIH that Lieber “had no formal association with WUT” after 2012, that “WUT continued to falsely exaggerate” his involvement with WUT in subsequent years, and that Lieber “is not and has never been a participant in” China’s Thousand Talents Plan.  This is an ongoing investigation with the Federal Bureau of Investigation (FBI), the Defense Criminal Investigative Service (DCIS), and the Health and Human Services Office of Inspector General (HHS-OIG).

Bradken Inc. Pays $10.8 Million to Settle False Claims Act Allegations and Enters Into Deferred Prosecution Agreement
On June 15, 2020, DOJ announced that Bradken Inc. (Bradken), a subsidiary of Hitachi Construction Machinery, has paid $10,896,924 to resolve allegations that Bradken produced and sold substandard steel components for installation on Navy submarines.  Bradken and Bradken’s former lab director have also been charged criminally.  The criminal complaint charged Elaine Thomas, Bradken’s former Director of Metallurgy, with Major Fraud Against the United States.  A criminal information was also filed against Bradken with Major Fraud Against the United States.  Under a deferred prosecution agreement, Bradken has accepted responsibility for the offense and has agreed to take remedial measures.  If Bradken complies with the agreement, the Government will dismiss the charge after three years.  According to the court filings, Bradken is the Navy’s leading supplier of high-yield steel for naval submarines.  Bradken’s Tacoma foundry produces castings that prime contractors use to fabricate submarine hulls.  The Navy requires that the steel meet certain standards for strength and toughness to ensure that it does not fail under certain circumstances, such as a collision.  The court filings allege that, for 30 years, the Tacoma foundry (which was acquired by Bradken in 2008), produced castings that had failed lab tests and did not meet the Navy’s standards.  The filings allege that Elaine Thomas, as Director of Metallurgy, falsified test results to hide the fact that the steel had failed the tests.  Thomas falsified results for over 200 productions of steel, which represent a substantial percentage of the castings Bradken produced for the Navy.  As part of the deferred prosecution agreement, Bradken admitted these allegations.  The court filings state there is no evidence that Bradken’s management was aware of the fraud until May 2017.  At that time, a lab employee discovered that test cards had been altered and that other discrepancies existed in Bradken’s records.  While Bradken initially disclosed these findings to the Navy, it then made misleading statements suggesting that the discrepancies were not the result of fraud.  Bradken admits that these misleading statements hindered the Navy’s investigation and its efforts to remediate the risks presented by Bradken’s fraud.  The deferred prosecution agreement describes substantial steps taken by Bradken to cooperate with the Government’s investigation and overhaul to its quality control and compliance procedures.  These steps include entering into a compliance agreement with the Navy, creating new positions devoted to oversight of lab testing and tracking, creating an audit and risk committee to oversee the compliance issues, and implementing of a new lab information system with anti-fraud controls.  The company will also publish a detailed account of its missteps in the Casteel Reporter, a trade publication, to educate other government contractors.  In addition, Bradken has made changes to the management team in place at the Tacoma Foundry.  If Bradken complies with all of the deferred prosecution agreement’s requirements, the Government will dismiss the charge after three years.  This case was investigated by DCIS, NCIS, and the Defense Contract Audit Agency.

Medical Technology Company President Charged in Scheme to Defraud Investors and Health Care Benefit Programs in Connection with Coronavirus Disease- 2019 Testing
On June 9, 2020, Mark Schena, president of Arrayit Corporation—a California-based medical technology company—was charged in an unsealed complaint in connection with his alleged participation in schemes to mislead investors and conspire to commit health care fraud in the submission of over $69 million in false and fraudulent claims for allergy and coronavirus disease- 2019 (COVID-19) testing to Federal healthcare benefit programs (including TRICARE).  The complaint against Schena, is the first criminal securities fraud prosecution related to the COVID-19 pandemic that has been brought by the Department of Justice (DOJ) and charges one count of securities fraud and one count of conspiracy to commit health care fraud.  Between approximately 2018 and February 2020, Schena and others paid kickbacks and bribes to recruiters and doctors to run an allergy screening test for 120 allergens on every patient regardless of medical necessity, and then made numerous misrepresentations to potential investors about Arrayit’s allergy test sales, financial condition, and its future prospects.  Schena and others issued press releases and tweeted about partnerships with Fortune 500 companies, Government agencies and public institutions, without disclosing that such partnerships either did not exist or were of de minimis value.  As the COVID-19 crisis began to escalate in March 2020, Schena and others made false claims concerning Arrayit’s ability to provide accurate, fast, reliable and cheap COVID-19 tests in compliance with state and Federal regulations, and made numerous misrepresentations to potential investors about the COVID-19 tests and Arrayit’s future prospects for COVID-19 testing.  Arrayit’s stock price doubled in mid-March, but Schena and others never disclosed that there were questions about the validity of its data and the accuracy of its COVID-19 test.  This is an ongoing investigation with the U.S. Postal Inspection Service (USPIS), the Veterans Affairs OIG, HHS-OIG, FBI, and DCIS.

South Korean Engineering Company Pleads Guilty to Defrauding U.S. Army, Agrees to Pay $68.4 Million
On June 10, 2020, SK Engineering & Construction Co. Ltd. (SK), one of the largest engineering firms in the Republic of Korea, pleaded guilty to one count of wire fraud in connection with a fraudulent scheme to obtain Army contracts through payments to a DoD contracting official and the submission of false claims to the Government.  As part of the plea agreement, SK was ordered to pay $60,578,847 in criminal fines, the largest fine ever imposed against a criminal defendant in the Western District of Tennessee, pay $2,601,883 in restitution to the Army, and serve three years of probation, during which time SK agreed not to pursue Federal Government contracts.  TheArmy previously suspended SK from future contracting throughout the executive branch of the Government on November 17, 2017.  As part of SK’s plea agreement, SK agreed to cooperate fully with the United States in all matters relating to the conduct covered by the plea agreement and other conduct under investigation by the United States, to report violations of Federal law, and to continue to implement a compliance and ethics program designed to effectively detect and deter violations of Federal law throughout its operations.  Separately, SK has entered into a False Claims Act settlement with the United States, under which it is obligated to pay $5,200,000 in civil penalties to the United States, which was credited against SK’s criminal fine.  According to plea documents, SK obtained a large Army construction contract at Camp Humphreys, South Korea in 2008 worth hundreds of millions of dollars.  SK paid millions of dollars to a fake Korean construction company named S&Teoul, which subsequently paid that money to a contracting official with the Army Corps of Engineers.  In order to cover approximately $2.6 million in payments to S&Teoul, and ultimately to the contracting official, SK submitted false documents to the Army.  SK also admitted that its employees obstructed and attempted to obstruct federal criminal investigations of the fraud and bribery scheme.  SK admitted that, in April 2015, its employees burned large numbers of documents related to Army contracts, in order to hamper U.S. and Korean investigators.  Further, SK admitted that, in the fall of 2017, its employees obstructed a Federal criminal proceeding by attempting to persuade an individual not to cooperate with U.S. authorities.  This is an ongoing investigation with the Army Criminal Investigation Command (Army CID), DCIS, and the FBI. 

Former Drug Enforcement Agency Official Pleads Guilty to Elaborate $4M Fraud Scheme
On June 11, 2020, a former Drug Enforcement Administration (DEA) public affairs officer pleaded guilty to defrauding at least a dozen companies of over $4.4 million by posing falsely as a covert officer of the Central Intelligence Agency (CIA).  According to court documents, Garrison Kenneth Courtney, of Florida, falsely claimed to be a covert officer of the CIA involved in a highly-classified program or “task force” involving various components of the U.S. Intelligence Community and the DoD.  To accomplish the fraud, Courtney approached numerous private companies with some variation of this false story, and claimed that the companies needed to hire and pay him to create what Courtney described as “commercial cover,” i.e., to mask his supposed affiliation with the CIA.  Courtney also fraudulently claimed that the companies would be reimbursed in the future for these salary payments, sometimes by the award of lucrative contracts from the Government in connection with the supposedly classified program.  Courtney further created fake letters, purporting to have been issued by the Attorney General of the United States, which claimed to grant blanket immunity to those who participated in the supposedly classified program.  Courtney also convinced several Governmental officials that he was participating in this “task force,” explained that they had been selected to participate in the program, and then used those officials as unwitting props falsely to burnish his legitimacy.  Through the scheme, Courtney also fraudulently gained a position working as a private contractor for the National Institutes of Health Information Technology Acquisition and Assessment Center (NITAAC), a branch of NIH that provides acquisition support services to federal agencies.  Once he had installed himself at NITAAC, Courtney gained access to sensitive, nonpublic information about the procurements of other federal agencies being supported by NITAAC.  Courtney thereafter used that information to attempt to corrupt the procurement process by steering the award of contracts to companies where he was then also on the payroll, and used the false pretext of national security concerns to warp the process by preventing full and open competition.  This case was investigated by the CIA OIG; Intelligence Community OIG; National Geospatial-Intelligence Agency OIG; Air Force Office of Special Investigations; Army CID; DCIS; DOJ OIG; HHS-OIG; and the Naval Criminal Investigative Service (NCIS).

Man Sentenced to 101 Months Imprisonment for Veteran’s Unemployment Compensation Fraud
On June 11, 2020, Earl Lafayette Hall, III, was sentenced to 101 months imprisonment and ordered to pay $96,431 in restitution on June 9, 2020, for veteran’s unemployment compensation fraud.  Hall was previously convicted in November 2019 on 2 counts of conspiracy, 12 counts of mail fraud, 10 counts of money laundering, and 4 counts of aggravated identity theft.  The evidence presented during the trial and the sentencing hearing, showed that Hall applied for and received $96,431 in unemployment compensation benefits under the Unemployment Compensation for Ex-Service Members Program, commonly known as “The UCX Program,” under the assumed identities of 11 other individuals.  The UCX Program is a Federally funded, U.S. Department of Labor program administered by the states.  The jury found that Hall fraudulently obtained the benefits paid on seven false UCX claims submitted to Pennsylvania, three false UCX claims submitted in Utah, and another false identity UCX claim submitted to Hawaii in 2013 and 2014.  This was a joint investigation with the U.S. Department of Labor OIG, DCIS, and USPIS.  

Three Charged in $180 Million Health Care Fraud and Money Laundering Scheme
On June 12, 2020, an indictment was unsealed against three individuals for their alleged involvement in various schemes to defraud Medicare, TRICARE, and private insurance companies, and their conspiracy to launder the proceeds, which allegedly resulted in more than $180 million in fraudulent billings.  Mitchell “Chad” Barrett, of Gulf Breeze, Florida; David “Jason” Rutland, of Bolton, Mississippi; and Thomas “Tommy” Shoemaker, of Rayville, Louisiana were charged on May 27, 2020, in the Southern District of Mississippi.  The indictment alleges that between September 2011 and January 2016, Barrett, Rutland, and Shoemaker conspired to and engaged in a scheme to defraud numerous health care benefit programs of more than $180 million, including more than $50 million from Federal healthcare programs.  Using several pharmacies, including Gluckstadt Special Care Pharmacy and Compounding LLC, World Health Industries Inc., Opus Rx LLC, and Rx Pro Pharmacy and Compounding LLC, the defendants, as alleged, fraudulently formulated, dispensed, shipped, and billed insurance companies for compound medications in the form of topical creams and capsules, some of which contained controlled substances.  To further facilitate their scheme to defraud health care benefit programs, the defendants allegedly conspired to and engaged in a scheme to solicit and pay kickbacks and bribes to marketers, physicians, other medical providers, and beneficiaries to refer, prescribe, and receive prescriptions for medically unnecessary compound medications.  The defendants also allegedly conspired to and engaged in a scheme to launder the proceeds of their fraudulent activity by concealing the proceeds they obtained and conducting monetary transactions of a value greater than $10,000, including the purchase of numerous assets, such as real estate, luxury automobiles, a three-carat diamond, and other high-priced goods.  This is an ongoing investigation with the FBI, DCIS, and the Internal Revenue Service Criminal Investigations, with assistance from USPIS and the Office of Personnel Management OIG.  

ANNOUNCED PROJECTS (to view the announcement letters, if available, please click on the title)

External Peer Review of the Defense Information Systems Agency, Office of the Inspector General Audit Organization
The objective of this evaluation is to determine, for the period ending May 31, 2020, whether the quality control system for the Defense Information Systems Agency, Office of the Inspector General audit organization was designed to provide reasonable assurance that the policies and procedures related to the system of audit quality are suitably designed, operating effectively, and complied with in practice.

Evaluation of the Department of Defense’s Handling of Incidents of Sexual Assault Against (or Involving) Midshipmen at the United States Naval Academy
The objective of this evaluation is to determine whether Naval Academy Sexual Assault Prevention and Response Office personnel provided sexual assault prevention and response and victim support services to midshipmen (victims) according to DoD and Navy policy.  The evaluation will also determine whether Navy Criminal Investigative Service agents investigated reports of sexual assaults involving midshipmen (victims) according to prescribed policies, and whether Naval Academy leadership disenrolled midshipmen (victims) as retaliation for reporting sexual assault.  This evaluation will also determine whether the Under Secretary of Defense for Personnel and Readiness annually reported the correct number of midshipman (victim) reports of sexual assault to Congress.

Audit of TRICARE Telehealth Services
The objective of this audit is to determine whether the Defense Health Agency paid for telehealth services in accordance with Federal and DoD guidance.  Telehealth services use electronic information and telecommunications technologies to support and promote long-distance clinical health care.

Audit of Sole-Source Depot Maintenance Contracts
The objective of this audit is to determine whether the Military Services and Defense agencies negotiated fair and reasonable prices for sole-source depot maintenance contracts performed at contractor facilities.  This audit is in response to a reporting requirement included in House Report 116-333, the conference report to accompany the “National Defense Authorization Act for FY 2020,” December 20, 2019.

Audit of U.S. Army Corps of Engineers Contract Oversight Over the Construction of Alternative Care Sites for the Coronavirus Disease–2019 Response
The objective of this audit is to determine whether Army Corps of Engineers officials established quality assurance controls for alternate care site facilities constructed in response to the coronavirus disease-2019.

Evaluation of Access to DoD Information Technology and Communications During the Coronavirus Disease–2019 Pandemic
The objective of this evaluation is to determine the extent to which DoD Components provided access to DoD information technology and communications during the coronavirus disease-2019 pandemic.

Audit of U.S. Transportation Command Cargo Scheduling Effectiveness
The objective of this audit is to determine whether Military Departments requested timely airlift and sealift cargo movements through U.S. Transportation Command in accordance with DoD guidance.

Audit of the DoD Military Installations’ Public Health Emergency Readiness
The objective of this audit is to determine whether military commanders implemented measures to prepare for, respond to, and recover from public health emergencies, such as coronavirus disease–2019 on DoD installations.

Audit of the Department of Defense Mission Assignments for Coronavirus Disease–2019 in the U.S. Northern Command Area of Responsibility
The objective of this audit is to determine whether U.S. Northern Command and supporting DoD Components identified, tracked, requested, and received reimbursement from the Federal Emergency Management Agency for coronavirus disease–2019 mission assignments in accordance with Federal and DoD policies.  

Audit of the Award and Administration of National Guard Youth Challenge Program Cooperative Agreements
The objective of this audit is to determine whether the award and administration of National Guard Youth Challenge Program cooperative agreements were in accordance with applicable Federal and DoD policies and whether the academies achieved program goals and objectives.  The mission of the National Guard Youth Challenge Program is to intervene in and reclaim the lives of at-risk youth to produce program graduates with the values, skills, education, and self-discipline necessary to success as adults.