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In June of a recent year, allegations of fraud regarding repair contracts for work on board U.S. Naval Ships (USNS) were reported to law enforcement agents. The allegations indicated that fraud was rampant and could possibly impact the seaworthiness of these vessels. Employees from ABC Construction, Inc. (ABC), the entity in charge of getting contracts for USNS, were demanding that a high volume of contracts be processed, and they were also demanding faster processing time for these contracts. When some employees started quitting because of increased pressure, ABC made sure it did not get attention from the federal government. ABC had close relationships with some of the subcontractors, but had always kept totally independent from these subcontractors. A task force of agents from the FBI, Defense Criminal Investigative Service, and the Naval Criminal Investigative Service was quickly formed to investigate. The task force agreed that the most effective approach to investigating possible fraud was the use of an undercover operation utilizing a covert contracting business.
Questions
1. What are some of the symptoms of fraud in this case?
2. What questions would you ask yourself about fraud symptoms that might help you investigate this fraud?
3. Why would an undercover operation be the most effective approach to investigate?
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