U S Department of Energy Office of Inspector

U. S. Department of Energy Office of Inspector General Fraud Awareness Briefing DOE Office of Inspector General 1

OIG Presentation v This presentation, including any attachments and information contained therein, is the property of the Office of Inspector General (OIG) and is for OFFICIAL USE ONLY. The original and any copies of this presention must be appropriately controlled and maintained. Disclosure to unauthorized persons without prior OIG written approval is strictly prohibited and may subject the disclosing party to liability. Unauthorized persons may include, but are not limited to, individuals referenced in the report, contractors, and individuals outside the Department of Energy. Public disclosure is determined by the Freedom of Information Act (Title 5, U. S. C. , Section 552) and the Privacy Act (Title 5, U. S. C. , Section 552 a). DOE Office of Inspector General 2

Overview Mission of DOE – OIG: The Office of Inspector General promotes the effective, efficient and economical operation of the Department through audits, investigations and inspections and other reviews to detect and prevent waste, fraud, abuse and violations of law. The DOE – OIG accomplishes this in 3 ways: Office of Investigations – Criminal Matters (Fraud) Ø Office of Audits – Efficiency (Waste & Contract Audits) Ø Office of Inspections – Compliance (Abuse & Regulatory Compliance) Ø 3

Investigations • The Office of Investigations is responsible for investigating any fraudulent acts involving DOE, it’s contractors or subcontractors, or any crime affecting the programs, operations, Government funds, or employees of those entities. DOE Office of Inspector General 4

OIG Authority Ø DOE O 221 - Reporting Fraud, Waste, And Abuse To The IG • DOE or DOE contractor employees must report actual or suspected waste, fraud, abuse, corruption, or mismanagement to OIG. Ø DOE O 221. 2 – Cooperation with the Office of Inspector General • All DOE and contractor employees shall cooperate fully and promptly with requests by the IG for information and data; Ø DOE Notice 221. 7 • Alleged Criminal Violations Shall Be Reported to OIG, Office of Investigations • False Statements, False Claims, Bribery, Kickbacks, Fraud, Theft, Computer Crimes, Product substition/counterfeiting, Export violations, and Conspiracy to Commit Any of These Acts. • • Does Not Apply to Espionage (for reporting purposes) Does Not Necessarily Apply to Security Incidents 5

Investigative Outcomes q Criminal q Investigations are prosecuted criminally when guilt can be shown beyond a reasonable doubt (prison time, probation, fines, etc. ) q Civil q Requires a lesser degree of proof, a preponderance of the evidence (fines, penalties, etc. )

Investigative Outcomes q Administrative q Requires adequate evidence to show that a problem has occurred (disciplinary action, security clearance, fee reduction, etc. ) q Suspensions q & Debarments of Contractors These actions are not punitive but are taken to protect the interests of the Government – (taken by Agency counsel, prohibits any new financial relationship/assistance with any U. S. Government agency)

Investigation Types: • • Theft of Government Property • Bid Rigging Conspiracy • False Claims • False Statements • Defective Pricing • • Conflicts of Interest • Computer Crimes • Product Substitution /Counterfeit Parts Bribery Solicitation of Bribes Kickbacks Environmental Crimes Mail Fraud Wire Fraud Money Laundering

Qui Tam The False Claims Act (31 U. S. C. Sections 3729 -33): Allows a private individual or "whistleblower", with knowledge of past or present fraud on the federal government, to sue on behalf of the government to recover stiff civil penalties and triple damages. If the suit is successful, it not only stops the dishonest conduct, but also deters similar conduct by others and may result in the individual’s receipt of a substantial share of the government’s ultimate recovery – as much as 30 percent of the total. l Quitamonline. com

Hunt Valve Company Investigation Ø Joint investigation initiated with Defense Criminal Investigative Service based upon a qui tam complaint alleging that Hunt Valve of Salem, Ohio failed to comply with welding and nondestructive test requirements for valves manufactured under government contracts Ø OIG investigation found Hunt valves used by DOE in storage of depleted uranium hexafluoride at sites in Tennessee, Kentucky, and Ohio Ø OIG investigation determined that two key Defendants played pivotal roles in providing substandard valves to the government

Hunt Valve Company Investigation Hunt systematically failed to comply with contractually required drawing requirements and operated its quality program as a clearinghouse to hide improper manufacture and non-conforming product l Hunt manufacturing, inspection and quality personnel routinely fabricated records, falsely documenting both physical attributes and inspection/test results l Hunt certification clerks generated NDT test certifications with no evidence that the tests were performed or the parts passed because test certs were required for shipment and payment l

Hunt Valve Company Investigation Purchase orders to Hunt mandated stringent nuclear industry quality requirements l DOE paid for and relied on Hunt’s USECmonitored quality program l DOE unknowingly accepted substandard DUF 6 valves l NRC certified USEC gaseous diffusion operations l

Hunt Valve Company Investigation Defendant Wayne Aldrich, former Quality Assurance Manager at Hunt Valve, pleaded guilty to Title 18 Conspiracy charges and violations of NRC regulations. Wayne Aldrich was sentenced to 33 months in federal prison and ordered to pay $4, 177, 017. 15 in restitution.

Hunt Valve Company Investigation l Defendant Larry Kelly, former Vice President at Hunt Valve, pleaded guilty to Title 18 Conspiracy charges and violations of NRC regulations. l Larry Kelly was sentenced to 24 months incarceration and ordered to pay $4, 177, 017. 15 in restitution, jointly and severally with Wayne Aldrich. DOE Office of Inspector General 14

Hunt Valve Company Investigation DOJ formalized a qui tam settlement agreement between the relators and former DOE and Department of Defense prime contractors. The settlement was for $12. 6 million, of which the relators received over $3. 6 million.

How Do I Report? HOTLINE Phone: (800) 541 -1625 or (202) 586 -4073 Fax: (202) 586 -4902 Email: ighotline@hq. doe. gov Mail: U. S. Department of Energy Office of Inspector General ATTN: Hotline 1000 Independence Avenue, SW Mail Stop 5 A-235 Washington, DC 20585 16

OIG Rep Nearest You…. Pastephanie Bertrand, DC 202 -586 -3291. Loran De. Honney, Pittsburgh 412 -386 -6185. Louie Gomez, Albuquerque 505 -845 -6170. Tony Lewis, Chicago 630 -252 -2631 Chris Burris, Livermore, CA 925 -422 -2885 . Rebecca Freund, Las Vegas 702 -295 -0877. Ray Soske, Idaho & Wyoming 208 -526 -4227. Patrick Mc. Glinn, Richland, WA 509 -376 -8533. Steven Driver, Savannah River, SC 803 -725 -7323 18

Special Agent Laura Slatton Oak Ridge, TN Office 865 -574 -9827 slattonl@oigor. doe. gov DOE Office of Inspector General 19