The Mayflower Moving Company, which has been around since 1927, is America's largest and possibly most well-known shipping company. I caught it stealing from the U.S. government. Here's that story.
In the late 1990s, the Defense Finance and Accounting Service (DFAS), which provides payment services for the U.S. Department of Defense (DOD), ran a fraud examination group based in Monterey, Calif., that it called OPERATION MONGOOSE. Because DFAS pays the majority of the bills for DOD at about $1 billion a day, auditing those payments is daunting. We had a team of about 20 highly trained, skilled analysts to work that important task.
When you're dealing with a huge amount of information, data mining is the preferred method for sifting through haystacks for rusty needles. Fraud examiners use software to look for anomalies such as matching numbers, names, locations, etc. and determine relationships between the pieces of information. We were using the Social Security Death Index to check veterans' claims for disability payments, retirement payments and veteran benefits.
We also were matching contractors who were billing the government against the list of contractors who were restricted from doing business with the government (because of international laws, past illegal activities, outstanding bills, etc.). We were running a dozen programs like these at OPERATION MONGOOSE.
PAYING THE BILLS, OVER AND OVER
Within OPERATION MONGOOSE, I led the small Transportation Fraud Team consisting of a Navy chief (SEAL), a Navy lieutenant commander (logistics man) and two civilian auditors. I'm a CFE with an Air Force background in financial comptrollership. We were looking at vendors that had contracts with the DOD to move materiel and people and to provide transportation services and vehicles to the DOD. One of our successful programs consisted of analyzing moving company invoices for transporting military members' household goods. When we data mined that information, surprising red flags began to pop up. One vendor in particular, Mayflower, had some issues.
We found extraordinary matches in billing amounts in short periods of time, such as $5,437.21 showing up several times in two weeks. The chances of that are 10 times the number of digits in the value. In other words, it was highly unlikely that there were two or three bills of that exact amount out of 100,000 bills in less than a month. When we matched those values to the same names or locations, signal flares accompanied the flaming red flags! When we see a pattern of those recurring numbers coming from one company, it's probably a sign of a billing issue, either through negligence or criminal intent.
Unfortunately, DFAS was to blame for part of the problem. At that time, in the 1990s, DFAS had hundreds of "stove-piped" systems (independent programs that are unaware of the actions of the other systems) for contractors to pay bills. A vendor such as Mayflower would send a bill by snail mail, and DFAS would pay it. However, that same vendor might also send an electronic copy of the same bill on the same day, and another office DFAS would pay it. A week later the vendor would send a reminder “courtesy” bill, and another office would pay that. None of the offices would talk to each other, so Mayflower took advantage of the miscommunication. (DFAS has since corrected the stove-piping problem.)
STRIKING AT THE MOVERS
We constructed spreadsheets that clearly showed page upon page of bills for the same amounts. We found millions of dollars in Mayflower overbillings in just one year. We ran the case through our legal process, and it ended up in a federal court in Washington, D.C., where the judge liked our work. He made the shipping giant repay the DOD the millions they had stolen, levied a large fine on them and prohibited them from bidding on any new government contracts for one year. The defense argued that they were unaware of the overbillings and overpayments. The judge replied that if the Mayflower's accounting system was so messed up that they didn't know they had several millions of dollars in extra payments, then they were in bigger trouble than this one case showed.
All in all, a win for the taxpayer, for DFAS and for OPERATION MONGOOSE!
Robert "Trim" Blair, CFE, CGFM, CICA, is a retired lieutenant colonel in the U.S. Air Force and an ACFE Regent Emeritus. He was the chief investigator for the inspector general under Gen. David Petraeus at U.S. Central Command and was the senior Air Force representative for non-criminal investigations in Iraq, Afghanistan and Pakistan and the rest of the CENTCOM Area of Responsibility in Southwest Asia.
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