Thursday, April 25, 2013

Obstruction of Federal Audit

Did you know that lying to a Federal auditor is a felony? That's right. Back in 1988, due to widespread concerns about procurement fraud against the United States, Congress passed a series of laws designed to provide the Government with additional criminal and civil remedies to target and reduce that fraud.

One of those legislative actions was the Anti-Drug Abuse Act of 1988. Buried within the act, now codified under 18 U.S.C. Sec. 1516, is an obstruction of federal audit statute. This statute makes it a crime to influence, obstruct, or impede a federal auditor in the performance of official duties. Section 1516 carries a maximum punishment of imprisonment for five years and a fine of $250 thousand for an individual and $500 for an organization.

Congress felt that this protection was warranted because "in many successful investigations, government contractors have been able to avoid earlier detection by obstruction audits". Section 1516 applies to an endeavor to influence, obstruct, or impede a federal audit by fabrication (to include making a false statement or giving false testimony), altering, destroying, or concealing information; threatening an auditor, offering an auditor bribes or gratuities; or threatening or otherwise encouraging a third party not to cooperate with an auditor.

The following five elements must be present to support a conviction under Section 1516.

  1. The federal auditor must be in the performance of official duties
  2. Those official duties must relate to a person or organization receiving in excess of $100 thousand, directly or indirectly from the US in a one-year period under a contract or subcontract.
  3. The defendant must know that an auditor was in the performance of official duties
  4. The defendant must endeavor to influence, obstruct, or impede the federal auditor in the performance of his or her official duties
  5. The defendant must act willfully, with the intent to deceive or to defraud the United States.

Despite the rather expansive scope of Section 1516, it is surprising to us that it is rarely employed. Our research disclosed a couple of cases that went to trial; one involved the creation of bogus checks and bank statements in an endeavor to conceal fraud and the other involved a health care provider misleading an federal auditor. (Our research is extremely limited; we are not attorneys and we do not have access to extensive legal research).

No comments:

Post a Comment