OIG Investigations – Why Lawyers and Clients Should Both Worry

Virus searchOn first glance, investigations by a federal agency’s Office of Inspector General, or OIG, may seem like no big deal. An inspector general has no criminal authority. He can’t charge you with a crime or throw you in jail. He can’t even arrest you. Maybe he can fine you or get you fired if you are a federal employee.

But I’ve seen OIG investigations ruin people’s decades-long careers and lead to criminal investigations and False Claims Act cases. The upshot is that you should worry about an OIG investigation if you are the target of the investigation.

You should also worry if you are the target’s lawyer, because defending someone in these investigations is complicated. It’s never easy to defend a client when the deck is stacked against you, and when you may be actively prevented from advocating for your client.

What is an OIG?

In 1978, Congress passed the Inspector General Act, which created OIGs within each federal agency. It defined three purposes:

In order to create independent and objective units—

(1) to conduct and supervise audits and investigations relating to the programs and operations of the establishments listed in section 12(2);

(2) to provide leadership and coordination and recommend policies for activities designed

(A) to promote economy, efficiency, and effectiveness in the administration of, and

(B) to prevent and detect fraud and abuse in, such programs and operations; and

(3) to provide a means for keeping the head of the establishment and the Congress fully and currently informed about problems and deficiencies relating to the administration of such programs and operations and the necessity for and progress of corrective action.

In short, OIGs investigate waste, fraud and abuse within government agencies and report to Congress about their findings. OIGs are independent from the agency and the inspector general reports only to Congress. In other words, the Secretary of Defense cannot stop or direct a DoD OIG investigation.

It’s a narrow but deep channel of power within the federal government.

Who Should Worry about an OIG Investigation?

Federal government employees are the targets of OIG investigations and face the most direct repercussions.Any government employee–no matter who you are–can be investigated. There’s no exception for SES or heads of agencies.

Private companies should also worry. Many criminal investigations of private companies start with OIG investigations. For example, the OIG for Health and Human Services investigates Medicare fraud; that can easily lead to a False Claims Act case or criminal charges. The OIG for the Department of Defense often instigates government contracting fraud investigations.

For example, HHS OIG reported its results in a yearly report for 2016:

In FY 2016, investigations conducted by HHS’ Office of Inspector General (HHS-OIG) resulted in 765 criminal actions against individuals or entities that engaged in crimes related to Medicare and Medicaid, and 690 civil actions, which include false claims and unjust-enrichment lawsuits filed in federal district court, civil monetary penalties (CMP) settlements, and administrative recoveries related to provider self-disclosure matters.

This post will focus on OIG investigations into federal government employees. (Maybe I’ll talk about company investigations in a later post.)

What Do OIGs Investigate?

There’s a whole range of possible misconduct investigated by OIGs, but the most common ones are:

  1. Irregularities in procurement, such as soles sourcing a contract that should have been bid competitively, or failing to disclose a conflict of interest with an entity working with the agency;
  2. Improper use of government resources, including embezzlement or use of grant funds;
  3. Retaliation against whistleblowers;
  4. Improper hiring practices or personnel decisions;
  5. Falsifying time or work records;
  6. Violations of agency ethics and compliance rules.

The results of an OIG investigation may be made public through published reports. Each OIG has its own practice with respect to publishing investigation results. Some offices publish only a summary of the investigatory findings and others publish redacted final reports.

How Does an OIG Investigation Start?

OIG investigations often start with a whistleblower complaint. This is where I’ve seen a major problem: the whistleblower is often a workplace enemy of the complaint’s target. IGs open investigations without considering the fact that some complaints are made not because of any serious wrongdoing but because the whistleblower sees an easy way to harass someone over a disagreement.

My view is based on a relatively small number of cases, but it’s too much of a coincidence that the majority of my client’s cases started with a problem with a subordinate—a negative performance review, for example. The disgruntled subordinate then goes to the OIG to lodge a complaint and that starts the ball rolling.

It’s the ultimate revenge.

Federal agencies have an OIG hotline to allow for reporting of complaints. The complaints can be made anonymously. This anonymous reporting process serves a legitimate purpose—to encourage employees to report problems without fear of retribution, particularly if the alleged wrongdoer is a supervisor.

The OIGs’ Broad Subpoena Power

OIGs have incredibly broad administrative subpoena power. OIG subpoenas will be enforced by the federal courts as long as they (1) are issued for a lawful purpose, and (2) are reasonably relevant to that purpose, and (3) are not unduly burdensome. Some agencies have internal regulations that govern the issuance of subpoenas, as well.

There are also certain protections in federal statutes, such as the Right to Financial Privacy Act, which requires notice to an account holder when an OIG requests bank records.

Subpoenas can be issued to anyone in the United States, not just federal employees or contractors. This is very broad power, indeed. It’s like  a grand jury subpoena, but there’s not even the cover of a grand jury overseeing the process. It’s just the OIG, acting without oversight.

Why It Is Hard to Represent Someone in an OIG Investigation

An OIG investigation could destroy an employee’s career in the government, so the stakes are high.

The opening of an investigation can injure her professional reputation. Once the investigation is complete, any findings of wrongdoing are reported to an employee’s supervisory chain. The agency may then take certain action against the employee up to and including termination.

OIGs just love to refer cases to the Department of Justice.

Maybe it’s just me, but I always get the sense that the special agents who make up the OIG force live to refer cases to DOJ. If the case is referred, that special agent will often stick with the case and assist the FBI and AUSA in completing the criminal investigation. These agents get dug in; they started the case and they pushed to have it referred . Let’s just say that after all of that work, it’s unlikely an agent will still have an open mind as the investigation progresses.

There is a fundamental lack of fairness in the process because there is no process.

I don’t think that the grand jury system is all that fair, but at least it’s a system—with rules that (most) everyone follows. An OIG investigation has no such system or clear rules.

The employee is at the mercy of the investigation. She generally cannot refuse to be interviewed or she risks losing her job. Even the assertion of the Fifth Amendment may not be available (for reasons I’ll discuss in a later post, I promise.)

Defense counsel are not part of the process as they are in a standard white collar investigation. Although an employee can bring counsel to the interview, it is rare that the OIG lawyers will engage with or hear out defense counsel in the same way that an AUSA would during an attorney proffer.

I’ve literally begged to be heard by OIG lawyers, begged to be given the chance to explain our side of the case. I’ve been told that an agency’s “general practice” is not to hear from defense counsel. (To that particular OIG’s credit, my begging finally worked and I was allowed to make a presentation.)

But think about that for a second: Some agencies’ “general practice” is simply to refuse to listen to the target’s lawyer, or to hear an alternative view of how the facts could be interpreted or to learn how the OIG’s interpretation of the law may be flawed. I’m yet to meet an AUSA who is not willing to talk with me and hear my side of the case. At a minimum, it makes strategic sense–the AUSA will learn my theory of defense and can investigate facts to counteract it.

This is particularly odd given that the Quality Standards for Investigations report (discussed more below) says that agents have “a duty to be receptive to evidence that is exculpatory, as well as incriminating.” In my experience, the agents do not have much interest in finding exculpatory evidence or at least hearing about it from me.

There may be a written report made public.

At the end of an investigation, the OIG will write a report. Some agencies (it seems to be a minority) will publish them on their websites.

Now, the OIG will almost redact the employee’s name. However, people within the agency will likely know about the investigation and know exactly who its subject was. Nothing stops those people from telling others about it. And there’s sometimes no way to respond publicly to the report because the OIG won’t let you report it before it is finalized.

One agency did allow me to review the draft report and write a detailed response letter, published with the report, describing what we thought were its inaccuracies. That struck me as an incredibly fair process.

But other agencies will not even allow you to review the report before it is finalized, to correct any errors. It’s as though some OIGs simply don’t want to hear the other side of the story.

You can’t compare outcomes among cases because most of the information is not public.

For agencies that provide only brief summaries of investigations rather than reports, there’s no way to compare your case to other cases and demand a comparable result for your client. This leads to the perception—or the reality—that the system is unfair. Why should Employee A receive only a reprimand when he gave a contract to a company owned by his brother but Employee B be fired for the same conduct?

OIG investigatory results are not reviewed by any objective decision maker.

As crushing as it is to be indicted, at least it means you will eventually be in front of a jury. If you lose at trial, you can appeal. Your path to prison is littered with objective decision-makers.

Not so with an OIG investigation.

The only decision-maker is the IG herself. Her office opens the investigation, conducts the investigation, determines what law governs and decides the outcome. To expect that an IG is going to be a neutral arbitrator ignores reality. What IG is going to say no to the lawyers and agents within her office who have concluded that there is wrongdoing? Maybe it happens—and I hope it does—but I haven’t seen it.

Are There Any Standards at All?

Eh, kind of. There is an organization called the Council of Inspectors General for Integrity and Efficiency (CIGIE, pronounced sigg-ee). It published Quality Standards for Investigations.

You can read it, but it doesn’t say much that is helpful from the defense perspective. The statements are general and not specific. There’s just not much in there to hang your hat on.

So, you are on your own. I spend time in each new OIG investigation asking colleagues if they have had an OIG investigation from this particular agency. Because every agency conducts investigations differently, it’s hard to generalize from a previous investigation. This creates a lot of uncertainty for my clients and frustration on my part as I try to uncover the investigative method used by this particular OIG.

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10 Responses to OIG Investigations – Why Lawyers and Clients Should Both Worry

  1. An important topic that is often overlooked. I did lots of cases with IGs while at the DC US Attorney’s Office, and it can be just as serious as an FBI investigation.

    • Sara Kropf says:

      Agreed. There needs to be more commentary about these investigations because they really can have negative effects, yet there’s no standard method/process.

  2. brucejohnson20000 says:

    Actually, I think they are completely bias from the moment they take a case. I actually dealt with one who side-stepped every legal right I had. He wouldn’t hear of plausible explanations for what he assumed, he cherry-picked facts to fit the theory of guilt, he overstepped my legal rights on more than one occasion and he attempted to force a false confession out of me on the spot (or he threatened that I would rue not playing ball on his field by his rules). In most settings that is flat-out illegal and yet OIG Dillion did this in full view of a senior SSA investigator as if it was routine.

    What he wasn’t aware of is that I was in possession of a vocorder and I was taping every damn word. I would have said something as I usually give people the benefit of knowing they are being taped (in my case this is a memory aid and not a tool of entrapment) but since he came off like his 26 years of experience means he is never wrong….I felt it better to let him verbally ramble. I wonder if that would be enough to end his career if I made issue of it by filing a counter complaint?

    Yes, they do not have much oversight but they still have to answer to congress. Two HD recordings of his voice/investigation and his choice of tactic could well cost him everything and yet I haven’t pushed the idea because I feel that eventually the SSA will do the right thing in my case. I have let people know of this and the longer my case drags on the more I will speak of what I feel to be a miscarriage of justice. Imagine, if some one like me, can ‘up-end’ some like him….I do not believe in ultimate authority and never will. I do not experience fear as most or threat because of the autism/tbi concerns.

    I actually wouldn’t mind being the first to challenge the concept. I know he was in the wrong and maybe he is a good guy and a decease investigator but I have yet to see that with the outcome of my case. He looked over way to much exculpatory evidence. I have never liked bullies and the bigger they are the harder I like to see them fall. I won’t stop until my name is cleared and that is my intent to the bitter end if needed. It is my singulary purpose.

    It don’t help that so many of the SSA personnel have their noses buried into the OIG backside…I have yet to see one SSA investigator or Judge for that matter that isn’t swing hitting for the OIG in a very two-faced way. I know Peter Johnson and Richard Thrasher seems to be bent at the knee at the alter of the OIG’s proclamation. In my view none of them are worth the change in a bums pocket. I could not discern an ounce of independent thought with these people. Certainly they have no ethics with which to redeem themselves. Indeed!

  3. Shannon L Beebe says:

    Thanks for sharing your insight Sara! We’ve seen these investigations go in both directions – lodged by subordinates against supervisors, but also vice versa.

  4. Mr Johnson* hopefully you will get a sense of justice. It sounds like you have been wronged. A vocorder is pretty damning evidence if taken into the right setting. I am sure that the OIG and the SSA Judge should find that concerning –at the very least. Careers in today’s economy can be hard to replace. That is something a trial lawyer would dream of. Have you spoken to the Kasowitz firm yet? Highly recommended and they are not shy about making upper government officials eat crow.

    I read the legal complaint in full –all 36 pages. There is plenty of ability to see that the Federal government was in error. Possible why the OIG really backed out, however seriously the SSA should have cleared this too.

    The SSA can be just as corrupt as the OIG when they make snap decisions about what they are seeing! I heard that they actually took third party statement about ‘your’ lifestyle from rental managers. How can any rental manager attest to anything about your lifestyle behind closed doors? I’d think that would be ripe for lawsuit material based on defamation (especially true if comments or assumptions that have been placed to a file during an investigation ended up resulting in some adverse harm or actions with your case). You need a litigator. I am more of a TORT specialist. I can recommend several and they are very good. Some of them might take your case pro-bono for the publicity alone.

    For any rental staff to make any assumption regarding a tenet is not professional –and it just plain STUPID. Why volunteer things that you cannot prove. The person being questioned can always say that they do not know of certain facts when asked. Not only is that a professional concern for liability sake but it speaks to those parties being a bad judge of character– it makes them seem less than credible as a source. The whole thing is just hinky. None of what I heard was within the standard of the legal system. Regardless of US Court versus Admin Law settings. Do not let these people bully you– they are in the wrong.

    These agencies used these people’s perception as EVIDENCE against you in cases? There is a problem with that. Reliability and validity. And I assure you all the parties involved know better but it is about what they can get away with, it is an abuse and it should not happen. Since when did a person’s opinion of another become reliable or valid evidence? An apartment manager is not a relationship expert, nor would they have this degree of knowledge in most cases regarding their tenets. Maybe some weight can be given if you’re the roommate and testifying as a roommate who would have more intimate knowledge of a person’s general lifestyle. But simply being a staff person at a rental apartment gives no one special abilities to have intimate knowledge. Such parties, at best, can only attest to assumptions and mostly based on the tenet screening records. That is assuming that the records are accurate which is also not always true but it is generally assumed so. Let’s just say this is not a rightful legal maneuver. So, is it also held true that as a tenet you’d be able to give answers of this sort about a rental manager? You can attest only to what you witness but extrapolating is not evidence. Perception is no more than a personalized assumption which may or may not be factual. That makes this portion useless for court purposes. A decent lawyer would get assumptions suppressed.

    So as far as proof goes, If it is not backed up on paper in your written hand, in confession notation, I would have to say it fails the litmus test. Just because Jane Doe assumes something and reports it doesn’t make it true. But if Jane Doe reports this as a professional person, it can make her and her company liable for damages. Things like this cost people their careers so professionals tend to avoid making comments to investigators and they comply by allowing those investigators to review written records (when a properly authorized ROI is signed). It sound like the OIG/SSA decided to forego the written records as it did not support their assumption of guilt in your case, shame on them. I do not know what Ms. Pexa was thinking! What makes her even less credible is that Jane Doe’s word be assumed more knowledgeable when she has no daily connection to you which equates to that level of familiarity. Bluntly, unless you and Jane Doe have been hooking up in private— how can she really report anything which could be useful in a court setting? She might want to consider those aspects. So you are being bamboozled by the SSA if they tell you that meets the criteria of evidence. NOT TRUE.

    For example: Per my reading of this case, I became aware that a former tenet was accused of not reporting income based on the fact that he had a roommate. Apparently he declared his roommate status to SSA immediately. But for some reason the SSA is saying they consider that a form of unreported income that should have affected the reportees benefits. The assumption is that the roommate is a ‘couple’ and not just roommates. REALLY ?! So my roommate’s income can affect me even though he is only a roommate and shares nothing but the space? Okay …so maybe we are friends he takes me to a movie twice a year or we go out and eat once a week…still doesn’t make us a couple legally. So SSA is really over-reaching with that.
    Millions of people who get SSA benefits are in shared roommate arrangement due to the sheer expense of rent in non-affordable markets. So are we going to threaten everyone who gets a benefit because they are potentially a couple and also get a benefits? Can you say WATCHLIST! Unethical. Are you gonna pick only on heterosexual arrangements or are you going after the gays? You get the point, that would be utterly ridiculous and yet it happens. This reads more like a witch hunt than a serious legal work up. The SSA and OIG left so many holes in their own case that they are lucky you haven’t retained a decent attorney. What they call evidence we call layers of circumstantial crap. Meaning it has little meaning without context, and it cannot stand alone as fact. and is seriously questionable as qualified evidence. As I read this, I think to myself what kind of SSA Judge would go after a head injured man when the case is what this one has been? Seems questionable and low…but maybe that is how this Judge got to his standing…. some are heartless and less ethically abiding than others. Did they mess this up, well I can see at least 17 errors in judgment and I am not an SSA attorney. I can clearly see that they infringed on your right a few places. I can see they threw out evidence that supported your arguments when that evidence was equal or better to their own.
    Do I think you can go after this SSA Judge…ABSOLUTELY! Maybe even the OIG but since the OIG did drop their portion of the case it would be harder to meet the tenet of proof of harm. But as for the SSA, they still have an active case correct? So they are still causing harm. That is something that you can prove as of today. You can prove it has harmed your credit and your welfare as a citizen in various ways.

    My point is…unless you admit to being a couple and the roommate too… there is no binding evidence of a couple status. Forged documents cannot be considered in these types of proceedings so that is another false piece of information.
    Did you put couple status on the rental apps, if so shame on you, if not shame on them. Other third party assumptions are not proof and will not stand up in court as such. My understanding from the brief I read, is that, in the above case – that the rental apps did NOT denote couple status. Shame on you OIG/SSA! Since these apps were in place before the parties knew they were being watched it should be clear that their status is roommate and NOT couple. Now to complicate issues if some idiot makes an error, such as a tax accountant at a rental property, which does CPR’s, than that is not the tenet who should be held liable…that would be the rental properties fault. I read that these parties both contacted the rental staff to get such errors corrected as quickly as they became aware of them in each event (yes they kept the proof of that). The other thing that I read that clued me in to the fact that these assumptions resulted in unfavorable errors was that each party paid rent separately. If they were a couple or acting as a couple they would not have done it this way. Each month they paid rent separately as would be expected of roommates. They are enough issue like this that were consistent both before and after the person knew they were being investigated. Their behavior never changed, they continued as the always had always enacted which suggests that they are in a roommate situation. Investigators and Judge alike should have keyed in on those issues. I am aware they did but they avoided it because it did not fit their theory of fault. Such obvious blind-eye and heavy-handed tactics show a pattern of bias against the accused which favor the theory of fault.

    In a brief notation the SSA Judge blames the first party A (asccused) for something he assumes the second party has done. As-if that makes it more likely that party A was involved. This seems rather improper and certainly reeks of biased assumption. If the Judge is right about party B that doesn’t mean that party A was in any way involved. Since there was forgery involved in this mess and ID fraud…. what the Judge assumes might not be relevant to either party. Assumption based on the possibility the there is shared fault, is out-of-place for many reasons, but especially true, if party B was already absolved of fault via the OIG investigation. Again a tediously leap of logic that is not supported by any proven fact. If the OIG speaks for the SSA and they only enact upon the suggestion based on that investigation than party B has been ruled at no fault in the whole matter. The OIG placed blame solely on party A which given the basic of the reason for the claim makes no sense. How can one party be responsible for being a couple while the second party be exempt? They either both are or both aren’t. That is the logic of the conclusion but the OIG ruled party A at fault and party B to have no fault. Than the SSA ruled that party A was at fault but say is assumes party B has fault as well. Both Party A and Party B have denied all allegations stating that these accusations are not true. It seems party A was not believed but party B was assumed telling the truth. Interestingly, both party A and party B said the same thing. There is a legal error of logic here that both parties should take advantage of.

    If others assume I am in a relationship and report that assumption as factual that justifies the Feds coming after me for fraud ? Who the hell makes these rules anyway? Can I declared the assumed person on taxes as a spouse or DP and get a break….I mean seriously. Can I use their credit without getting into trouble? If I eat a box of their cookies I am committing fraud…..That is a JOKE! What makes this worse is that the man had ‘roommate’ designated on the paperwork but all the counter claims against him were verbal; meaning there wasn’t any real proof to be offered to back up what the government did. So if I run around claiming people I don’t like are terrorist –does that mean the OIG will ruin their life too? So let’s not just blame the OIG, there are also other government agencies involved who are playing into this mess just as badly. Their accountability for it is nearly zero and that should change especially if they hurt other people in the process. In the case above OIG and SSA played equal parts. In ruining Johnsons life. They should both be expected to pay for the errors that have damaged his life. They should also correct where they can.

    If I were this poor man I would sue everyone involved, OIG, SSA, apartment complexes and any other fools who opens up their mouth like that know my business. He definately had his rights stepped on. I bet if it happened to this guy then it is probably more common place than people think. He has a head injury– so obviously he is less able to defend himself than others in the community. So did they bully him? I am not sure how to see that issue, but I think they did. Did they wrong him …most definitely! Should they pay…YES. They should be held accountable for the wrongs they have done.

  5. Pingback: Fighting Back Against OIG Investigations (But Losing) | Grand Jury Target

  6. Pingback: OIG Investigations – Why Lawyers and Clients Should Both Worry (Part II) | Grand Jury Target

  7. Pingback: OIG Investigations – Why Lawyers and Federal Employees Should Both Worry (Part III) | Grand Jury Target

  8. Sheridan Steele says:

    Read the book the “Case of the Indian Trader” very well documented case where investigators only took notes on things that supported their theory and in the end they destroyed a person’s career and life with no charges filed. In my case, I had a spotless 38 year career that ended with an IG investigation over a retirement gift that has left a huge cloud over me despite all that I accomplished for the government. There was no waste fraud or abuse and the gift cost the government nothing and there clearly was no quid pro quo but the IG still found wrongdoing and destroyed my reputation as a ‘going away gift’… In addition, I had volunteered to help the agency after retirement by working(no compensation) for a non profit partner which was helping the agency advance its mission but the IG determined it was inappropriate “employment”. even though I worked as a volunteer – why do people volunteer? because they believe in the purpose of the organization and they want to give something back -exactly my motivation yet it was “wrong” …
    No one can show any harm(or cost) to the government or the non-profit partner – only value added but that made no difference….. .

    • Sara Kropf says:

      Your story is similar to so many I hear from my clients. Extremely minor offenses (if offenses at all) that ruin people’s career. And the investigators have no sense of the collateral effects of what they are doing. I’m sorry to hear of your experience and I’m sure it’s cold comfort to know many others have been (and no doubt will be) in your shoes.

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