WASHINGTON, D.C. – U.S. Senator Mark Pryor today said data he received from 20 federal agencies indicates that a portion of stimulus money is being mishandled, but that Inspectors General are aggressively following more than 730 allegations of potential wrongdoing. The data comes in response to Pryor’s ongoing review of potential waste, fraud and abuse of the $787 billion American Recovery and Reinvestment Act.
“Stimulus money is meant to create jobs and get the economy moving again. There is zero room for fraud,” Pryor said. “That means ensuring our federal watchdogs root-out inefficiency and fraud in stimulus spending. It means wrongdoing will be publicized, and fraudsters will be caught and punished.”
The new data stems from letters Pryor sent to 22 Inspectors General in January to ensure they investigated cases of potential fraud referred to them by the Recovery Accountability and Transparency Board. The letters sought information about the status of the referred cases, Recovery Act waste they uncovered independently, spending programs that show the greatest risk, and what additional improvements are needed to safeguard the Recovery Act funds.
Findings from the Inspectors General responses include:
- Of the 122 cases referred to Inspectors General by the Recovery Accountability and Transparency Board, 51 have been closed and 71 are open.
- Federal agencies received or uncovered an additional 739 leads or allegations of waste, fraud or abuse.
- Of those, 386 remain open, including 31 under active investigation; 131 referred for administrative action; 19 referred to US Attorneys; 1 referred for prosecution; 2 referred to the FBI; and 3 referred to the IRS. 220 allegations were closed.
- Examples of concerns uncovered by independent audits include:
- The Department of Defense (DoD) allotted stimulus funds to “several” companies that are already subject to ongoing investigations.
- The Department of Housing and Urban Development (HUD) awarded a recipient $1.9 m. when it was not eligible. Adequate controls were not in place to ensure only qualified applicants were selected.
- The Department of Energy awarded contracts to large businesses that were slotted for small businesses.
- Many of the Inspectors General investigations have come from allegations and leads from citizens. Citizens who see misuse or waste of Recovery funds should call the Recovery Board Fraud Hotline at 1-877-392-3375 or via the internet at www.recovery.gov.
Pryor said he will hold agencies accountable for handling funds and continue to probe Inspectors General to ensure they fully investigate every allegation or lead. The Association of Certified Fraud Examiners has found that U.S. organizations lose an estimated 7 percent of their annual revenues to fraud, a problem Pryor wants to avoid with stimulus funds. If this number were to apply to stimulus funds, it would amount to a staggering $55.1 billion.
“The jury is still out on whether Federal departments charged with spending and managing Recovery Act funds can do better,” Pryor said. “I will continue to review this data, follow the trail and ensure those who seek to defraud the government are punished to the full extent of the law.”
