Twenty years ago, the September 11, 2001 terrorist attacks devastated the United States, and began one of the largest cleanup and recovery efforts of the modern era. On this anniversary, we are mindful that whenever federal, state, and local governments provide relief money to help victims recover, these efforts are often ripe targets for fraudsters.
The 9/11 cleanup and recovery efforts were no exception. In fact, early in the cleanup, a grand jury investigated if organized crime diverted tons of steel from Ground Zero to scrap yards to sell instead of intended landfills. Anticipating more frauds like this, the New York City Department of Investigation appointed Project Integrity Compliance Monitors to oversee the dozens of companies involved with the cleanup process.
The primary goal of these Integrity Monitors was to uncover and investigate actual or potential fraudulent behavior arising from billing, state labor law compliance, and other areas. In congressional testimony, Neil Getnick, Managing Partner of Getnick & Getnick LLP—one of the four law firms appointed as an Integrity Monitor—explained their work:
“We were in the field on a daily basis, observing the work in progress, speaking with the workers on the site, monitoring a complaint hotline 24 hours a day, and gathering significant intelligence. We reviewed billing submissions, checked back-up documentation, visited home offices of subcontractors when appropriate, and compared the billing submissions with our own observations in the field.”
This type of monitoring would uncover relatively common frauds by government contractors. Last month, on Fraud in America, our team analyzed the rampant time card fraud at the heart of the Hanford Site nuclear cleanup case, which resulted in a $50 million settlement, exactly the type of fraud an Integrity Monitor might have detected.
But Integrity Monitors do not just detect fraud, their very presence is enough to deter fraud. In a Homeland Security report issued in August 2006, staff found,
“The World Trade Center Integrity Compliance Monitorship Program was effective in large part because it was preventive. By embedding private integrity monitors with the individual contractors, the monitoring program prevented fraud and abuse by contractors that were unscrupulous or sloppy in their accounting.”
The 9/11 cleanup demonstrates that with proactive efforts, enlisting the help of private attorneys experienced in detecting fraud on the government, we can detect and deter fraud on the government. Integrity Monitors help, but the government’s primary tool to fight fraud is the False Claims Act with cases initiated by whistleblowers.
For example, when Hurricane Katrina hit New Orleans 16 years ago, millions were stolen from the relief efforts, and only exposed through False Claims Act cases brought by whistleblowers. Just last year, one such case finally settled, returning $12 million to the Federal Emergency Management Agency (FEMA).
Today, in 2021, the federal government is pouring trillions of dollars in relief funds to respond to the COVID-19 pandemic and new natural disasters, like the wildfires in the West, hurricanes in the Gulf and on the East coast, and flooding in the Midwest and South.
Although the total cost of responding to natural disasters in 2021 is still incomplete, COVID-19 fraud losses, including potentially tens of billions lost to fraud on the Paycheck Protection Program have already been identified. Other cases involving fraud against the COVID-19 unemployment and stimulus funds are ongoing and will likely last for years to come.
Because fraudsters will always try their best to swindle away taxpayer dollars, Integrity Monitors and whistleblowers are as important today as they were 20 years ago.
Written by James King of Taxpayers Against Fraud Education Fund