1 u. s. department of transportation: office of inspector general office of investigations and...
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U. S. Department of Transportation:U. S. Department of Transportation:Office of Inspector GeneralOffice of Inspector General
Office of InvestigationsOffice of Investigationsandand
Illinois Department of Transportation:Illinois Department of Transportation:Financial Review and Investigation SectionFinancial Review and Investigation Section
Office of Quality Compliance & ReviewOffice of Quality Compliance & Review
Shah Engineering Inc.Shah Engineering Inc.Todd KathTodd KathSpecial AgentSpecial AgentTelephone 312-353-0106Telephone [email protected]@oig.dot.gov
Gene GanszGene GanszSupervisory AuditorSupervisory AuditorTelephone 217-785-4592Telephone [email protected]@illinois.gov
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Per FBI statistics dated between Per FBI statistics dated between 2006 and 2008, the average dollar 2006 and 2008, the average dollar loss per offense for:loss per offense for: Identity theft was $6,383Identity theft was $6,383 Car theft was $6,751 Car theft was $6,751 Bank robbery was $4,854Bank robbery was $4,854 Burglary was $2,079Burglary was $2,079
How would you like to How would you like to end your career after end your career after you caught:you caught: 1,481 Car Thieves, or1,481 Car Thieves, or 1,566 Identity 1,566 Identity
Thieves, orThieves, or 2,060 Bank Robbers, 2,060 Bank Robbers,
oror 4,810 Burglars???4,810 Burglars???
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You might think that this You might think that this might be that retiree...might be that retiree...
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In reality it could be any one of you!!!In reality it could be any one of you!!! Program managers,Program managers, Project executives,Project executives, Contracting officials,Contracting officials, Analysts,Analysts, Engineers,Engineers, Attorneys,Attorneys, Auditors, andAuditors, and Law enforcement personnelLaw enforcement personnel
The Shah Engineering Inc. investigation The Shah Engineering Inc. investigation resulted in a settlement of $10 MILLION .... resulted in a settlement of $10 MILLION .... equaling 4,810 burglars or 160 burglars equaling 4,810 burglars or 160 burglars per year for a 30 year career, nearly one per year for a 30 year career, nearly one burglar caught burglar caught every other dayevery other day..
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Shah Engineering, Inc. (SEI)Shah Engineering, Inc. (SEI) Engineering firm located in Chicago, Engineering firm located in Chicago,
IllinoisIllinois Manu Shah was the sole shareholder Manu Shah was the sole shareholder
and was solely responsible for the and was solely responsible for the billing and management of contractsbilling and management of contracts
SEI provided a full range of SEI provided a full range of engineering and architectural engineering and architectural services to public and private sector services to public and private sector clients with over 20 years in clients with over 20 years in Consulting/Engineering.Consulting/Engineering.
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Illinois Department of Illinois Department of Transportation (IDOT) Transportation (IDOT)
AuditAudit January 12, 2004 – IDOT auditJanuary 12, 2004 – IDOT audit
Initial Conference/ConferencesInitial Conference/Conferences Claimed no Job cost informationClaimed no Job cost information Partial records released to auditorsPartial records released to auditors
Field TestingField Testing Timesheets unsigned or unapprovedTimesheets unsigned or unapproved Timesheet corrections not initialedTimesheet corrections not initialed Shifting hours between jobs or office workShifting hours between jobs or office work Invoices with little or no detailInvoices with little or no detail Assets depreciated and leased by various Shah-Assets depreciated and leased by various Shah-
owned companiesowned companies Employee lists did not match up with payroll Employee lists did not match up with payroll
summarysummary
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Example of shifting hours
(with instructions)
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No invoice supportand child’s company
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Payments to GCMat end of year (from warrant)
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Illinois Department of Illinois Department of Transportation (IDOT) Transportation (IDOT)
AuditAudit January 12, 2004 – IDOT audit – January 12, 2004 – IDOT audit –
ContinuedContinued ObservationsObservations
Employee worker caught creating a timesheetEmployee worker caught creating a timesheet Blank timesheets found on copy machineBlank timesheets found on copy machine Related Companies – owned by childrenRelated Companies – owned by children Noticing number of alterations on timesheetsNoticing number of alterations on timesheets Accounting contact could not provide information without Accounting contact could not provide information without
the owner’s reviewthe owner’s review Fresh copies of old invoicesFresh copies of old invoices
ConclusionConclusion Based on initial review, IDOT believed SEI had received Based on initial review, IDOT believed SEI had received
in excess of $1,500,000 more than its entitlement and in excess of $1,500,000 more than its entitlement and referred the audit to DOT/OIG, FBI, and the USAOreferred the audit to DOT/OIG, FBI, and the USAO
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IDOT analysis oftimesheet alterations
Search WarrantSearch Warrant
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Search WarrantSearch Warrant
IDOT committed to work with investigatorsIDOT committed to work with investigators IDOT gave detailed information on search IDOT gave detailed information on search
sitessites Simultaneous warrant of SEI corporate Simultaneous warrant of SEI corporate
office and Manu Shah’s residenceoffice and Manu Shah’s residence Interviews of employees including Manu Shah Interviews of employees including Manu Shah
at residenceat residence IDOT auditors brought in to sites as expertsIDOT auditors brought in to sites as experts
Identification of relevant paperworkIdentification of relevant paperwork
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Investigation / AnalysisInvestigation / Analysis
Investigation / analysis took Investigation / analysis took approximately 2 yearsapproximately 2 years
Team ApproachTeam Approach IDOT audit spent time calculating amount of IDOT audit spent time calculating amount of
fraud versus normal audit adjustmentsfraud versus normal audit adjustments Agents used this information to extend the Agents used this information to extend the
reach of the investigationreach of the investigation US Attorneys supported efforts with use of US Attorneys supported efforts with use of
grand jury tools, subpoenas, immunity for non-grand jury tools, subpoenas, immunity for non-targetstargets
Interviews of relevant partiesInterviews of relevant parties
Additional Additional DocumentationDocumentation
Dozens of Subpoenas issuedDozens of Subpoenas issued Personal and corporate bank recordsPersonal and corporate bank records
Review of banking/investment documentsReview of banking/investment documents Individuals for testimony under oathIndividuals for testimony under oath Multiple transfers to friends, family, personal Multiple transfers to friends, family, personal
contactscontacts Checks endorsed by Manu Shah and deposited back Checks endorsed by Manu Shah and deposited back
into SEI or Manu’s accountsinto SEI or Manu’s accounts Extensive transfers into trust accounts for tax Extensive transfers into trust accounts for tax
and disadvantaged business enterprise (DBE) and disadvantaged business enterprise (DBE) purposespurposes
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Investigation / AnalysisInvestigation / Analysis Obtained evidence of the following:Obtained evidence of the following:
Mail Fraud, 18 U.S.C. Mail Fraud, 18 U.S.C. §§ 1341 1341 Direct billing fraudDirect billing fraud Overhead fraudOverhead fraud DBE certificationDBE certification
Money laundering, 18 U.S.C. Money laundering, 18 U.S.C. §§ 1956 & 1957 1956 & 1957 False documents / statements, 18 U.S.C. False documents / statements, 18 U.S.C. §§
10011001 Witness tampering, 18 U.S.C., Witness tampering, 18 U.S.C., §§ 1512 1512 RICO, 18 U.S.C. RICO, 18 U.S.C. §§ 1962 1962
Examples….Examples….
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Original Invoice
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Fake Invoice
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SEI OutboundCheck to Bipin
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Manu’s Summary
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SEI InboundChecks from BipinTotal of $17,160.00
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Summary of DirigoTransactions
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Original InvoiceFromDirigo
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Manu’s Fake Invoice
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Investigative ResultsInvestigative Results Manu ShahManu Shah
Pled to 2 counts of mail fraudPled to 2 counts of mail fraud Inflated hoursInflated hours False SEFCFalse SEFC
Pled to 1 count of false statements*Pled to 1 count of false statements* Initial escrow of $5.5 million stock toward lossInitial escrow of $5.5 million stock toward loss Sentenced to 41 months in prison, starting August Sentenced to 41 months in prison, starting August
20, 200920, 2009 SEISEI
Pled to 1 count of mail fraudPled to 1 count of mail fraud $500,000 fine$500,000 fine
Manu Shah and SEI debarredManu Shah and SEI debarred $10 million restitution ordered to 12 State and municipal $10 million restitution ordered to 12 State and municipal
entitiesentities Actual Overbilling as much as Actual Overbilling as much as $12,366,947.45$12,366,947.45
Indictment --Count 2Indictment --Count 2……During the course of the audit, Manu Shah During the course of the audit, Manu Shah
was requested to supply documentation for was requested to supply documentation for certain direct labor and overhead expenses certain direct labor and overhead expenses claimed for IDOT and other contracts in prior claimed for IDOT and other contracts in prior years.years.
On or about February 24, 2004, in the Central District of On or about February 24, 2004, in the Central District of Illinois, Illinois, MANU SHAH … MANU SHAH … submitted a false writing submitted a false writing or document, knowing the same to contain a or document, knowing the same to contain a materially false, fictitious and fraudulent statement materially false, fictitious and fraudulent statement and entry including an invoice purportedly from and entry including an invoice purportedly from “Associated Engineering and Technology,” which had “Associated Engineering and Technology,” which had been altered to read “office rent” (which was listed as been altered to read “office rent” (which was listed as an overhead expense) from the original invoice which an overhead expense) from the original invoice which was actually for the delivery of other services. ..in was actually for the delivery of other services. ..in violation of Title 18, United States Code, § 1001.violation of Title 18, United States Code, § 1001.
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Lessons Learned/Fraud Lessons Learned/Fraud PreventionPrevention
Stay Alert!!!Stay Alert!!! Verify with sources (documents & Verify with sources (documents &
people)people) Document Document Red FlagsRed Flags Communicate with Audit or Communicate with Audit or
Investigative counterpartsInvestigative counterparts Get angry – this is YOUR money!Get angry – this is YOUR money!
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Manu Shah’s residence – Manu Shah’s residence – July 1, 2007July 1, 2007
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Manu Shah’s Residence, Manu Shah’s Residence, October 6, 2010 -- October 6, 2010 --
ASHLAND FCI MANU SHAH, 15384-026, 74-Asian-MANU SHAH, 15384-026, 74-Asian-
M ,M , Release date 08-10-2012Release date 08-10-2012
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Robert Sullinger’s Robert Sullinger’s residence October 6, residence October 6,
20102010 1. ROBERT G SULLINGER 15508-1. ROBERT G SULLINGER 15508-
026 026 61-White-M 05-02-2012 61-White-M 05-02-2012
MARION USP
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CATCH the CATCH the BiggestBiggest Robbers & Robbers & Thieves!Thieves! Contract fraudContract fraud Grant fraudGrant fraud EmbezzlementEmbezzlement Etc.Etc.
Remember..... You can “save” the taxpayer Remember..... You can “save” the taxpayer the equivalent of:the equivalent of:
Millions of Millions of $$$$$$ $$$$$$ (Or More!)(Or More!)
Thousands of carsThousands of cars
Thousands of IdentitiesThousands of Identities 32
A little visual of the A little visual of the “savings”“savings”
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QuestionsQuestions
Todd KathTodd KathSpecial AgentSpecial Agent
Telephone 312-353-0106Telephone [email protected]@oig.dot.gov
U. S. Department of Transportation:U. S. Department of Transportation:Office of Inspector GeneralOffice of Inspector General
Office of InvestigationsOffice of Investigationsandand
Illinois Department of Transportation: Financial Illinois Department of Transportation: Financial Review and Investigation SectionReview and Investigation Section
Office of Quality Compliance & ReviewOffice of Quality Compliance & Review
Gene GanszGene GanszSupervisory AuditorSupervisory Auditor
Telephone 217-785-4592Telephone [email protected]@illinois.gov