The Proposed Program Fraud Civil Penalties Act

Gao ID: 118070 April 1, 1982

In a testimony before a congressional committee, the Special Assistant to the Comptroller General noted that fraud in government operations and programs can undermine the integrity of the federal government and, under the present system, individuals can commit fraud against the government with little or no fear of federal reprisal. S. 1780 would provide agencies with a mechanism to impose civil penalties against those who knowingly make false claims or statements for money, property, or services provided by the federal government. The bill would strengthen the government's ability to recover funds lost due to fraud and, if aggressively implemented, its penalty provisions should serve as a deterrent to the commission of fraud. With its present limited resources, the Justice Department is forced to prosecute only those cases which it perceives to be of greatest importance. Therefore, it is important that federal agencies be authorized to levy civil money penalties and assessments in those cases which Justice elects not to prosecute. However, GAO believes that S. 1780 should be clarified to: (1) indicate that the military departments are included in its provisions; and (2) show that the term "consequential damages" covers all costs incurred by the government, including such items as the cost of any administrative expenses incurred in documenting a false claim or statement. GAO also stated that the waiting period after the Attorney General declines to take action and before the agency head initiates proceedings should be shortened to about 60 days. A major element in the fight against fraud is the strengthening of agency internal control systems to make fraud difficult to perpetrate.

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