Tuesday, July 10, 2018

Why Audits of Government Contracts and Grants are Important for Taxpayers

Back in 2009 and 2010, the Federal Government was spending seemingly endless amounts of cash on stimulus projects (remember the American Recovery and Reinvestment Act). While everyone quickly realized that the jobs promised by spending a trillion dollars on what were supposed to be "shovel ready" projects, didn't materialize as hoped. There are plenty of examples questionable expenditures. In one such case, the Energy Department decided to use stimulus money to expedite nuclear facility cleanup. A lab needed to test soil samples was told to hire fourteen new employees in anticipation of a significant workload increase. The project was not exactly shovel-ready and so excavation never materialized and no soil samples were sent to the lab. When the stimulus money ran out, the lab laid off the fourteen chemists.

In another stimulus case that is finally reaching its conclusion, the Energy Department gave North American Power Group (NAPG) and its owner, Mike Ruffato a $10 million grant for a Carbon Site Characterization Project to collect and analyze data and to design and implement carbon sequestration wells at the Two Elk Energy Park in Wyoming. The problem was that there was no operational energy plant there so there was nothing to carbon sequestration to study. So, Mr. Ruffato spent the money on other things, things like personal legal fees, car payments, jewelry, international travel and other personal items. The Energy Department suspended the agreement in 2012 after discovering the fraudulent claims but by then, Ruffato had spent $5.7 million out of the $10 million grant.

Mr Ruffatto plead guilty and was sentenced last month to 18 months in prison, three years supervised release, a $50 thousand fine, and $14.4 million in restitution.

Read more about Mr. Ruffatto's activities here.

Read the related Justice Department press release here.

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