Reposted from the This Week in Nonprofit Fraud Blog – December 9, 2013
Couple’s Collusion Cheats Government Contracts
Photo courtesy of The Daily Caller
December 6, 2013: Kathleen McGrade, a former state department contract specialist, along with her husband, Brian Collinsworth, was sentenced to prison for an enormous government contracting fraud. While employed by the U.S. Department of State, McGrade concealed her marriage while funneling millions in lucrative high-value contracts toward, Sterling Royale Group, a company which she and her husband jointly owned. Sterling Royale Group was awarded $53 million in contracts to provide HVAC services at U.S. embassies between 2008 and 2011. The couple used their ill-gotten gains to purchase a $73,000 Lexus, a $500,000 yacht, and $223,000 in jewelry.
See more on this case at The Washington Post
- In this case, McGrade purposefully failed to disclose her marriage during a background check, which helped conceal a clear conflict of interest.
- It is critically important that you conduct an independent background check on employees so that you are not reliant on their statements.
Raffa Forensic Practice Tips:
- Employees engaging in fraud often exhibit behavioral red flags (e.g. living beyond their means). How well do you know your employees?
- An independent workplace and background investigation can potentially identify undisclosed conflicts of interest.
- Does your organization have a formal conflict of interest policy, as well as procedures that monitor the relationships between your employees and vendors?
December 4, 2013: Emilio Amador was sentenced to serve 108 months in prison and ordered to pay $24 million after pleading guilty to receiving health care kickbacks in conjunction with a $48 million home health care fraud scheme. From approximately January 2006 – June 2011, Amador recruited patients for Caring Nurse Home Health Care. In exchange, he received kickbacks and bribes from Caring Nurse’s owners and operators for allowing them to bill the Medicare program on behalf of the recruited patients. The Medicare beneficiaries were used to bill for home health care and therapy services that were either medically unnecessary or not provided. Amador also pled guilty to his involvement in $30 million of fraudulent billing for Nation’s Best Home Health Corp, a separate home health care provider where he was the owner, operator, and president.
See more on this case at The Federal Bureau of Investigation – Miami Division
- Sometimes a small fraud is just the tip of the iceberg. Frauds of this scale are usually uncovered by whistleblowers, but in this case, regulators were able to use program data to identify suspected fraud. A full investigation revealed a series of interrelated home health care frauds and a massive loss to Medicare.
Raffa Forensic Practice Tips:
- Analyze and evaluate all the data you have, not just the financial data!
- Does your organization have formal management reporting for key nonfinancial data which might also help uncover a fraud?
- When a potential fraud loss is discovered, take action right away to minimize losses.
- Does your organization have a formal fraud policy that outlines your response to an alleged fraud?
DON’T BE THE NEXT VICTIM OF FRAUD!
The Raffa Forensic Accounting Services Practice offers a wide variety of fraud prevention and detection services including Fraud Risk Assessments, Background and Workplace Investigations, Fraud and Internal Investigations, Transactional Due Diligence Investigations, Anti-Fraud Consulting and Training, and Computer Forensic Analysis.
For more information on the Raffa Forensic Accounting Services Practice please visit us at www.raffa.com/ProfessionalServices/Forensic/ and the Nonprofit Fraud Prevention Institute at www.raffa.com/Fraud.
You can also contact the following Raffa professionals with any questions or if your organization needs assistance in fraud prevention:
Lawrence J. Hoffman, CPA/CFF, CVA, CFE, Senior Partner: Lhoffman@raffa.com
Leslie C. Kirsch, CFE, Manager: Lkirsch@raffa.com