How My Teenager Learned About Fraud

I have a "typical" teenage daughter.  Well, she’s not typical to me, of course.  She’s smart, funny, and very perceptive.  And I should add, she has always been a lot more trusting than I am.

I should also acknowledge that I am a recovering federal prosecutor.  I stood in the federal courthouse in Mobile, Alabama, for almost 18 years presenting evidence of “high crimes and misdemeanors.”  I say that I am recovering but that’s only partially true.  You see, the whole experience left me pretty jaded after seeing every variety of deception, deceit, and crookedness.  A career focused on turning over the entrails of failed character has a way of changing your world view.  For me it had a way of leaking out at home, too.  I suppose it has been a subconscious way of trying to protect my daughter against the pain that I have seen fraud cause so many families and friends.  Trust broken has untold repercussions.

Of course, there is a delicate balance between cultivating a healthy trust of people on the one hand and on the other hand appropriately warning your child about the frailties of human nature.  If you ask my 17-year-old daughter where I came down on that at home she’d probably say, “Dad has seen way too many crooks in his line of work.”  That’s the price you pay as a parent trying to blunt the inevitable pain that comes the first time your child is swindled.  You know it will come.  They never seem to believe it.

For my daughter Michaelan, it came last year at Webb School of Knoxville.  The Knoxville News Sentinel carried the story and it shocked the community.  You may have read the account of how Suzi Bass, a math teacher at Webb, perpetuated a scheme to defraud students, parents, teachers, and community members alike out of money they earned to help her fight a serious illness she apparently never had.

Michaelan, who was a junior last year at Webb, served on the prom committee that was organizing a fund raiser for their math teacher Bass.  Bass had told school staff she had been diagnosed with breast cancer, but prior to the prom, media announcements about the fundraiser led to several phone calls stating that Bass was running the same scam she had been accused of perpetuating in two other school systems in Georgia and Alabama.

Prior to being hired at Webb, Bass had passed a background check and came highly recommended by at least one previous employer.  In a letter posted on Webb’s web site, Principal Scott Hutchinson wrote, “To the heart of the matter with Suzy Bass, there is an overwhelming preponderance of testimony and evidence that she has been dishonest in representing herself to this school community.  I take very seriously the role that adults at Webb play in inspiring our students, and honorable words and actions are at the top of the list for attributes that we seek in our teachers.  It makes no sense to me to expect the best from our children if we can't provide the best from our adults."

So when my daughter came home after the news broke of this deception, she was astounded.  She was both hurt and angry.  Hurt because Bass had played on her sympathies and angry that she had been snookered.  Despite having seen this sort of thing from the criminal justice side many times before, this news hit me as preposterous as it did Michaelan.  We stood in the kitchen aghast at the audacity of how someone could stoop so low.  I prided myself on resisting the temptation to remind my daughter of all the times she had chided me about preaching “trust but verify.”  Frankly, it didn’t seem like anything I had ever said helped right then.

And so, what does all of this have to do with TVA and you?  Well, each year many of you discover that your fellow employee or a TVA contractor was cheating TVA.  (Take a look at our video for examples of how this occurs--click here.)  You have the same mixture of hurt and anger that someone on the team let all of us down.  They didn’t just cheat TVA, they cheated you.  Every time a TVA employee takes a bribe from a contractor or embezzles money from a TVA account we all lose.  Our confidence in humanity is once again shaken and our propensity about how much we should trust slows us up.  The team takes a hit. 

The Office of the Inspector General is TVA’s “watchdog” but we can’t do it all.  Every time a fraud is committed there were tell-tale signs that someone could have caught.  That was true at my daughter’s school with her scheming math teacher and it’s true with those TVA employees who cheated TVA.  Clues were missed because we are naturally trusting and no one wants to be seen as thinking “everybody’s a crook but me.”  After all, who would imagine that a math teacher at Webb would let her students go out and raise money because they were grieving her fictitious life-threatening breast cancer?  The fellow employee of the TVA employee who took a bribe from a contractor wouldn’t have believed in a million years that his buddy would do that.  The friends and coworkers of the TVA employee who was siphoning off TVA money into her own bank account couldn’t imagine that she would do that.

Millions of dollars could be saved every year at TVA if TVA employees followed up on their hunches and gave us a call.  Like we always say, “you don’t have to be judge and jury.  Just tell us what you know.”  Are you seeing things that don’t pass the “smell” test?  Do your instincts tell you that something is going on?  Trust but verify.  One way you can do that is to call the OIG.  No one will ever know you called if you want your identity to remain hidden.  You could save everybody a lot of grief.

Former Comptroller Sentenced to 46 Months for Wire Fraud

An investigation conducted by TVA's OIG has led to the sentencing of a former TVA contractor employee Phyllis Giger of Knoxville, Tennessee.  Assistant U.S. Attorney Trey Hamilton represented the government.

Giger, 64, was sentenced Thursday, Sept. 25 by the Honorable Thomas Phillips, U.S. District Judge, to 46 months in prison, followed by 3 years of supervised release.  This sentence followed Giger's guilty plea to wire fraud charges on April 3, 2008.  Giger was also ordered to pay restitution totaling $577,647.37.

On June 20, 2007, a federal grand jury returned an indictment charging Giger with wire fraud.  According to court documents, Giger provided comptroller services for National Emergency Assistance, Inc. (NEA) and Retiree Resources Corporation (RRC) and electronically transferred funds from NEA’s and RRC’s AmSouth accounts to her personal bank accounts located at Home Federal Bank and First Tennessee Bank.  Giger concealed her wire transactions by falsely identifying the electronic fund transfers as payments to other individuals.  Giger's fraudulent transactions totaled $577,647.37.

"This case illustrates the importance of being vigilant in looking for fraud,” Inspector General Moore said.  "We always say you don’t have to be judge and jury, but if something just doesn’t look right, you can contact our Empowerline at 1-877-866-7840 or by visiting www.OIGempowerline.com to report your concern.  The Empowerline was designed with your protection in mind and is staffed by a third-party away from TVA.  It is structured to keep your identity unknown to anyone if you so choose.”

The following were signs that created suspicion among senior-level management in Giger’s case.

1. No back-up personnel – Giger was the only employee who knew how to do payroll, direct deposits, journal vouchers, bank transfers, and all cash disbursements.
2. Reluctance to provide cross-training – When others tried to learn components of the job, Giger made little effort to explain things and continued to do them herself.
3. Generating disorganization – Files had not been updated in years, and Giger left recent documents scattered and disorganized.  In order to review a document, one had to ask multiple times.
4. A reluctance to adhere to established schedules – Travel was being paid/entered on a very erratic schedule, which resulted in payments being made almost any time and not on a regular schedule.  In the end, the erratic payment schedule may have served to camouflage the fraudulent bank transfers.
5. Dramatic changes in lifestyle – Individuals independently noted Giger was spending a lot of money, including funding a wedding, buying matching automobiles and two motorcycles, buying a new house and a nightclub as well as a leather-wear shop, etc.  People reportedly assumed that Giger received money after her first husband’s death, but the level of spending during her last year of employment was definitely noticed by others.

Telework Works for TVA OIG

With almost everything a finger push away nowadays, for many the 21st century workplace doesn’t include a designated place anymore.

Since work in America has become so technologically driven, many believe a traditional office setting may no longer be as necessary or even as conducive to work as it once was.  Work is more about results and less about where the work occurs.

In these inflationary times of high gas prices, astronomical healthcare costs, and the devaluing of the American dollar, U.S. employers are also looking at ways to give their employees a break.  For some, such as the state of Utah and other government agencies, that break has come in the form of four-day work weeks.  For others, teleworking has become the more popular choice.

Teleworking involves utilizing the latest technology to allow employees to work from home and other non-traditional office sites.  This style of working is practiced mostly by government agencies and corporations in larger cities where commuting to a jobsite is a hindrance due to seemingly endless lines of traffic and nearly impossible parking, but that doesn’t stop TVA Inspector General Richard Moore from offering it to his primarily East Tennessee-based employees.

“Telework is a natural fit with TVA’s emphasis on conservation of energy and its commitment to lessen its impact on the environment,” IG Moore said.  “We can contribute to that effort by lessening our effect on greenhouse gas by significantly decreasing our carbon footprint on the environment caused by daily and unnecessary commuting into Knoxville and Chattanooga.  The type of work our auditors and investigators do allows them to work from remote locations.  In fact, much of the work they do requires them to be out of the office when conducting interviews and doing field research.  With technology being what it is today, they don’t need to be in a traditional office setting to type and electronically submit their reports.  Our focus is on results, not on where you do the work.”

“We are absolutely convinced there is an obvious environmental benefit to having your workforce operating flexibly,” stated a 2008 report produced by The Work Design Collaborative, a Limited Liability Corporation of the Future of Work, a membership organization for HR, IT, and Facilities professionals.  “The arithmetic is simple:  if every company in a major metropolitan area encouraged (or required) its workforce to work from home or a neighborhood satellite facility just one day a week instead of commuting to the central office, the number of cars on the road, and their energy consumption, would drop by 20 percent.  Just think what we could do for energy independence in the United States if we could shift the entire workforce to flexible work models.”

About 17 percent of federal employees are teleworking according to a survey by CDW-G, a government-focused IT vendor, released in March 2008.  This is compared to only 14 percent of private industry workers in the U.S.

The TVA OIG already had success with the program when it was piloted about a year ago with some 25 employees.  “The employees who volunteered for it indicated they liked the flexibility teleworking gave them and their productivity actually increased,” said Deputy Inspector General Ben Wagner.  “That’s when our IG decided the program warranted a trial run from all employees who were able to try it.”

Sylvia Whitehouse, who works in IT Audits, is one of the employees who just recently started teleworking.  “Benefits come easily with this opportunity,” Whitehouse said.  “The most obvious is the savings on gas and time for commuting.  A little less obvious is being able to enjoy my home atmosphere with a lot fewer interruptions and distractions.  I can work a long time in my own surroundings while keeping distractions to a minimum, focusing better on the work.  There’s not the opportunity to chat with coworkers and interruptions are more limited, coming mainly from email requests and phone calls which seem to occur less frequently than when I’m actually in the office.”

OIG auditor in Contract Audits, Greg Strach, echoed Whitehouse’s sentiments saying, “Telework has been a benefit to the OIG and myself.  There are less distractions at home than in the office which allows me to be more productive.  I come into the office at least once a week to touch base with other persons in the department and with my director.  I save two hours of travel time each day plus the fuel costs.  Just like anything new, you have to make some mental adjustments and focus on the task at hand.”

OIG Special Agent David Winstead credits technology with making telework not only possible, but often more efficient than working in an office, “With the advent of secure remote access to our servers, electronic filing systems and a myriad of ways to communicate, there is little that must be done in a traditional office setting.  Telework is a boost to efficiency.  I’ve reclaimed an hour a day which was once dedicated to commuting and it is easier to focus on the work at hand by reducing the interruptions inherent in a world of cubicles.”

According to the 2008 report produced by The Work Design Collaborative, “numerous studies” of the productivity differential between teleworkers and non-teleworkers consistently demonstrated at least a 15 percent gain in productivity of teleworkers over their non-teleworking counterparts.

The TVA OIG measures productivity through a system called Winning Performance which is the same system used by TVA.  When productivity measures are met or exceeded, a financial incentive is tied to these met or exceeded goals and is distributed to employees at the end of the fiscal year.  The OIG also conducts regular team and department meetings and monitors progress through quarterly departmental and monthly managers meetings with IG Moore.

To avoid losing the effectiveness of teamwork, TVA OIG teleworkers also meet in the office when necessary and will soon be utilizing collaboration software that allows team members to connect from various locations when needed.

The 2008 Work Design Collaborative report commended leaders who are willing to weather the storm of getting technologies to work.  “These mobile ‘pioneers’ continue to face frustrating – and generally unnecessary – technological challenges when they attempt to ‘hook up’ with their colleagues or access corporate data and other information from remote locations.  We think it’s time for employers to catch up with their workforce.  The companies that take an aggressive leadership position to enable mobile work will thrive in the future because they’ll become talent magnets.”

IG Moore noted, “Telework works plain and simple.  We had to go through some minor machinations in acquiring and learning to use the latest software to make it work, but once all the kinks were resolved and everybody got on-line, we found we had the same abilities that we would have if we were all physically in the same office together.  Plus, our employees are saving a significant amount on these never-before-seen gas prices because they don’t have to drive hundreds of miles collectively every day to an office they don’t need to be in.”

IG Moore observed, “We are examining how we can radically reduce our need for expensive office space in downtown Knoxville through our telework program.  We shouldn’t cling to traditional offices just because we were taught years ago that everybody needs one.”  In an ever increasingly challenged economy, employers have a choice that makes sense.

With a little ingenuity and the latest technology, employers can go a long way to save employees pain at the pump, reduce the greenhouse gas effect, and contribute to energy efficiency of corporate or government-run buildings by allowing employees to work from home.

For more information about the TVA OIG, go to their web site at www.oig.tva.gov.

Bonneville Power Group

During June, representatives from the Portland-based Bonneville Power Administration (BPA) visited our Knoxville office to learn more about the OIG’s role in administering TVA’s Ethics and Compliance Program, including details about the OIG-sponsored Empowerline system. 

BPA officials sought out the OIG’s assistance as that agency moves forward in implementing a comprehensive ethics assurance program.

Anne Ferrell, Program Manager, met with Helen Goodwin and Debra Smiley of BPA’s Agency Compliance and Governance Division.  Dale Hamilton, Senior Manager, TVA Ethics and Compliance, also spent time with the BPA visitors to discuss TVA’s overall Ethics and Compliance Program.  According to Goodwin, the BPA is in the process of adopting a program similar to the OIG’s Empowerline program.  After the visit, BPA management stated they were “impressed with the Empowerline as it is an all-encompassing and easy-to-use portal for employees, contractors, and the general public.”

Employees, contractors, and the general public can report suspected fraud, waste, or abuse affecting TVA to the Empowerline.  The Empowerline is administered by a third-party contractor and can be reached toll-free by phone (1-877-866-7840) or over the web (www.oigempowerline.com) 24 hours a day, 7 days a week.  Individuals who report concerns may do so anonymously or request confidentiality.  They can also use the system to track the disposition of concerns they report.

Reminder

The TVA OIG is offering employees and the public the opportunity to be among the first to receive news from the OIG.

Employees have the option of signing up for automatic notification of new postings to the TVA OIG web site.  This service is intended to offer the quickest and most direct source for OIG audit reports, inspections, and other news items.

To be “in the know” and start receiving notification of changes to the OIG web site, employees can sign up for this new service on the OIG web site at www.oig.tva.gov.  Those wanting to subscribe to the new service should look for the “E-mail Alert Service” box on the home page and then submit their e-mail address.  Employees can unsubscribe at any time.