Report | May 19, 2015

DoD Cardholders Used Their Government Travel Cards for Personal Use at Casinos and Adult Entertainment Establishments

DODIG-2015-125

Objective

Our objective was to determine whether DoD Government travel charge card holders used their card for personal use at casinos or adult entertainment establishments. Public Law 112-194, “Government Charge Card Abuse Prevention Act of 2012,” requires the Inspector General of each executive agency with more than $10 million in travel card spending to periodically audit or review travel card programs. We focused on individually billed travel cards. Cardholders are personally and financially liable for payment of all undisputed charges, including personal use, indicated on the billing statement, not the government.

Finding

DoD cardholders improperly used their Government travel charge card (GTCC) for personal use at casinos and adult entertainment establishments. From July 1, 2013, through June 30, 2014, DoD cardholders had 4,437 transactions totaling $952,258, where they likely used their travel cards at casinos for personal use and had 900 additional transactions for $96,576 at adult entertainment establishments. Specifically, we reviewed seven nonstatistically selected cardholders who had 76 transactions valued at $19,643 to confirm that our analysis identified personal use at casinos and adult entertainment establishments from July 1, 2013, to June 30, 2014. DoD did not detect these transactions because:

  • the Defense Travel Management Office (DTMO) compliance program did not assist Agency Program Coordinators to identify personal use at casino and adult entertainment establishments;
  • DoD policy did not specifically identify high-risk merchants or categories for personal use such as in casinos or adult entertainment establishments; and
  • Citibank was not required to notify Agency Program Coordinators or management officials of potential fraudulent activity or suspension of accounts.

As a result, Component Program Managers and Agency Program Coordinators did not have sufficient details on transactions that occurred at casinos or adult entertainment establishments to determine if there was misuse. Unless DTMO and the Component Program Managers improve oversight actions, improve internal controls of the GTCC program, and provide written prohibition of the use of the GTCC at high-risk merchants, DoD personnel may continue to use their GTCCs for personal use at casinos and adult entertainment establishments. Finally, without these controls in place the Department will not be able to identify and hold personnel accountable for misuse of the GTCC.

Recommendations

We made several recommendations to address these problems. See the recommendations sections of the finding in the report.

Management Comments and Our Response

Comments from the Director, Defense Travel Management Office addressed recommendations 1.e; partially addressed 1.a, 1.b, 1.c, and 1.d.2; and did not address the specifics of 1.d.1. Comments from the Service Component Program Managers partially addressed recommendations 2-5. We request comments in response to the recommendations by June 30, 2015.