Editor's note: This is the first part of an op-ed from Charles D. Stake.
For Guam taxpayers to get their money’s worth and for the democratic process to function properly, public money with a designated purpose must be used as intended. Otherwise, the intent of those we elected to represent our interests is subverted. We suffer the consequences with a less safe environment when Department of Transportation federal highway funds and Federal Communications Commission emergency 911 funds are not used for the intended purpose. Too often long-term planning to build a future with a strong, safe infrastructure takes second place to the pet project of the moment. We end up dealing with never-ending bureaucratic brush fires rather than better, safer highways. History tells us this recurrent problem will continue until it is adequately addressed.
When the misused public funds happen to be federal, there is more than adequate expertise, manpower and sanctions available to deal with the matter. There is a plethora of criminal and civil remedies. Federal statutory coverage is comprehensive and basically blankets the entire area. Sanctions range from an admonition and closer supervision, to returning the misused funds, to cutting off future funding and termination of the grantee, to civil monetary penalties, and finally criminal prosecution. Most large agencies including the DOT and FCC have an Office of Inspector General attached to them by Congress as a watchdog over their grants and other spending. OIGs are authorized to conduct audits, conduct investigations and make referrals to the Department of Justice. OIGs initiate investigations based on audit results and their detailed specialized knowledge of their own agency’s statutes and regulations. In serious cases, OIG specialists work with the generalists of the FBI to bring a developed case to a U.S. Attorney Office for prosecution.
Significant tools in dealing with misuse of federal funds include the criminal and civil false claims statutes. Since grants and funds often come with restrictions on how the money may be used, misuse of funds or failure to properly account for them may incur liability under the criminal or civil False Claims Act. The False Claims Act makes it illegal to defraud a government program by providing fraudulent bills, i.e. “claims" or making false statements about fraudulent bills. It also encourages people who come forward to report fraud with a whistleblower provision. The whistleblower may receive part of the recovered damages and is also protected by law from job loss. The federal False Claims Act and other civil and criminal fraud remedies were discussed in detail in a Guam Bar Seminar published on the web as “Guam Bar 6-29-11 Procurement Seminar.” The criminal False Claims Act provides for imprisonment up to five years and a fine each time a false, fictitious or fraudulent claim is knowingly submitted.
The civil False Claims Act provides a monetary penalty of three times the amount falsely claimed. Both acts provide a serious deterrent. The criminal act is used when fraudulent intent is clearly demonstrable. The civil False Claims Act is used when fraudulent intent is less demonstrable, but still present. In addition to the False Claims Act, federal protection against misuse of funds includes the false official statements statute, the anti-kickback statute, and the broader theft of public money property or records statute which can be found at 18 U.S. Code 641.
Charles D. Stake, a retired federal attorney, is a Barrigada resident.