March, 2019
Washington -- “It shouldn’t be this easy to defraud the Department of Education.”
That was the last line of a New York Times article about how some $13 million of federal taxpayer money is missing in the collapse of Argosy University. The money was intended for students but used for other purposes by the for-profit college.
Oh, but it is easy to defraud. I've worked at the Department and can attest to how easy it is. I've also sued those who defrauded the Department and won settlements getting some of the money back. My files are full of information, most* of it public, as to how fraud happens and who has been doing it, by name.
• One way is to get someone from your organization or industry appointed to a high position in the department, then count on her or him to deliver on key decisions. There are laws against conflicts of interest, under which such appointees are to recuse themselves from decisions that help their former employers or industries, but they are often unenforced.
• Another way is to get inside information from friends in the Department who will give you advice on upcoming audit schedules and how to adjust your books to thwart the auditors.
• If there is a legal question, don't ask the Department if you are afraid of the answer. Hire your Washington lobbyist to give you a legal opinion and act on that. Before doing so, ask a friend in the Department "off the record" as to what the answer would be, so you can act accordingly.
• If necessary, just lie and count on the fact that perjury will not get you into trouble.
• Develop and execute a plan to take advantage of Department employees who might be fooled into approving something big by making it appear small, or by thanking them for a decision never made to see if the Department catches it.
All of the above examples are taken from actual incidents, for which there are written records. The sum of these frauds is in the hundreds of millions of dollars.
Recently, House committees and subcommittees have been looking into problems in programs under the Higher Education Act. In the hearings, the focus is on policy changes to avert future problems, not catching the miscreants who have committed the fraud. Often it is observed at such hearings that at the Department "the foxes are guarding the henhouse" but no effort is made by Congress to insist on catching the foxes.
It shouldn't be this easy to defraud the Department of Education, but it is.
________________________
*Some is confidential and cannot be disclosed.
