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The Department of Waste, Fraud and Abuse
WASTE, FRAUD, ABUSE AND THEFT
"$1.9 million of education funds meant for children who live on Indian reservations and military bases was stolen from the U.S. Department of Education and diverted to two bank accounts. Withdrawals made in the form of cashiers checks were used to purchase a $49,900 Cadillac Escalade, a $50,000 Lincoln, and a $135,000 house in Maryland. The rest of the money was then moved into other bank accounts."
WASTE, FRAUD, and ABUSE at DEPARTMENT OF EDUCATION
"The U.S. Department of Education was last year declared "inauditable" by auditors"
Cooking The Books At Education
Accuracy in Media
Cliff Kincaid
June 9, 2001
In Washington, during congressional debate over President Bush's "Leave no child behind" education initiative, Republicans have been arguing for an increase of 11 percent in spending by the Department of Education, while Democrats have been arguing for a 35-50 percent increase. The department currently operates on a budget of $44.5 billion a year. But the sad truth, which has escaped the attention of most of the major media, is that there is no real guarantee that any of this money will actually get to the students that may need it. This is because the Department of Education has been so mismanaged that it can't account for the money it is spending.
The amount of missing, mismanaged or stolen money reaches $6 billion. Outright looting and embezzlement of Education Department funds by agency officials in the Clinton administration cannot be ruled out, as there was no security over the obligation and disbursement of federal funds. Officials of the agency may have conspired to "cook the books" and spend more money than Congress had appropriated. This would be a violation of the federal anti-deficiency act, which bars federal agencies from disbursing more funds than authorized by Congress.
Stories about government waste, fraud and abuse are common, but the scandal at the Department of Education has reached a new and unprecedented level. This is an agency out of control. Yet the story remains largely untold. Recognizing the dimensions of the problem, Rep. Charles Norwood of Georgia has suggested the department be shut down until the problems are solved.
Revelations of the limited investigations conducted so far include 21 Department of Education employees who wrote a total of 19,000 checks in one year, without getting approval from any other official, totaling $23 million; employees using agency credit cards to buy items such as computers, software, cell phones and Internet service that may have been diverted to personal use; and $1.9 million of Department of Education grants intended for two school districts in South Dakota diverted to buy real estate and luxury sport utility vehicles.
Ignoring a Whistleblower
At a recent background briefing in Washington, D.C., a member of the leadership of the House of Representatives was asked about the case of John Gard, the whistleblower from the Department of Education who has sparked the numerous investigations into the department's finances. The congressman had never heard of Gard. He was also not aware that the Department of Education had failed three straight audits and that the new secretary of education, Rod Paige, has expressed the hope that it may be able to pass an audit in about 18 months.
This is the agency that Congress and the administration plan to give billions more dollars. It makes no sense.
John Gard has not sought the attention of the media. However, this is no excuse for ignoring his sensational charges, which have been the subject of congressional hearings and an Office of Special Counsel (OSC) investigation. The OSC determined that his allegations of "gross mismanagement" to the tune of billions of dollars are true. When the OSC report was issued on Jan. 31, the Associated Press ran a good story about Gard and some of his charges. But it was published back on page 21 of the Washington Post. This is typical of how the agency's problems have been covered.
Whistleblower Talks to AIM
Gard was recently interviewed by Accuracy in Media, which has championed the cause of whistleblowers in the federal government. As damning as the OSC report was, Gard said it amounted to a whitewash because it failed to reveal the extent of the corruption.
He told a harrowing story of how he battled to expose waste, fraud and abuse in the department only to be made the target of reprisal and retaliation, eventually being escorted from agency property by armed federal security guards.
Gard was a systems accountant in the Office of the Chief Financial Officer. He exposed serious problems in the department's Grants Administration and Payment System (GAPS), under which dozens of agency employees were potentially able to funnel education department funds to their personal bank accounts or their friends and associates without being caught. The system was such that it was impossible for the department to monitor who was tapping into the money and how much was being diverted.
It may be a stretch to say that all $6 billion was funneled out of the department in this way. Some may have been wasted or mismanaged. On the other hand, Gard asks the central question, "Where did the money go?" The system was so open to abuse that it may be impossible to determine how much money was stolen and by whom.
In one sensational incident, Gard found unsecured checks lying on top of an employee's desk and reported the matter to the Office of the Inspector General of the department. These checks could have been cashed by the employee for personal use.
For blowing the whistle, Gard said he was attacked by the then-chief financial officer, Donald Rappaport, as a "spy" who could not be trusted.
In a filing with the OSC, which is part of the public record in the case, Gard's lawyers also say that agency employees who helped cover up the agency's "mismanagement, waste of funds and potential fraud activity" were rewarded with "enhanced job assignments, promotions, awards, recognition or enhanced office space."
Gard said his concern all along has been that the agency obey the laws of the United States. He believes agency employees have violated several federal laws on financial record keeping and other related matters.
He is still being paid, but he has no assigned duties. He spent most of his time on his lawsuit against the department. He is willing to return to the department under the Bush administration and try to help solve the problems which have plagued the agency. But his offer to do so has been ignored.
Gard emphasizes that he is not advocating the elimination of the department but wants to see the funds that are disbursed recorded properly and accounted for. He has said, however, that the problems are so large that the department should be placed under the supervision of a special master appointed by a federal court or put into receivership. This has been done in the past with grossly mismanaged agencies of the Washington, D.C. city government.
Paige Turns the Page
The corruption problem is so massive that Secretary Paige was forced to hold a press conference on April 20 specifically on fraud and mismanagement in the department. Putting a happy face on the problem, it was at this event that he said his hope was that the agency could pass an audit in 18 months.
Paige also announced that Deputy Secretary-designate Bill Hansen and Undersecretary-designate Gene Hickok would head a reform effort. Hansen has been approached by one of Gard's lawyers about Gard helping try to clean up the mess. Gard said he hasn't heard anything back from Hansen.
At the press conference, Paige suggested the problem in the agency involved the mismanagement or loss of only $450 million, and that $250 million of that had been recovered. The $450 million figure was put forward at an April 3 congressional hearing, where the agency's inspector general testified.
The hearing was covered by the Associated Press, the Washington Times on page 6, and the Washington Post back on page 21. This event also featured a discussion of the agency's failure to pass three consecutive audits. However, the evening news programs of the three major networks completely ignored the hearing.
But Gard emphasizes that this $450 million figure is far too low. The AP and the Washington Post have noted a discrepancy with the Department of Treasury's accounting of what the Department of Education has spent that amounts to $6 billion over the last three years under Secretary Richard W. Riley.
Gard believes this is a more accurate figure reflecting the true amount of how much money is missing or unaccounted for. Again, this is because there was no security over the disbursement of federal funds when the agency implemented GAPS. Gard says that, despite the change in administrations, there's still a reluctance to tell the American people about the full extent of the problem because both major parties want to spend more on education.
Officials at Paige's news conference claimed that financial problems are going to be addressed through the installation of a new software program, Oracle Federal Financials. Gard told us that this would not solve the GAPS disbursement and security problems.
Gard said the Oracle software may resolve some accounting problems if it is installed correctly. He said he knew of one federal agency that had used it properly. Ironically, it had been installed at the Corporation for National Service by one of his former associates at the Department of Education, after he had been relieved of his duties. The Department of Education has been without a chief financial officer for two years and it is apparent that the agency has had a very difficult time finding a new one. The agency has been without an assistant secretary for management for five years. This suggests the problems are simply too large to be addressed and that the agency may not be salvageable.
Honor Gard
President Bush has called upon federal employees to "disclose waste, fraud, abuse and corruption to the appropriate authorities." Gard did just that and has suffered for it. He is suing the Department of Education.
Gard should be compensated for the damage to his career. President Bush should restore Gard to his previous position or even promote him. If Secretary Paige wants to make sure that Department of Education money is used to "teach children," he should take the initiative himself and immediately put Gard back to work.
But Gard's name was never raised during Paige's news conference. That's a strange way of encouraging employers to expose corruption. Yet, without Gard back at the department, it will be hard to have any confidence that the financial problems will be solved.
The only reporter at the press conference who seemed familiar with the extent of the corruption was George Archibald of the Washington Times, who produced a page two story for that paper. Archibald has an understanding of the agency, having worked there under the president, Ronald Reagan, who wanted to abolish it.
Figure 3
Number of Public School Districts, 1945-94
The Pentagon needed some competition.