Conflicts, Corruption and Bribery: A Summary of 2023 Cases
This yearly compilation, which dates back to 1990, highlights key cases involving conflict of interest, bribery and corruption by federal employees, contractors, grant recipients and others.
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On July 31, 2024, the U.S. Office of Government Ethics (OGE) published their annual survey on major federal conflicts of interest prosecutions from 2023. This yearly compilation, which dates back to 1990, highlights key cases involving conflict of interest, bribery and corruption by federal employees, contractors, grant recipients and others.
In addition, these can be useful to write ethical or investigative training scenarios or deliver fraud awareness case studies. The OGE summary also contains links to key documents, which often contain further details, such as the indictment, plea agreement or statement of facts.
The primary defendants, typically government employees or officials, ranged from a U.S. Ambassador to an Army travel clerk, from an Assistant United States Attorney to a Contracting Officer. All but one had multiple co-conspirators, some charged and others not, who participated in or had knowledge of the scheme. One case involved representatives of a foreign government who secretly funded the government employee to engage in a covert lobbying campaign on their behalf.
The value of their schemes varied; one example was a scheme that was identified prior to the agency awarding funds (although more than $450,000 in administrative costs were lost and thus unable to obligate those funds). In one bribery scheme, the defendant received more than $38 million in bribes. The total loss or value of the schemes collectively was $40,587,775, or an average of $5 million. Removing the outlier, the average was $301,821.
Sentences were as varied as the schemes themselves. One low-level Army employee received 29 days of prison time (versus his co-conspirator, who received 18 months). The former FBI Special Agent in Charge who created a scheme to receive a $225,000 “loan” from a foreign business associate received 28 months in prison and a U.S. Air Force contracting officer representative received 188 months (largely based on the substantial loss of more than $38 million).
The case described above involving fraud and theft by a senior member of the National Park Service is worth an in-depth look. In 2021, the United States Attorney announced an indictment against the man, who was an acting Park Superintendent in the U.S. Virgin Islands. Using his position, the man failed to pay the required rent for his government housing for more than a year. He also directed a subordinate to change the housing classification to lessen the rent that was required to pay. If that was not enough, he also allegedly submitted a change of duty station voucher that falsely reflected he was relocating his wife and four children to St. Croix in August 2019 (which never occurred, they were still living in Florida). He also submitted overlapping travel vouchers. He was ultimately sentenced in April 2024 to home detention, probation and restitution.
Another interesting case involved a Contracting Officer from the U.S. Office of Personnel Management. She and her husband had formed companies that had received government contractors for years; then she was hired by OPM in 2007. Beginning in around 2011, she began to direct government contracts worth millions of dollars to her husband and his companies, despite being prohibited from participating in government decisions in which she or her husband had a financial interest. The government’s sentencing memorandum describes the multiple instances in which she had been instructed in the law of conflict of interest and the lengths she took to conceal her interest in her husband’s companies and his dealings.
Conflicts of interest are inherently a difficult type of fraud examination to undertake. They are often shrouded in secrecy, purposefully designed by the participants to evade detection. But understanding how these cases have progressed is important for all CFEs to understand. First, it can show the “slippery slope” of unethical behavior, which slowly descends into more serious crimes. It also shows the consequences when individuals engage in illegal activity and the impact they can have on parties who are not part of the scheme. The victims are not only the government, the taxpayers and the public institutions, but also many others (both directly and indirectly) who suffer when integrity is breached for personal gain.
How These Summaries Can Be Useful
Understanding the basics of these complex conflict of interest and corruption cases can be useful for fraud examiners, even those outside of government. Reviewing them enables Certified Fraud Examiners (CFEs) to assess the methodologies, the schemes, attributes of the participants and resolutions. In turn, these can help fraud examiners in conducting risk assessments, fraud prevention work and catalog red flags.In addition, these can be useful to write ethical or investigative training scenarios or deliver fraud awareness case studies. The OGE summary also contains links to key documents, which often contain further details, such as the indictment, plea agreement or statement of facts.
By the Numbers
The 2023 survey included eight cases, which to be sure, is not the entirety of corruption cases brought over the year—it merely represents those directly involving federal employees or contractors. There are numerous other cases involving corruption and conflict of interest that are brought by the Department of Justice’s Public Integrity Section (which also publishes annual reports, 2022 being the most recent) or state-level prosecutors.The primary defendants, typically government employees or officials, ranged from a U.S. Ambassador to an Army travel clerk, from an Assistant United States Attorney to a Contracting Officer. All but one had multiple co-conspirators, some charged and others not, who participated in or had knowledge of the scheme. One case involved representatives of a foreign government who secretly funded the government employee to engage in a covert lobbying campaign on their behalf.
The value of their schemes varied; one example was a scheme that was identified prior to the agency awarding funds (although more than $450,000 in administrative costs were lost and thus unable to obligate those funds). In one bribery scheme, the defendant received more than $38 million in bribes. The total loss or value of the schemes collectively was $40,587,775, or an average of $5 million. Removing the outlier, the average was $301,821.
Sentences were as varied as the schemes themselves. One low-level Army employee received 29 days of prison time (versus his co-conspirator, who received 18 months). The former FBI Special Agent in Charge who created a scheme to receive a $225,000 “loan” from a foreign business associate received 28 months in prison and a U.S. Air Force contracting officer representative received 188 months (largely based on the substantial loss of more than $38 million).
Types of Schemes
Over these cases, the types of schemes or methods of corruption were assorted, primarily depending on the main issue involved. As anticipated, conflicts of interest between their obligations as a government employee and a relationship was the most common issue. In most cases, the relationship was with a spouse (3) or a business associate (3). In one unique case, it was with their own false reporting to their agency which enabled the conflict and theft scheme (see below for the case). In another case, it was a procurement fraud scheme that failed before it got off the ground. Two cases involved bribery.The case described above involving fraud and theft by a senior member of the National Park Service is worth an in-depth look. In 2021, the United States Attorney announced an indictment against the man, who was an acting Park Superintendent in the U.S. Virgin Islands. Using his position, the man failed to pay the required rent for his government housing for more than a year. He also directed a subordinate to change the housing classification to lessen the rent that was required to pay. If that was not enough, he also allegedly submitted a change of duty station voucher that falsely reflected he was relocating his wife and four children to St. Croix in August 2019 (which never occurred, they were still living in Florida). He also submitted overlapping travel vouchers. He was ultimately sentenced in April 2024 to home detention, probation and restitution.
Another interesting case involved a Contracting Officer from the U.S. Office of Personnel Management. She and her husband had formed companies that had received government contractors for years; then she was hired by OPM in 2007. Beginning in around 2011, she began to direct government contracts worth millions of dollars to her husband and his companies, despite being prohibited from participating in government decisions in which she or her husband had a financial interest. The government’s sentencing memorandum describes the multiple instances in which she had been instructed in the law of conflict of interest and the lengths she took to conceal her interest in her husband’s companies and his dealings.
A Fraud Prevented
It is rare to find a case prosecuted where fraud was prevented prior to its full execution. But the case of Kevin Kuciapinski and his co-conspirators is complex, but interesting. Some of the background can be found in this affidavit for an email search warrant filed in the case. Over the course of a year, the active-duty U.S. Air Force major worked with a co-conspirator to obtain a government contract that would benefit Kuciapinski’s then-wife, who owned a company that sought to do business with the Government. Kuciapinski, to aid their scheme, provided technical advice on various occasions to his then-wife (whom he filed for divorce later in 2014). There are certainly some valuable lessons all fraud examiners can draw from it, including the importance of prevention, training, documentation and oversight.Conflicts of interest are inherently a difficult type of fraud examination to undertake. They are often shrouded in secrecy, purposefully designed by the participants to evade detection. But understanding how these cases have progressed is important for all CFEs to understand. First, it can show the “slippery slope” of unethical behavior, which slowly descends into more serious crimes. It also shows the consequences when individuals engage in illegal activity and the impact they can have on parties who are not part of the scheme. The victims are not only the government, the taxpayers and the public institutions, but also many others (both directly and indirectly) who suffer when integrity is breached for personal gain.