IMPAC Training 2002 Fraud and Ethics

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IMPAC Training 2002Fraud and Ethics
DESC Budget Conference
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OVERVIEW

• Fraud Concerns
• Chris Poston

• Proper Use
• Louise Hansen

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FRAUDULENT CHARGES

• If you notice that charges have been made
  against the card which the cardholder did not
  authorize, report this immediately to your
  Commander and DESC-CPB

• Coordinate the matter with DESC-G. Do not
  assume that the credit card company will handle
  the investigation
• The credit card company will need information to
  validate any claims that the cardholder did not
  authorize the charges

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GOVERNMENT LIABILITY FOR CHARGES

• When charges are made by authorized IMPAC
  cardholders, the Government is liable for payment
  of those charges under the Master GSA Agreement

• If you suspect that a cardholder is making
  unauthorized charges, you should report the
  matter in accordance with ethics and fraud
  regulations
• If you suspect that someone other than the
  cardholder is making charges, you should also
  report the matter

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IMPROPER CARD USAGE

• Improper use of the IMPAC card can be
• Fraudulent
• Constitute an ethics violation
• Violate fiscal laws
• Result in revocation of card privileges
• Basis for administrative disciplinary actions

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REPORTING FRAUD

• Employees must report actual or suspected ethics
  violations and instances of fraud
• Suspected violations must be reported to any of
  the following
• DESC Fraud and/or Ethics Counsel
• agency designee
• suspected violator's agency designee
• Commander
• Defense Logistics Agency Criminal Investigative
  Activity (DCIA)
• DoD Inspector General (IG)
• Defense Criminal Investigative Service (DCIS)
• DoD Hotline

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CRIMINAL INVESTIGATIONS AND PROSECUTIONS
INVOLVING CREDIT CARDS

• In the last two years, there have been more than
  500 purchase card fraud cases filed involving
  military credit cards, according to information
  gathered by the office of Sen. Charles E.
  Grassley (R-Iowa)
• One bank company has been forced to write off 59
  million in fraudulent debts from military cards

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IMPACT CARD AND TRAVEL CARD ABUSE CASES

• A night auditor employed at the Travel Lodge Inn,
  Pensacola, FL, made unauthorized and fraudulent
  charges to a number of credit cards, including
  Government issued Visa cards
• Between February 1998 - 2000, a man received
  payments of 1,000 and a 1,500 personal computer
  from a Supply Specialist, Finance Management and
  Comptroller, Office of the Assistant Secretary of
  the U.S. Army, in return for purchasing 45,000
  of office supplies for DoD from Direct Office
  Products (DOP), Cheverly, MD using his IMPAC Card

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MORE IMPACT CARD AND TRAVEL CARD ABUSE CASES

• A man purchased items for his personal use,
  including a motorcycle, with a Government credit
  card. He was a supply technician at NSWC and
  altered documentation provided to the Government
  to substantiate his purchases in order to conceal
  the nature of his activity
• From January 1999 to June 1999, a management
  assistant at DLIS applied for Government credit
  cards under fraudulent pretenses and transmitted
  the credit card applications to the bank via
  facsimile transmission. Illegal transactions
  totaled over 7,000. All of the credit card
  purchases were non-Government related charges,
  predominantly automated teller machine cash
  withdrawals

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YET MORE IMPAC CARD ABUSE

• Late last year, Congress reviewed a General
  Accounting Office audit indicating that personnel
  at two Navy commands in San Diego allegedly used
  charge cards to buy pricey leather goods and
  electronics
• The questionable purchase card purchases at the
  two San Diego commands included a 400 briefcase
  from the upscale Coach leather stores, "Palm
  Pilots by the lot'' and dozens of slim-line
  computer monitors at about 2,400 each

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STILL MORE IMPAC CARD ABUSE

• Eccard, former director of the Defense Automated
  Printing Service (DAPS), New Orleans, LA, used
  his privately owned business to make 310,410 in
  fraudulent charges to Government credit cards
  held by his subordinates. Eccard wire
  transferred the funds into his personal business
  account, Diversified Automated Printing Service
  (DAPS)
• In addition, Eccard embezzled 271,587 in
  Government funds by allowing other businesses to
  make fictitious charges to the Government credit
  cards and then those businesses divided the
  proceeds with Eccard. He also diverted checks
  intended for DAPS by depositing them into
  Diversifieds account
• Eccard was sentenced to 30 months confinement, 3
  years supervised release, restitution of 581,997
  and a special assessment fee of 100

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PROPER USE FISCAL LAW ISSUES
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PROPER USE OF IMPAC

• Is always a case by case determination
• Follow rules regarding use of appropriated
  funds
• Use common sense -- even if it is an allowed, if
  the cost is excessive, it is probably improper
• If improper to buy with a purchase order, also
  improper to use IMPAC
• Call DESC-CPB or DESC-G with questions before you
  make the purchase

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CHANGE OF COMMAND
Comments/Qualifications
Is it Allowable?
Printing and Mailing Costs of Invitations and
Programs
Printing should be through GPO or advance waiver
obtained to use commercial source single color
printing only
YES
Trophies, Mementos and Plaques
YES
Must be inexpensive and appropriate to the
occasion
Food, refreshments, plates, silverware
For cake, cookies and punch suitable to the
occasion Paper plates and plastic silverware
YES
NO
Hors doeuvres and/or meals
For spouses of departing and incoming commanders
Must be suitable to the occasion
YES
Flowers
NO
Table or other decorations
If suitable space, such as an auditorium or large
room, is not available on site limited to that
suitable to the occasion
Meeting Space
YES
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RETIREMENT/FAREWELL
Is it Allowable?
Comments/Qualifications

• Must qualify under Government Employees
  Incentive Award Act (GEIAA) for civilian or 10
  USC 1125 for military
• GEIAA authorizes honorary non-cash awards
  recognizing employees contributions upon
  retirement
• Includes plaques, paperweights and other
  honorary, inexpensive awards

Trophies, Mementos and Plaques
MAYBE
MAYBE

• If award qualifies under GEIAA, may incur
  incidental expenses necessary to honor awardees,
  including refreshments
• Agency must determine refreshments would
  materially enhance the effectiveness of the
  awards ceremony
• Inexpensive and suitable to occasion

Food, refreshments, plates, silverware
Flowers
NO
If suitable space, such as an auditorium or large
room, is not available on site limited to that
suitable to the occasion
Meeting Space
YES
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CONFERENCES
Is it Allowable?
Comments/Qualifications
Light Refreshments

• JFTR and JTR authorize cost of light
  refreshments as an allowable conference cost
• Applies ONLY when conference is limited to
  government employees
• Conferences sponsored by DESC for contractor
  attendance are not authorized to provide light
  refreshments prohibited by law
• At least 51 of conference attendees must be in
  TDY status to use this rule
• Must follow JTR C4950/JFTR U2550 on conference
  planning and comply with documentation
  requirements

YES
If suitable space, such as an auditorium or large
room, is not available on site limited to that
suitable to the occasion
Meeting Space
YES
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OFFICE PARTIES
Is it Allowable?
Comments/Qualifications
YES
Seasonal decorations, e.g., Christmas tree or
Hanukkah menorah
Decorations
NO
Non-seasonal decorations, e.g., birthdays
Trophies, Mementos and Plaques
NO
Food, refreshments, plates, silverware
NO
NO
Flowers
Meeting Space
NO
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OVER-ARCHING CONSIDERATIONS

• Ask yourself
• What is it for
• Why do we need it
• How much does it cost
• Are there appearance concerns (would a reasonable
  person question this expense?)