Don't just stand by -- Fraud hurts everyone Published May 19, 2016 Aif Force Office of Special Investigations ROBINS AIR FORCE BASE, Ga. -- The Air Force has made it easy for its employees to be aware of external threats to the mission. When members of Team Robins drive onto base, they see what the force protection posture is. When they log onto their computers, they see what the information protection posture is. And, they even get notices of severe weather. But the question is, "Have you ever stopped to think about what threats jeopardize your individual duties?" Fraud is a word that is getting more use in the media lately. Large corporations are being fined and executives indicted for structuring business deals. But, does that kind of corruption take place within the Air Force? Most Air Force employees don't want to think about that because they like to believe everyone has the same ethical standards - surely, no one would exploit taxpayer money for their own benefit. To combat corruption, the Air Force Office of Special Investigations created a directorate specifically organized to investigate those kinds of threats within weapon system acquisitions and sustainment efforts. According to the 2016 "Report to the Nations on Occupational Fraud and Abuse" by the Association of Certified Fraud Examiners, a typical organization loses 5 percent of revenue because of fraud. In the Air Force, that percentage affects operational budgets, and ultimately the ability to support the warfighter. The average loss from fraud was $2.7 million. When plugging those statistics into an operational perspective, the impact is devastating. One area where a tremendous vulnerability exists is the insider threat, which manifests itself as public corruption. In fact, 35 percent of fraud cases in the past year fell into the corruption category with a median loss of $200,000. In the past couple years, several employees have been prosecuted for accepting cash and other items of value from outside vendors in exchange for preferential consideration or as a thanks for helping a contractor with a project. Despite annual ethics courses and warnings from leadership, government employees still knowingly engage in corrupt practices. In roughly 95 percent of the cases in the ACFE study, the perpetrator took some efforts to conceal their fraud. The most common concealment methods were creating and altering physical documents. It's hard to imagine, but those bad actors exploit gaps in existing internal controls to perpetuate their crimes. According to the study, lack of internal controls was cited in more than 29 percent of cases, and authorized deviations to internal controls contributed to fraud losses in 20 percent of cases. In other words, people are finding loopholes in the system, or simply authorizing fraudulent behavior for various reasons. OSI has found after years of investigating these types of cases - and the ACFE report confirms it - that fraud perpetrators tended to display behavioral warning signs when they were engaged in their crimes. The most common red flags were living beyond means, financial difficulties, unusually close association with a vendor or customer, excessive control issues, a general wheeler-dealer attitude involving unscrupulous behavior and recent divorce or family problems. At least one of those red flags was exhibited during the fraud in 79 percent of cases. Quite often, fellow employees suspect their co-worker is up to no good, but they feel powerless to make a change, either from fear of reprisal or lack of management support. In over 40 percent of cases, the victim organizations decided not to refer their fraud cases to law enforcement, with fear of bad publicity being the most-cited reason. Government employees stand at a fork in the road then: should we report suspicious behavior, or should we continue to tolerate fraud through inaction. I hope that we choose the first option.