Fraud in Government Programs

GAO reported on the results of a statistical analysis of fraud and other illegal activities affecting 21 Federal agencies which was undertaken to respond to growing public concern over abuses and misuses of taxpayers' money.

Thefts accounted for almost half of the fraud cases, and false statements accounted for another 25 percent. The rest of the cases covered a wide variety of fraudulent activities including extortion, forgery, kickbacks or bribes, and nonperformance of contract terms. Items were stolen from Government buildings and installations as well as contractor plants. False statements were made in obtaining Federal assistance or benefits under many different Federal programs. About 55 percent of the known fraud cases occurred in the civil agencies, and the remaining 45 percent occurred in defense agencies. However, the total cost of fraud will never be known because of the difficulty in estimating the monetary losses caused by undetected fraud. Federal employees discovered over one-third of the frauds during the course of their normal day-to-day activities. Another 20 percent were discovered through compliance or eligibility reviews. Individuals were prosecuted in only 11.7 percent of the cases in which suspects were identified. The most common administrative actions taken against Federal employees who committed fraud were the establishment of a formal loss recovery plan and dismissal. In cases involving non-Government organizations and individuals, there were attempts to recover the loss and the issuance of warning letters. The Department of Justice was successful in 95 percent of the cases that it prosecuted. However, the courts often suspended large portions of sentences or granted probation.