Rising infrastructure money could incite fraud, DOJ review

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President Joe Biden celebrated the passage of the $ 1.2 trillion infrastructure investment and jobs law, proclaiming the package to be a “blueprint for rebuilding America.” As with other federal funding programs, this bill will increase white collar enforcement affecting many sectors and industries.

Whenever significant federal funding enters the economy, fraud ensues. The many sectors and areas of application implied by the new law mean that companies must review and, if necessary, revamp their corporate compliance policies in line with this and other existing Justice Department guidelines.

Businesses and individuals should be mindful of scrutinizing the areas below such as procurement, bid rigging, energy pricing, taxation and financing, etc.

Supply

The Department of Justice announced a Procurement Collusion Strike Force, an interagency partnership to investigate and prosecute antitrust crimes and related programs that target government procurement, grants and program funding at all levels of government.

The Anti-Fraud Section of the Department of Justice’s Criminal Division, the Antitrust Division and strategically located U.S. Attorney’s Offices will team up to investigate waste, fraud and misuse of supply as dollars grow. infrastructure is pouring into the system.

Bid-rigging and anti-competitive conduct

The new infrastructure law will inevitably lead to competitive tendering for construction and service contracts in various industries. The government will take increased enforcement action to ensure that the competitive process is administered fairly. Activities related to collusion, bid rigging and market sharing will remain a top priority for DOJ.

The new law invests $ 21 billion to clean up Superfund and Brownfield sites, reclaim abandoned mining lands and cover orphaned oil and gas wells. The Department of Justice’s Environmental Crimes Section has 43 dedicated prosecutors who prosecute individuals and organizations to enforce environmental crimes and will ensure the appropriate use of the increased funds.

Energy pricing and market manipulation

Improving the country’s energy infrastructure is a centerpiece of the new law. Energy pricing and market manipulation will also be important areas of application. According to recent reports, DOJ is investigating energy price benchmarks released by S&P Global Platts, targeting the alleged manipulation of transaction prices provided by individual traders.

Federal investigators are focusing on alleged wrongdoing by traders by submitting transaction prices to calculate oil and energy benchmarks. By providing fraudulent information to Platts, traders attempted to influence S&P Global’s daily market price for energy industry commodities and profits on subsequent trade. Similar inquiries can be expected as infrastructure funds pour into the energy sector.

Tax crimes and the misuse of federal funds

Funding for the new law will include tax exemptions and credits, as well as other incentive mechanisms. In addition, as with other recent programs, there will be accounting and reporting requirements.

The Criminal Taxation Division of the Department of Justice (with assistance from the Criminal Investigation Division of the IRS and the Inspector General of the Treasury for Tax Administration) manages or oversees most tax investigations and prosecutions criminal acts involving individuals and corporations attempting to evade tax, willfully fail to file returns, submit false tax forms, or attempt to defraud taxpayers in any other way. The division is likely to be a key partner in the Justice Department’s efforts to uphold the integrity of infrastructure funds and related reporting.

Financial fraud and the integrity of federal funds

Following the implementation of the Coronavirus Aid, Relief and Economic Security Act (CARES Act), the DOJ has aggressively investigated and pursued malfeasance regarding the Check Protection Program of payroll and loans for economic disasters in coordination with the Special Inspector General for Pandemic Relief.

Inspectors General of the Ministries of Commerce, Energy, Interior, Homeland Security, Treasury and others will take on increased roles to ensure that the law is administered with integrity and efficiency.

Public corruption

Many provisions of the infrastructure law will require companies to interact with local, state and federal public authorities on a myriad of issues. Businesses should proceed with caution and educate themselves on how campaign finance and contribution laws may be involved. Mere appearances of impropriety can lead to costly investigations.

Cybersecurity and resilience

The law will provide direct funding, grants, incentives and technical assistance to promote cyber resilience within various critical infrastructure industries. The DOJ recently announced its intention to use the False Claims Act to prosecute cybersecurity-related fraud by government contractors, contractors and grant recipients.

Deputy Attorney General Lisa Monaco noted the DOJ will seek to “extract very hefty fines” against companies that fail to report security breaches and use the false claims law to tackle “cybersecurity fraud” by contractors. government.

Given the law’s lofty cybersecurity enhancement goals, federal contractors, subcontractors, and grant recipients should be mindful of cybersecurity requirements in their contracts, the Federal Acquisition Regulations, the Defense Federal Acquisition Regulations Supplement. and all required certifications. As always, they should seek advice in the event of potential cyber incidents such as data breaches or ransomware attacks.

GM Priorities: Compliance

On October 28, at the 36th National Institute on White Collar Crime of the American Bar Association, Monaco announced several Department of Justice priorities and policies on corporate criminal law enforcement, summarized as follows:

  • Companies should actively review their compliance programs to ensure that they are adequately monitoring and remedying faults.
  • For clients facing investigations, the department will review their entire criminal, civil and regulatory record, not just part of that record.
  • Clients who cooperate with the government should identify all those involved in the misconduct – not just those who are substantially involved – and produce all non-privileged information about their involvement.
  • For clients negotiating resolutions, there is no presumption by default against corporate monitors; it’s a case-by-case decision.

Monaco declared: “Looking to the future, this is the beginning (and not the end) of the actions of this administration to better fight against corporate crime. “

This column does not necessarily reflect the opinion of the Bureau of National Affairs, Inc. or its owners.

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Author Info

Luke Cass, Womble Bond partner Dickinson in Washington, DC, defends businesses and individuals in federal criminal allegations including healthcare fraud, conspiracy, mail and email fraud, embezzlement, embezzlement, bank fraud and money laundering. Previously, he was Senior Counsel with the Public Integrity Section of the Criminal Division of the Ministry of Justice.

Joe d whitley, a partner of Womble Bond in Atlanta, represents clients in white-collar matters, including internal company investigations, regulatory enforcement, the Foreign Corrupt Practices Act, and FDA-related matters. He has held several senior positions within the DOJ and the Department of Homeland Security.

Brett Switzer, an associate at Womble Bond in Atlanta, focuses on complex civil and criminal defense work in federal government enforcement and investigative contexts.

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