Be on the lookout: Fraud affects us all

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As employees of the Air Force, we are all very aware to external threats to the Air Force mission. When we drive onto the base, we see what our force protection posture is, when we log onto our computers, we see what our information protection posture is — and we even get notices of severe weather! 

But, have you ever stopped to think about what threats jeopardize your individual duties? “Fraud” is a word that is getting more use in the media lately. You see large corporations being fined and executives indicted for structuring business deals, but do you ever think about that kind of corruption taking place within the Air Force? Most of us do not want to think about this because we like to believe everyone has the same ethical standards that we do — surely, no one would exploit taxpayer money for their own benefit. 

Well, it does happen. So much so that the Air Force Office of Special Investigations created a directorate specifically organized to investigate these kinds of threats within our weapon system acquisitions and sustainment efforts.

According to the 2016 “Report to the Nations on Occupational Fraud and Abuse” by the Association of Certified Fraud Examiners, a typical organization loses a percentage of revenue because of fraud. In the case of the Air Force, that percentage affects our operational budgets, and ultimately our ability to support the warfighter! The average fraud loss from fraud was $2.7 million. When we plug those statistics into our operational perspective, the impact is devastating. When we as the government fall prey to fraud schemes, our ability to effectively support the warfighter is diminished, and taxpayer confidence is eroded.

One area where we see a tremendous vulnerability is the insider threat, which manifests itself as public corruption. In fact, 35 percent of fraud cases in the past year fell into the corruption category, with a median loss of $200,000. 

In the past couple of years, we have seen several fellow employees prosecuted for accepting cash and other items of value from outside vendors in exchange for preferential consideration or even as a “thanks” for helping a contractor with a project. Despite annual ethics courses and warnings from leadership, government employees still knowingly engage in corrupt practices; in fact, 94.5 percent of the cases in the ACFE study, the perpetrator took some efforts to conceal their fraud. The most common concealment methods were creating and altering physical documents.

It is hard to imagine, but these bad actors exploit gaps in existing internal controls to perpetuate their crimes. According to the study, lack of internal controls was cited in over 29 percent of cases, and “authorized” deviations to internal controls contributed to fraud losses in 20 percent of cases. 

In other words, people are finding loopholes in the system, or simply authorizing fraudulent behavior for various reasons. We have found after years of investigating these types of cases, and the ACFE report confirms, that fraud perpetrators tended to display behavioral warning signs when they were engaged in their crimes. The most common red flags were living beyond means, financial difficulties, unusually close association with a vendor or customer, excessive control issues, a general “wheeler-dealer” attitude involving unscrupulous behavior, and recent divorce or family problems. At least one of these red flags was exhibited during the fraud in 79 percent of cases.

Quite often, fellow employees suspect their co-worker is up to no good, but understandably, they feel powerless to make a change, either from fear of reprisal or lack of management support. In over 40 percent of cases, the victim organizations decided not to refer their fraud cases to law enforcement, with fear of bad publicity being the most-cited reason. 

Government employees stand at a fork in the road then: Should we report suspicious behavior, or should we continue to tolerate fraud through inaction? I hope that we choose the first option.

If you suspect fraud or other illegal activities within your programs, there are multiple ways for you to report:

• Hill AFB Inspector General Fraud, Waste & Abuse Hotline

801-777-5361

• AFOSI Office of Procurement Fraud Investigations, Detachment 2 OL-A

801-775-6050

afosi.pfdet2ol-a@us.af.mil

• Department of Defense Hotline

dodig.mil/hotline

• Federal Bureau of

Investigation, Salt Lake City

801-579-1400