Investigative Reports

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.

We investigated an allegation that a program manager with the West Virginia Department of Environmental Protection (WVDEP) misused Water-Use Data and Research (WUDR) grant funds awarded by the U.S. Geological Survey (USGS) to pay WVDEP employees who did not perform work related to the grant.Our investigation determined that from February 2018 through January 2020, the WVDEP incorrectly compensated an employee using $24,550 in WUDR grant funds. This employee unknowingly received WUDR funds toward his salary and benefits but did no work in support of the grant. We did not find evidence that the WVDEP intentionally misused the grant funds. Instead, the evidence suggested that the incorrect allocation of funds occurred because of management errors within the WVDEP.As a result of our investigation, the WVDEP corrected its internal WUDR grant funding allocations to accurately reflect the personnel who performed the WUDR grant functions during this time. Our investigation also confirmed that the WVDEP completed the work set forth in the WUDR grant as required and there was no financial loss to the Government.

A management official and a company Inspector violated Amtrak policies by accepting gifts and favors from a construction contractor who was awarded a $58 million contract by the company. The management official received gifts from the contractor, including three trips to Philadelphia, and drinks and entertainment at a gentleman’s club. His employment with the company was terminated on February 1, 2021. The Inspector received gifts from the contractor, which included a furnace for his church, a suit, and a pair of shoes. His employment with the company was terminated on March 30, 2021.

We investigated allegations that Nathan Shumaker, a service supervisor employed with Alliance Energy Services, LLC, knowingly discharged oil from the offshore platform known as Vermillion 124F into the Gulf of Mexico (GOM) in 2016.Black Elk Trust operated the Vermillion 124F platform located on a Federal lease in the GOM and hired Montco Oilfield Contractors, LLC, to perform work on the offshore platform. Montco hired Alliance as a subcontractor to perform plugging and abandonment operations associated with the platform.We conducted a joint investigation with the Environmental Protection Agency’s Criminal Investigation Division and found that Shumaker discharged oil mixed with produced water into the GOM from a “gas buster” tank located on the Vermillion 124F platform. Shumaker discharged the fluid over the objection of another concerned employee. Shumaker also discussed the discharge with Thomas Wharton, Montco’s company representative in charge of the platform and the individual who had ultimate work authority. Because of his position, Wharton was legally responsible for reporting the discharge to Federal authorities, but he failed to do so.The U.S. Attorney’s Office, U.S. Department of Justice, prosecuted this matter in the United States District Court for the Western District of Louisiana. As a result, Shumaker pleaded guilty to a violation of 33 U.S.C § 1319(c)(1)(A), “Negligent Violation of the Clean Water Act,” and on December 14, 2020, he was sentenced to 1 year of probation, issued a $2,500 fine, and issued a $25 special assessment. Wharton pleaded guilty to a violation of 33 U.S.C. § 1321(b)(5), “Failure to Notify Authorities Under the Oil Pollution Act,” and on December 7, 2020, he was sentenced to 24 months of probation, issued a $10,000 fine, and issued a $100 special assessment.

Hootan Melamed, a pharmacist based in Los Angeles, California, was sentenced in United States District Court, Southern District of California, on March 29, 2021, to six months in prison and three years’ probation for conspiracy to commit health care fraud. Melamed was also ordered to forfeit $1,816,038.82 in cash and personal property.Our investigation found that Melamed paid kickbacks to medical marketers who referred patients to his pharmacy to fill the patients’ prescriptions for compound creams and other pharmaceuticals. Melamed previously pleaded guilty on November 2, 2020, to the conspiracy charges. As a result of the scheme, Amtrak’s insurance providers were fraudulently charged approximately $22,000. Criminal judicial proceedings for other defendants in this case are pending.

The OIG investigated allegations that Bureau of Indian Affairs (BIA) realty specialists processed and approved 15 land transfer gift deeds from a tribal member to his sister without the proper authority. The complaint also alleged that the deeds contained forged signatures and improperly backdated documents.We confirmed the realty specialists processed the gift deeds for the tribal member, and we found that they did not follow the BIA’s delegation of authority procedures and issued the gift deeds without proper review and approval.The BIA later processed corrections to two of these gift deeds. We established that the tribal member signed the 15 original gift deeds, but we could not determine who signed the corrected documents. We noted significant differences between the signatures on the original documents and the signatures on the corrected documents.We also collected contradictory statements about the corrected documents from the tribal member and the realty specialists involved. In addition, we confirmed that realty specialists improperly backdated the corrections to the gift deeds.The BIA ultimately determined the gift deeds were not properly authorized and voided all the transactions.

Lauren Jones, a former Hertz employee in Chicago, Illinois, pleaded guilty in Circuit Court of Cook County on March 24, 2021, to felony theft charges and was sentenced to two years’ probation on the same date. Our investigation found that Jones stole validated parking passes for the Chicago Union Station parking garage, valued at over $500, from Hertz. In addition, three other individuals were previously charged and convicted of theft charges in this investigation.