DOD Fraud Investigations:

Characteristics, Sanctions, and Prevention

AFMD-88-5BR: Published: Jan 20, 1988. Publicly Released: Feb 22, 1988.

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In response to a congressional request, GAO reviewed Department of Defense (DOD) fraud investigations to determine: (1) fraud characteristics, in terms of most prevalent types and the functions most affected; (2) DOD actions taken against those caught defrauding the government; and (3) whether DOD investigative agencies determine the causes of detected fraud so that DOD can take actions to reduce vulnerabilities.

GAO found that: (1) DOD reviewed 794 cases of fraud with losses of $1,000 or more during fiscal years 1984 and 1985; (2) the losses totalled $66.2 million, while recoveries or fines totalled $39 million; (3) although fraud accounted for about one-third of the cases, procurement fraud accounted for 29 percent of the cases and was responsible for 81 percent of the loss amount; (4) 55 percent of the fraud cases, with losses totalling $44 million, resulted in legal or administrative actions against those who defrauded DOD and $33 million in fines and recoveries; (5) although prosecutors did not act on 45 percent of the cases referred because they were below the dollar threshold for prosecution, DOD recouped $6 million of the $22 million in losses; (6) recent legislation provided DOD with new authority to bring administrative penalties and make recoveries in certain cases declined for prosecution; (7) procurement fraud investigations doubled, while suspected fraud in nonappropriated fund and pay and allowance activities decreased substantially; and (8) DOD initiated efforts to use information developed during criminal investigations of internal controls or management weaknesses that contributed to fraud.

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