Investigative Reports

OIG investigated allegations that an oil and gas company improperly claimed royalty suspension under the Deepwater Royalty Relief Act of 1995, and failed to pay mineral royalties associated with an offshore Federal lease.We determined the company was eligible for royalty relief but was required to pay royalties once it reached the royalty free production limit established for the Federal lease. We found the company failed to pay Federal royalties for a five-month period in 2015 after it exceeded its royalty suspension volume, but the company, without knowledge of our investigation or direction from the Office of Natural Resources Revenue (ONRR), self-corrected its royalty reporting and on February 6, 2017, paid approximately $194,974 in late royalties and over $8,000 in interest.

The OIG investigated allegations that a U.S. Bureau of Reclamation (USBR) contractor submitted a fraudulent claim for an equitable adjustment to a crane repair contract. The contractor allegedly altered cost submission documents submitted by the sub-contractor. We determined that the claim for equitable adjustment did not contain fraudulent information as alleged, and we confirmed that the sub-contractors cost submission documents submitted by the contractor were authentic.

The OIG investigated allegations that a National Park Service (NPS) senior manager purchased personal gifts with government funds, reprised against an employee, committed travel fraud, misused Government-owned vehicles, wasted training funds, improperly permitted park guests to lodge in a ranger station, and used her personal credit card to pay for lodging of park guests. We also investigated an alleged conflict of interest by a subordinate of the NPS senior manager.We substantiated several of the allegations, including that the senior manager used park funds to purchase two high valued items, valued at nearly $600, which could not be located or accounted for. We also confirmed the senior manager lowered the performance rating of an employee after concerns were reported related to the senior manager’s official travel. We further determined that the senior manager permitted visitors and park employees to lodge at a ranger station that was not approved as park housing. We also substantiated that the senior manager drove a Government vehicle to their private residence prior to official travel without the required written approval, and that the senior manager paid for a visitor’s lodging with personal funds and then claimed reimbursement from the Government. We did not find evidence that the senior manager committed travel fraud or wasted training funds as alleged.We also confirmed that a subordinate of the NPS senior manager improperly used park funds to purchase antiques from a family member, a violation of conflict of interest regulations.We referred this matter to the U.S. Attorney’s Office for the Western District of New York, which declined prosecution.

This Newsletter provides a bimonthly summary of selected investigative accomplishments.

OIG investigated allegations that a former Bureau of Indian Affairs (BIA) contracting employee had a conflict of interest involving a government contractor. We also investigated allegations that the employee had an inappropriate relationship with a second government contractor.Our investigation confirmed the allegations. The employee signed an agreement with a contractor to assist the contractor in obtaining government contracts in exchange for the employee receiving help to develop business on an Indian reservation. The employee denied the conflict of interest, however, the contractor provided us with the contract, which bore the employee’s signature.We further determined that the employee attended social functions and accepted at least one meal from the second government contractor, a prohibited source. The employee also failed to disclose multiple outside employment interests and income as required by government regulation.The employee left the Department. Prosecution was declined by the U.S. Attorney for the District of New Mexico.

OIG investigated allegations that a Bureau of Indian Affairs (BIA) employee improperly used a BIA purchase card to purchase speakers, headphones, and electronic tablets.Prior to any significant involvement by our office, we learned that BIA had already investigated the matter and confirmed that two employees inappropriately purchased and gave to colleagues eight headphones and two wireless speakers, totaling $2,931.92. One of the employees also used his personal funds to improperly purchase five tablet computers at a discounted rate through a BIA contract. Both employees involved in the purchases left the Department.Our investigation also found two supervisors were responsible for approving the purchase card purchases. One supervisor received a letter of reprimand, and the other was removed from Federal service. The United States Attorney’s Office for the District of South Dakota declined prosecution of this matter.

Four ticket agents resigned in February and March 2018, prior to their administrative hearings, for stealing money from their cash drawers at Amtrak’s Los Angeles Union Station. Our investigation determined that three of the employees would wait until train conductors electronically scanned passengers’ tickets and would then reset the ticket’s status as if it had not been scanned at all.

A former Amtrak Superintendent of Transportation at Chicago Union Station, Benjamin Sheets, was sentenced on February 27, 2018, in the Federal District Court of Northern Illinois after pleading guilty to making false statements to our agents in violation of 18 U.S.C. § 1001(a)(1).

We investigated allegations that a senior official with the U.S. Department of the Interior (DOI) made several comments that caused other DOI employees to question his ethics. He allegedly expressed his intent to assist two American Indian tribes he had worked with before becoming a DOI employee, encouraged subordinates to hire his former business associates and to arrange for the DOI to approve payment of the guarantee on a tribal loan he had been involved with before he came to the DOI, and asked a DOI employee to hire one of his relatives.We found that in the short time the senior official worked for the DOI, he made several comments that created an appearance to employees that he was planning to give preferential treatment to entities he had relationships with:• He told employees that he intended to continue assisting two tribes he had worked with before coming to the DOI. We found he assisted these tribes only once as a DOI employee, when he volunteered to schedule meetings for them with Secretary of the Interior Ryan Zinke.• He spoke to subordinates about hiring his former business associates and approving the loan guarantee payment. Although this did not violate regulations, his statements made his subordinates uncomfortable.• He asked a DOI employee to hire his relative. He claimed that his request had been meant as a joke, but the employee believed he had been serious.The senior official has left the DOI. We provided this report to the Deputy Secretary of the Interior for any action deemed appropriate.

OIG investigated allegations that an Office of Surface Mining Reclamation and Enforcement (OSMRE) employee stole government equipment and committed time and attendance fraud.We determined the employee stole two stereoscopes and a mapping tool from OSMRE and that the equipment was obsolete and valued at approximately $150. The employee admitted she had the items in her possession, and without authorization. She said she later donated the property to a charity. We did not substantiate the allegation of time and attendance fraud.The U.S. Attorney’s Office for the District of Colorado declined prosecution.

The OIG investigated allegations that Richard Ruggiero, Chief of the Division of International Conservation (DIC), International Affairs, U.S. Fish and Wildlife Service (FWS), may have violated Federal ethics regulations when he issued a cooperative agreement and was involved in two grants to nonprofit organizations with which a family member was associated.We found that Ruggiero violated Federal conflict of interest laws and regulations by participating in an FWS cooperative agreement that financially benefited his family member, and neither Ruggiero nor his family member disclosed their relationship in writing to the FWS. Ruggiero also shared nonpublic FWS information about the agreement with his family member. Ruggiero initially told us he did not participate in any decisions related to the agreement, but he later admitted his involvement and said he should have documented the potential conflict and recused himself from working on the agreement.Other FWS employees, to include one of Ruggiero’s senior employees, knew that Ruggiero’s family member was involved with the agreement, and that Ruggiero authorized additional funding to the agreement. The senior employee consulted with the FWS Ethics Office on behalf of Ruggiero, but failed to follow the guidance he received to have Ruggiero draft a recusal memorandum and submit it to the ethics office for review. Neither Ruggiero nor any of the other FWS employees reported the conflict of interest to the FWS Ethics Office.We also found that Ruggiero was a decision maker on other grants awarded by the FWS to organizations with which his family member was involved.We provided this report to the Acting FWS Director.

OIG investigated allegations that a former attorney-advisor for the U.S. Department of the Interior (DOI) Office of the Solicitor (SOL), may have violated post-employment restrictions by representing a DOI employee in her Equal Employment Opportunity complaint against the Bureau of Indian Affairs (BIA). The former attorney-advisor made a counter allegation that she was the subject of harassment by the SOL.We found no evidence the former attorney-advisor was involved in matters during her tenure at DOI that would have prohibited her from representing her client. We also determined the former attorney-advisor’s counter allegation was outside our investigative purview.

The Office of Inspector General (OIG) received an anonymous complaint alleging that Secretary of Veterans Affairs David Shulkin and other senior leaders misused VA funds by taking an official July 2017 trip to Europe for more personal than official activities. Secretary Shulkin traveled with a group that included senior VA leaders, his wife, and a six-member security detail. The 11-day trip included two extensive travel days and three-and-a-half days of official events—with a cost to VA of at least $122,334. The VA delegation had a day-and-a-half of meetings with Danish veterans’ healthcare officials and experts in Copenhagen and attended the Ministerial Summit on Veterans’ Affairs in London. Secretary Shulkin stated that he also worked on VA matters when there were no official functions. The group’s schedule, however, included significant time for preplanned tourist activities by Secretary Shulkin, his wife, and others on the delegation. After a thorough investigation, OIG’s findings included (1) the Chief of Staff’s alteration of a document and misrepresentations to ethics officials caused Secretary Shulkin’s wife to be approved as an “invitational traveler,” which authorized VA to pay her travel costs (although only airfare was claimed); (2) Secretary Shulkin improperly accepted a gift of Wimbledon tickets and related hospitality; (3) a VA employee’s time was misused as a personal travel concierge to plan tourist activities exceeding that necessary for security arrangements; and (4) travelers’ documentation was inadequate to determine the trip’s full costs to VA. The OIG did not assess the value of the trip to VA or determine whether the Europe travel, as conducted, was “essential,” per VA policy. The OIG made five recommendations to ensure reimbursement to VA by the travelers of all unallowable expenses incurred; redress of any VA employee misconduct; and retraining of VA personnel on ethics and travel policy matters.

We initiated an investigation after receiving an allegation that employees at Chicago Union Station wrongfully kept approximately $1,700 in cash that was turned in to the ticket counter to be processed as “lost and found.”

The OIG and the FBI jointly investigated allegations that two employees stole school funds from the Shonto Preparatory School (SPS) in Arizona, which is funded by grants from the Bureau of Indian Education.The investigation determined that former SPS Business Manager Felicia Barlow stole $20,430.87 by fraudulently obtaining three SPS checks. Barlow pled guilty to one count in violation of 18 U.S.C. § 1163, Embezzlement and theft from Indian tribal organizations, in U.S. District Court for the District of Arizona, and was sentenced to 2 years of probation and ordered to pay $20,430.87 in restitution. A second SPS employee was not charged.

OIG investigated allegations that the United Mine Workers of America Health and Retirement Funds (UMWAF) was not adhering to Federal law and regulations concerning three federally supported health benefit plans. According to the allegations, the UMWAF enrolled beneficiaries in the combined benefit fund (CBF) after the enrollment cutoff date and inflated the beneficiary numbers by retaining deceased beneficiaries in its records. The UMWAF reportedly also provided legal advice to a coal company during bankruptcy proceedings and failed to pursue recovery of other coal companies’ delinquent benefit plan premiums. Lastly, the UMWAF allegedly falsified enrollment documents so that beneficiaries would qualify for Federal support.We found that the UMWAF enrolled 1,909 beneficiaries into the CBF after the enrollment cutoff date and paid this population an estimated $96 million in benefits. After we initiated our investigation, however, the DOI Office of the Solicitor concluded that there was conflicting authority on this issue. The Office of Surface Mining Reclamation and Enforcement (OSMRE) will review beneficiary lists with this in mind before completing the fiscal year 2018 transfer requests. We could not determine if the UMWAF inflated beneficiary numbers by retaining deceased beneficiaries, because it did not provide detailed lists to the Government during funding requests.We also found no evidence that the UMWAF provided legal advice to a coal company during its bankruptcy proceedings, that the UMWAF failed to pursue delinquent coal operator premiums, and that the UMWAF falsified enrollment documents. We presented our findings to the U.S. Attorney’s Office for the District of Columbia, which declined prosecution.

OIG investigated allegations that an employee at the Office of the Special Trustee for American Indians (OST) lied about her cancer diagnosis, forged medical records, falsified documents, and abused her own sick leave and leave donated by coworkers.Our investigation confirmed the allegations. We found no evidence that the OST employee had been diagnosed with cancer or that she received medical care for cancer as she claimed. On 15 occasions, the employee submitted physicians’ notes to OST containing forged signatures from 5 separate medical providers. As a result of the falsified physicians’ notes, the employee was authorized 256 hours of her own sick leave and received 28 hours of donated leave from her coworkers.The employee left the Department before we issued our report.

The OIG investigated allegations that the Bureau of Land Management’s (BLM’s) Wyoming State Office (WYSO) had entered into an unneeded contract for oil-and-gas-record digitization services, had improperly selected the contractor, and had improperly carried the funds for the digitization project across fiscal years. We also investigated an allegation that WYSO had not received proper compensation for record copying and other clerical services it had performed for an oil and gas company.Our investigation did not substantiate these allegations. The BLM Washington (DC) Office had encouraged WYSO and other state offices to identify high-value records, which included WYSO’s oil and gas records, and to begin digitizing them to improve record retention and reduce costs for storing physical records. WYSO used a contractor that was competitively selected by the U.S. Government Publishing Office to provide scanning and digitization services to multiple Federal agencies. We confirmed that WYSO had carried funds used for this project across fiscal years, but we learned that it had the authority to do so and used the appropriate financial mechanism. We also confirmed that WYSO was paid for the copies and the other services it provided to the oil and gas company.

OIG investigated discrepancies identified after the National Park Service (NPS) conducted an electronic audit of the fee collection software at the Petrified Forest National Park (PEFO), located in eastern Arizona, which compared cash collected at the park with cash deposits made into the bank.Our investigation determined that from approximately 2010 through March 2016, Sharon Baldwin, Supervisory Visitor Use Assistant, exploited vulnerabilities in the NPS remittance process at PEFO and stole approximately $313,000 in fees collected at the park. Baldwin pled guilty in Federal court in AZ to violating Title 18 U.S.C. § 641, theft of Government money, and was sentenced to one year and one day in prison and ordered to pay $313,000 in restitution to PEFO.We also found that the PEFO staff who assisted Baldwin with the cash counts were never formally trained on the NPS remittance process and relied on the training given to them by Baldwin, which contributed to Baldwin’s scheme remaining undetected for several years.