Federal Bureau of Federal Bureau of InvestigationInvestigation

What is the FBI?What is the FBI?

Investigates violations of federal law Investigates violations of federal law including the theft of federal fundsincluding the theft of federal funds

Works closely with the United States Works closely with the United States Attorney’s Office.Attorney’s Office.

Coordinates with state and local Coordinates with state and local agencies to investigate and agencies to investigate and prosecute crimes.prosecute crimes.

Public CorruptionPublic Corruption

The abuse of trust or position by an The abuse of trust or position by an elected or appointed personelected or appointed person

Personally profiting through schemes Personally profiting through schemes involving an elected or appointed involving an elected or appointed positionposition

Bribery, kickbacks, contracts to friendsBribery, kickbacks, contracts to friends

Acting in your own best interest and Acting in your own best interest and not that of the publicnot that of the public

ObstaclesObstacles

Public corruption is not easily Public corruption is not easily detected because it is secretive and detected because it is secretive and the participants benefit with no clear the participants benefit with no clear victimvictim

Corrupt activity can be part of Corrupt activity can be part of routine business and not apparent routine business and not apparent without inside knowledgewithout inside knowledge

Traditional White Collar Crime is Traditional White Collar Crime is uncovered through audits, reports uncovered through audits, reports from victims and routine from victims and routine investigations of bank transactionsinvestigations of bank transactions

Public corruption is different and we Public corruption is different and we rely on the public to report problems rely on the public to report problems that might not directly affect them.that might not directly affect them.

ObstaclesObstacles

Examples of CorruptionExamples of Corruption

Sole source contracts for friends or Sole source contracts for friends or relativesrelatives

Contracts that lack a competitive bid Contracts that lack a competitive bid processprocess

Kickbacks paid to contracting officers Kickbacks paid to contracting officers for issuing contractsfor issuing contracts

HONEST SERVICES FRAUDHONEST SERVICES FRAUD

““Scheme to Defraud” in Honest Scheme to Defraud” in Honest Services ContextServices Context

Misuse of Position for Gain Misuse of Position for Gain The Function of State Law The Function of State Law Concealed Financial Interest Concealed Financial Interest

Bribery of Federal OfficialsBribery of Federal Officials18 U.S.C. 18 U.S.C. § 201(b)§ 201(b)

Payer must offer or give a thing of Payer must offer or give a thing of value to a public official with intent value to a public official with intent to influence.to influence.

Public Official must solicit or accept a Public Official must solicit or accept a thing of value in return for being thing of value in return for being influenced.influenced.

Gratuities to Federal OfficialsGratuities to Federal Officials18 U.S.C. § 201(c) 18 U.S.C. § 201(c)

A thing of value is offered or given to A thing of value is offered or given to a public official “for or because of a public official “for or because of any official act performed or to be any official act performed or to be performed.”performed.”

Federal Program FraudFederal Program Fraud18 U.S.C. § 66618 U.S.C. § 666

Government or organization receives Government or organization receives $10,000 in federal assistance$10,000 in federal assistance

Bribery relates to a transaction or Bribery relates to a transaction or series of transactions involving $5,000 series of transactions involving $5,000 or moreor more

Agent of the government/organization Agent of the government/organization solicits or receives a thing of valuesolicits or receives a thing of value

Acts corruptly, intending to be Acts corruptly, intending to be influenced or rewardedinfluenced or rewarded

Hobbs Act Extortion Under Color of Hobbs Act Extortion Under Color of Official Right, 18 U.S.C. § 1951Official Right, 18 U.S.C. § 1951

““The Government need only show The Government need only show that a public official has obtained a that a public official has obtained a payment to which he was not payment to which he was not entitled, knowing that the payment entitled, knowing that the payment was made in return for official acts.” was made in return for official acts.”

Effect on Interstate CommerceEffect on Interstate Commerce

Conflict of InterestConflict of Interest18 U.S.C. § 20818 U.S.C. § 208

Executive Branch official or employeeExecutive Branch official or employee Participates personally and Participates personally and

substantiallysubstantially In a matter in which any of the In a matter in which any of the

following has a financial interest:following has a financial interest: the official, spouse, or minor child the official, spouse, or minor child A general partner, or an organization with A general partner, or an organization with

whom the official is employed or is negotiating whom the official is employed or is negotiating for employmentfor employment

Federal Government OfficialFederal Government Official Jane is the GSA official in charge of procurement of construction services for

all federal buildings in Texas. John runs Acme Construction Company, which specializes in small scale office renovations. Acme operates throughout the South and is respected for the quality of its work and known for its low prices. Several years ago when Jane was promoted to her current position, John remembered that they had gone to college together. John invited Jane to dinner at Houston’s most luxurious restaurant to celebrate Jane’s new job. At dinner, John asked Jane whether she could help Acme do more business renovating federal office buildings. Jane said she would see what she could do.

Over a five-year period, John made it a point to treat Jane to a nice dinner about once a month. Usually both Jane and John also brought their spouses. John also remembered Jane’s birthday each year – usually with a $200 Nordstrom gift certificate. On about 10 occasions during the same time period, John’s company submitted bids to renovate Texas federal buildings. On each of these occasions, John called Jane and told her he hoped that Acme would get the contract. Jane was the deciding official on these contracts. Acme was awarded 8 of the 10 contracts it bid on – – it was the low bidder on 4 of those contracts. The contracts awarded to Acme totaled $750,000 and Acme made $500,000 in profits from these. After the largest of the contracts was awarded – – for $300,000 – – John surprised Jane by telling her he had arranged a three day all expense paid golf trip for the two couples to Pebble Beach. Half of the contract awards took place more than five years ago.

On two occasions, John also asked Jane to recommend Acme to other prospective clients. Jane called her GSA counterpart in Alabama and a friend of hers who is a City of Houston procurement official, and sang the company’s praises. Acme then bid on, but did not win business in Alabama – it did get a $1 million sole source contract from Houston.

The Elements of FraudThe Elements of Fraud

The crime of mail [or wire] fraud has three The crime of mail [or wire] fraud has three elements:elements:

(1)(1) The defendant knowingly devised or The defendant knowingly devised or participated in a scheme to defraud;participated in a scheme to defraud;

(2)(2) The defendant did so knowingly and The defendant did so knowingly and with the intent to defraud; andwith the intent to defraud; and

(3)(3) For the purpose of carrying out the For the purpose of carrying out the scheme or attempting to do so, the scheme or attempting to do so, the defendant used or caused the use of the defendant used or caused the use of the United States mails or a private or United States mails or a private or commercial interstate carrier.commercial interstate carrier.

There are two types of honest services fraud – There are two types of honest services fraud – “either bribery of the official or failure to “either bribery of the official or failure to disclose a conflict of interest, resulting n disclose a conflict of interest, resulting n personal gain.”personal gain.”

Conflict of interest gives rise to fraud “when Conflict of interest gives rise to fraud “when an official fails to disclose a personal interest in an official fails to disclose a personal interest in a matter over which they have decision-making a matter over which they have decision-making power and the public is deprived of its right power and the public is deprived of its right either to disinterested decision making itself either to disinterested decision making itself or . . . to full disclosure as to the official’s or . . . to full disclosure as to the official’s potential motivation behind an official act.”potential motivation behind an official act.”

Concealed Financial InterestConcealed Financial Interest

Concealed Financial Interest (cont’d)Concealed Financial Interest (cont’d)

Where a public official conceals a Where a public official conceals a financial interest in violation of state financial interest in violation of state criminal law and takes discretionary criminal law and takes discretionary official action . . . that . . . will directly official action . . . that . . . will directly benefit the concealed interest, the official benefit the concealed interest, the official has deprived the public of his honest has deprived the public of his honest services, regardless whether the services, regardless whether the concealed financial interest . . . concealed financial interest . . . influenced the official’s actions.”influenced the official’s actions.”

Where to ReportWhere to Report

Your local office of the Federal Your local office of the Federal Bureau of InvestigationBureau of Investigation

Seattle Division (206) 622-0460Seattle Division (206) 622-0460

Olympia Resident Agency (360) 352-Olympia Resident Agency (360) 352-32343234

What Can I Do?What Can I Do?

Look at things differentlyLook at things differently Get involved in your communityGet involved in your community Report your suspicions early even if Report your suspicions early even if

second-hand informationsecond-hand information

Most Common MythsMost Common Myths

There is no corruption in Washington There is no corruption in Washington StateState

If I know something, then the FBI If I know something, then the FBI must already know itmust already know it

The victim of corruption always The victim of corruption always reports the problemreports the problem

““Business as Usual” mentalityBusiness as Usual” mentality