Investigative Reports

Ryan Kane, a resident of Pennsylvania, was sentenced in U.S. District Court, Northern District of Illinois, to time served, three years supervised release, and a $100 special assessment for his part in an Amtrak ticket fraud scheme. As part of his sentence, Kane was ordered to pay $124,544 in restitution; $35,000 of which is owed solely by Kane and $89,544 of which is owed jointly with co-conspirator Christian Newby. As a condition of his release, Kane was sentenced to 12 months of home detention with electronic monitoring. Kane previously pleaded guilty to theft of government funds after our investigation found that he participated in a scheme to defraud Amtrak and others by using stolen credit card information from more than 10 credit cards to purchase Amtrak tickets online.

The OIG investigated allegations that a Bureau of Indian Education (BIE) superintendent and one of the superintendent’s coworkers influenced the award of a subcontract on a BIE contract to a business owned by a family member of the superintendent. We also investigated allegations that the superintendent instructed other BIE employees to perform work for the family member’s business while on duty.We found no evidence the superintendent directly influenced the award of the contract because we found no evidence that the prime contractor had substantive contact with the superintendent before selecting subcontractors. We did find, however, that the superintendent’s coworker included the family member’s company on a list of recommended subcontractors sent to the prime contractor, which violated standing guidance. This failure may have contributed to an appearance of improper influence.We confirmed that BIE employees assisted subcontractors with tasks at the project site but did not find evidence that, in allowing this, the superintendent’s position was misused to benefit the family member’s business.

The OIG conducted a joint investigation with the U.S. Department of Transportation’s Office of Inspector General into allegations that a tribal transportation consortium fraudulently received more than $9 million between 2012 and 2015 by collecting Bureau of Indian Affairs (BIA) Roads Funds for tribes no longer affiliated with the consortium.We did not substantiate the allegations. We identified 24 tribes that were members of the consortium, and none of the representatives we spoke to corroborated the allegations. None of the representatives from tribes that had withdrawn from the consortium provided evidence that the consortium continued to collect their tribe’s BIA Roads Funds after they left.The consortium is a defunct entity and has not received BIA Roads Funds since 2015.

The OIG investigated allegations that a service-disabled veteran-owned small business (SDVOSB) acted as a pass-through entity to enable another company to obtain SDVOSB contracts that it was not eligible to receive. It was further alleged that the veteran identified as the SDVOSB’s owner had little or no involvement in the day-to-day operation of the SDVOSB.We found that the SDVOSB and the other company used the SDVOSB’s status to obtain approximately $3.5 million in U.S. Department of the Interior (DOI) SDVOSB contracts, which the other company would not otherwise have been eligible to receive. The SDVOSB shared the large company’s office space, support services, and staff, which were in Arizona, even though the SDVOSB was based outside of Arizona. Further, both the SDVOSB and the other company registered or updated System of Award Management profile records on the same days, using the same unique IP address. We also found no evidence that the SDVOSB’s veteran owner, who resided outside of Arizona, was involved in the day-to-day operations of the SDVOSB, even though this is a requirement to receive SDVOSB status.The U.S. Attorney’s Office for the Southern District of Arizona declined both criminal and civil prosecution of this matter. We have referred both the SDVOSB and the other company to our Administrative Remedies Division for consideration of suspension or debarment.

The Office of Inspector General (OIG) opened this review in March 2019 after receiving a congressional request to examine alleged delays in the disbursement of approximately $20 billion of disaster recovery and mitigation funds appropriated for Puerto Rico following Hurricanes Irma and Maria. Our review examined the decisions and actions of U.S. Department of Housing and Urban Development (HUD or Department) officials that affected the timing of HUD’s release of three tranches of funds intended to address Puerto Rico’s unmet needs for repairs and mitigation efforts. We examined (1) the effect that the government shutdown during late 2018 to early 2019 had on the release of these funds; (2) HUD’s decision-making process for making the second and third tranches of funding available to the Puerto Rico grantee; and (3) whether former HUD Deputy Secretary Pamela Patenaude resigned because of undue influence related to HUD’s administration of Puerto Rico disaster-recovery funds. Our examination of HUD officials’ decision-making in this review included inquiry into their interactions with Office of Management and Budget (OMB) and White House officials regarding the execution of HUD’s disaster-recovery programs. Our role in this review was not to opine on the appropriateness of any OMB or White House officials’ actions, as our oversight authority does not extend to their conduct, but we assessed the extent to which OMB or White House officials directed or influenced HUD officials’ actions.

A TVA manager was accused of improperly providing employees with gifts. While no federal ethics standards were implicated, it was determined TVA Standard Programs and Processes 11.418, Employee Recognition and Acknowledgment (TVA SPP-11.418), was not followed.

An Amtrak Customer Service Representative based in Kansas City, Missouri, resigned from employment on April 12, 2021, prior to his administrative hearing. Our investigation found that the former employee violated company policies by leaving his post between two and four hours at a time during his shifts without authorization to do so and without clocking out. In addition, the former employee also violated company policy by initially lying to our agents about his abovementioned actions.

Sidney Cobos, Allan Lummer, Farshad Sassounian and Ashkan Kohanpour, medical marketers based in Los Angeles, California, pleaded guilty in United States District Court, Central District of California, on April 9, 2021, to one count each of aiding and assisting in the preparation of a false tax return. The four defendants will be sentenced at a future date.Our investigation found that they aided in the preparation and presentation of a false tax return to the Internal Revenue Service for Pharmacy Acquisition LLC. The defendants knew the tax return falsely claimed a deduction for expenses that were actually distributions made to them, as owners of Pharmacy Acquisition LLC. Further, our investigation found that Pharmacy Acquisition LLC provided medically unnecessary compounded drug prescriptions to Precise Compounding Pharmacy that were reimbursed by health care benefit programs, including Amtrak’s plan. As a result of the scheme, Amtrak’s insurance providers were fraudulently charged approximately $22,000.