In 2009, Congress passed the federal Stimulus Package, infusing nearly a $1 trillion dollars into the American economy. However, as tax dollars poured out of the federal coffers, some raised concerns that existing laws and systems could not stop entities from fraudulently siphoning these funds. Thankfully, Congress subsequently patched some of the holes in relevant anti-fraud laws, including the federal False Claims Act. Now, however, it is up to America’s courageous whistleblowers to step forward and recover the Stimulus funds that were wrongfully drained by fraudsters.

With each passing day, the massive scope of Stimulus Package fraud is becoming more apparent. Similarly, the inadequacy of government controls and, in turn, the need for whistleblowers is also becoming quite clear.

One example of the problem is evidenced in a recent US Department of Health and Human Services audit, where the Inspector General examined one State’s ability to monitor Stimulus funds dispensed under the federal Community Services Block Grant (CSBG) program. Here, the Inspector General examined the mechanisms used by the State of Colorado to monitor the nearly $9 million in Stimulus funds that it dished out to 40 entities that were supposedly creating, coordinating, and delivering programs and services to low-income Americans.

Pursuant to the federal CSBG Act, the State was required to monitor eligible entities by conducting full onsite reviews of each eligible entity at least once during each 3-year period. The State was also required to conduct reviews to determine whether eligible entities met the performance goals, administrative standards, financial requirements, and other requirements of its State.

The Inspector General discovered that the State largely sidestepped its responsibilities to monitor these federal dollars. Specifically, the State did not conduct full onsite reviews at all eligible entities within a 3-year period; ensure that CSBG funds were used to provide services only to eligible clients; conduct initial Stimulus Package onsite reviews at each eligible entity that received funding; or adequately document onsite reviews.

When the Inspector General dove deeper into the expenditures, it discovered rampant fraud and false claims. For example, for the quarter ending March 31, 2010, five entities billed for 140.3 full-time employee hours (FTE). However, based on the time records supporting the entities’ quarterly expenditures, the Inspector General determined that the five entities should have reported only 16.4 FTE. Thus, these entities overestimated the number of jobs reported by 123.9 FTE. Due to its inadequate internal controls, the State did not identify these errors.

Unfortunately, this is just the tip of the fraud iceberg when it comes to the federal Stimulus Package. However, the federal government does not have the time, money, or resources to audit every single dollar, as they did in this instance. In short, the federal government needs the help of the private citizenry to expose the fraudulent activity that is hidden beneath the surface. Hopefully, people with inside knowledge will step forward and leverage the federal False Claims Act to recover these federal funds.

For more information about qui tam law and health care fraud, contact Nolan & Auerbach, P.A.