Does the federal
government get ripped off? You
bet. It's called
governmental fraud. Do
you and I pay for the losses? You
bet. It's called taxes.
Many branches of the federal government are seen by criminals
as being such over-burdened and cumbersome bureaucracies that they
are prime targets for fraud. The
Departments of Defense, Transportation and Education have been
susceptible to procurement schemes and substandard performance by
contractors. These
schemes not only cost us enormous sums each year, they often place
the public in real danger.
A major Department of
Defense fraud was uncovered by the FBI in Operation Ill Wind.
Contractors had falsely inflated costs of sensitive military
aircraft and naval shipping equipment.
Using wiretaps, the FBI was able to uncover false billings
and bid rigging by high-level government contractors, which had cost
taxpayers hundreds of millions of dollars.
The most notorious
frauds against the Department of Transportation involved fictitious
gasoline wholesalers, established by Russian and Italian organized
crime groups. These
organizations evade state and federal excise taxes on millions of
gallons of gasoline and fuel oil by creating a chain of bogus
wholesalers who close up shop before government taxes are paid. This scheme has become one of the biggest Russian Mafia
moneymakers, second only to drug trafficking.
Another
governmental fraud puts lives at risk when used and damaged aircraft
parts are falsely certified as new or rebuilt.
Most
Department of Education cases involve government student loans which
are never repaid. Although
each loan is relatively small, the combined losses are in the
billions. Loan frauds are
also committed against the Small Business Administration, stealing
funds that are designed to help disadvantaged businesses in
economically depressed areas. These
and other frauds against the government all add up to higher taxes for
the rest of us.
