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The new high-tech weapons against fraud

Jun. 27, 2010 - 06:00AM   |  
By TIM KAUFFMAN   |   Comments
The Recovery Accountability and Transparency Board, chaired by Earl Devaney, above, uses software to analyze information on government databases and track fraud in stimulus spending.
The Recovery Accountability and Transparency Board, chaired by Earl Devaney, above, uses software to analyze information on government databases and track fraud in stimulus spending. (Tom Brown / Staff file photo)

When a federal agency checks the General Services Administration's list of suspended or debarred contractors to prevent those companies from getting government work, it's only uncovering one piece of the puzzle.

A company can change names and owners, acquire a new business registration number through the Data Universal Numbering System DUNS, for short and appear to the agency as an entirely new business.

"If you get debarred from federal service, all you've got to do is ask your wife to open a company, get a new DUNS number and you're back in business," said Douglas Hassebrock, assistant director of investigations at the Recovery Accountability and Transparency Board, at a government conference in April. The board is responsible for ensuring that Recovery Act money is spent properly.

The Recovery Board knew it needed to close such loopholes to prevent fraud, waste and abuse as the government paid out $275 billion in contracts, grants and loans through the Recovery Act, which Congress passed in early 2009 to help stimulate the economy.

It turned to a software platform from Palantir Technologies, based in Palo Alto, Calif., to help accomplish the task. The software tool analyzes information contained on various government-maintained databases GSA's list of suspended or debarred contractors, the Treasury Department's financial crimes network and other law enforcement records along with open-source data such as newspaper articles, lawsuits and other public documents.

By viewing these data in a more holistic way, analysts at the Recovery Board can draw connections between individuals and companies that might not be apparent otherwise. For example, they could find out if a man who was debarred from federal contracting work had resumed business under his wife's name, to use Hassebrock's example from the Palantir-sponsored conference. Analysts then refer that information to the inspector general at the agency that's handing out that contract, loan or grant for further investigation.

Similar tools are used by intelligence agencies to track terrorists and by credit card companies for fraud detection and prevention. But this is the first time a federal agency has deployed such a tool to track government spending, said Earl Devaney, chairman of the Recovery Board.

"These are tools that the IG community has never used before and quite frankly, they're using it now and I think they would all say to their great benefit," Devaney said in an interview.

Currently there are 317 active criminal investigations throughout government related to waste, fraud and abuse of Recovery Act funds, out of about 3,000 complaints that have been reported, Vice President Joe Biden said at a June 18 news conference.

Biden said the level of reported fraud and abuse in the Recovery Act program has been remarkably low, compared with the size of the program and speed at which agencies have gotten money out the door.

"I think it's really remarkable a program of this size has worked this well," Biden said.

The Obama administration has been so impressed with the Recovery Board's efforts to root out fraud and abuse that it's expanding the initiative to the Centers for Medicaid and Medicare Services, which accounted for roughly 60 percent of the $110 billion in improper payments the government made last year.

One pilot will test whether the Palantir tool can help investigate the thousands of tips Medicare receives through its 1-800 hot line. A second pilot will help CMS identify potentially fraudulent medical providers in the Southern region of the country, where fraud is prevalent.

If the pilot is successful, CMS will look at expanding the effort nationwide.

"The goal here is to see how can this tool be used not only once fraud has been detected to build a case against that entity, but how can we use this tool to prevent something from happening," Devaney said.

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