PHILADELPHIA - U.S. Attorney William M. McSwain was honored to speak yesterday at the conference of the NASA Office of Inspector General in Philadelphia, Pennsylvania. U.S. Attorney McSwain’s remarks are below.
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Thank you very much to Inspector General Paul Martin and the entire NASA OIG for inviting me to speak here today. It is truly an honor to join you.
I am blessed that the U.S. Attorney’s Office is filled with skilled, experienced prosecutors who want nothing more than to serve the public and do justice. But no Assistant U.S. Attorney can win a case without the help of an outstanding law enforcement partner. We are very thankful for our relationship with NASA OIG, and I am here today for two reasons: first, to express my appreciation for the work you do and, second, to talk about how we can build on our existing partnership and continue to do great things together.
Many federal, state, and local agencies work with our Office in the Criminal Division or the Civil Division, depending on the subject of their work and investigations. One attractive aspect of working with NASA is that you all are able to work equally well with both divisions of our Office, depending on the case, and you are able to achieve stellar results in both spheres.
Over the years, we have had a number of successful criminal prosecutions together. In one recent high-profile matter, United States v. Chaka Fattah, former Congressman Fattah misused NASA grant funds to help retire some of his campaign debt. NASA OIG assisted in this investigation, and Special Agent Michele Batignani testified at trial. With her great work, along with the work of AUSAs Paul Gray, Eric Gibson, and many other law enforcement partners, Fattah was convicted and is currently serving a sentence of 10 years in prison.
In another significant matter, United States v. Ding and Zotova, a Lehigh University professor (Mr. Ding) and his wife submitted proposals to NASA, seeking funding for scientific research. The defendants’ proposals claimed they would conduct the research at their business, ArkLight, and would subcontract some of the work to Lehigh, where Ding was employed as a professor. Instead, the defendants used ArkLight as a front to funnel federal grant money to themselves for research performed by students and others working under Ding’s supervision at his university lab. Defendants held Zotova (Ding’s wife) out to NASA as the “principal investigator," but she never did any work on the contracts at issue. Special Agent Erik Saracino brought this case to our Office. It was initially a case that our Civil and Criminal Divisions worked together, but that our Criminal Division ultimately pursued. AUSA Greg David, now our Civil Division Chief - and a former NASA intern I might add - was cross-designated as a criminal AUSA to bring this case to trial with AUSA Liz Abrams. Thanks to the dedicated work of Special Agent Saracino and AUSAs David and Abrams, after a two-week jury trial, the jury convicted the defendants of six counts of wire fraud. Both were sentenced to time in prison.
Our Office has also had success working with NASA on the civil side. For example, in 2014, Thermacore, Inc. agreed to pay $965,000 to resolve False Claims Act allegations. Thermacore submitted essentially identical proposals to perform the same work to NASA and the Air Force under the Small Business Innovation Research (SBIR) program. It was awarded both and received payment under both contracts. Essentially equivalent research may not be funded by more than one agency and submissions under the SBIR Program must be certified as being non-duplicative. Under the SBIR Program, therefore, it is unlawful to receive funding for essentially equivalent work already funded under any government program or to falsely certify that work is non-duplicative. AUSA Veronica Finkelstein and Special Agent Erik Saracino worked to bring a fair and just result in this case.
I want to continue our strong partnership and continue to bring cases together in both the criminal and civil arenas. In my first few months as U.S. Attorney, we reorganized some parts of the Office. One of the most important things we did was to form the Affirmative Civil Enforcement Strike Force in our Civil Division. The ACE Strike Force, as it is more commonly known, will investigate and, when necessary, file lawsuits to prosecute fraud and abuse against government programs. It will work closely with criminal prosecutors to coordinate civil and criminal investigations where appropriate. The ACE Strike Force will investigate cases arising from a number of sources, including those brought under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. We have always had a deep bench of talented civil attorneys who all contribute to the successful prosecution of affirmative civil enforcement and will continue to do so. But with the ACE Strike Force, we will now have additional firepower to focus on these critical matters, including those brought to us by NASA OIG.
So how can we continue to bring strong cases together? Much of it comes down to maintaining open lines of communication. But it also helps to keep in mind some general considerations about how we evaluate agency referrals at the intake stage.
The first thing to keep in mind when you present cases to our Office is that we are open to exploring both criminal and civil proceedings in any given case, and we consider a range of cases-from the smaller, simpler cases to the most complex of fraud schemes. We have many tools at our disposal to stamp out fraud; the case may be appropriate for criminal investigation, civil investigation under the False Claims Act, or investigation by both divisions “in parallel" proceedings.
Along those lines, we have no minimum or threshold loss amount. We will consider any case that fits within the federal statute in play, and we understand that the deterrent impact of bringing a smaller case can be very important to an agency partner. We will take that into consideration in making a charging decision. At the same time, our Office is capable of handling the most complex white collar cases, and what we often find is that when agencies identify smaller-types of violations of agency protocol or low-level criminal conduct, it can lead to discovering other, more significant criminal conduct by the same people at the same time.
So the first takeaway here is that no case is too small to bring to our attention, and we will determine, in each case, whether the civil enforcement or criminal charging route is appropriate.
The second thing to keep in mind as you evaluate matters is related to the first point - you should consider the wide variety of different types of behavior that could potentially fall within the purview of fraud. Remember that fraud comes in many forms, limited only by the creativity (or lack thereof) of the fraudsters involved. So the fraud at issue could involve grant fraud or procurement fraud, but it just as easily could involve employee embezzlement of funds or employee theft of government property, including intellectual property.
And in any type of case, the key for us, at the intake stage, is to distinguish innocent behavior or mistakes from actions undertaken with a criminal intent to defraud. In general, investigations should center around uncovering false statements or misappropriations that demonstrate intent. For example, in cases involving procurement fraud, we might look for whether the same vendor continually wins bids. We also might look for a series of revisions to contracts’ technical specifications so only one vendor is in a position to provide those particular items. These are just a couple of examples of the types of evidence of fraud that we look for in distinguishing innocent behavior from intentionally fraudulent conduct.
So the second takeaway here is to keep an open mind in assessing matters and to look for evidence that can be viewed as establishing fraud either directly or circumstantially.
Third, though we want you to bring us all types of cases, it is equally true that cases involving a “plus factor" are of particular interest to my Office. And by “plus factor," I mean that there is some substantial harm to a third party, or conduct that is particularly egregious and ongoing. So, for example, if you discover fraudulent conduct that, in turn, could raise safety concerns that impact third parties, as can happen when there is fraud that affects the validity of data or scientific research that others are relying upon, that sort of conduct is particularly concerning. Also, a long-standing pattern of fraud or abuse is often worthy of scrutiny.
And finally, in terms of what you, as agents, can do, it is important to know that there is a tremendous benefit to proactive agency intervention. We saw that in the Thermacore investigation. That investigation was prompted by NASA’s initiative to identify potential fraud in its SBIR contracts. But even beyond audit activities, it is important to be alert to the various additional sources of useful information to build a case, including tips from outside resources and employee exit interviews - to name just two potential sources of information.
In sum, my Office is proud of our past work with you, and we are excited about our future collaboration. Thank you for your partnership, and again, thank you for having me here today.
Source: U.S. Department of Justice, Office of the United States Attorneys
