Government employees misuse purchase cards

Federal government employees spent millions of dollars of taxpayer money using their government purchase cards to pay for questionable items such as Internet dating services, Brooks Brothers suits, expensive steak dinners, personalized iPods, computers, and more, and much of the expensive electronic equipment has been lost or stolen, according to Congressional investigators.

It’s fairly easy to misuse government purchase cards, which are like normal Visa and MasterCard credit cards, according to the Government Accountability Office. Investigators examined purchase card transactions made between July 2005 and June 2006 and estimated that for 41 percent of them, government cardholders did not follow proper procedures to prevent waste, fraud and abuse.

In one egregious case, a Forest Service employee wrote convenience checks to her boyfriend on her purchase card account, embezzling $642,000 over six years, according to a GAO report published Wednesday. The money “was used for personal expenditures, such as gambling, car loan and mortgage payments, and other retail purchases,” according to the report.

The cardholder, who was not named in the report, pleaded guilty in 2007 to embezzlement and tax fraud and was sentenced to 21 months in prison followed by 36 months supervised release and to pay back the $642,000.

And in many cases, things that weren’t tied down simply disappeared. Investigators noted that government agencies were unable to locate 458 of 1,058 expensive and “easily pilferable” items, such as iPods, digital cameras, laptop computers, and sometimes even larger items, accounting for $1.8 million in missing merchandise from the $2.7 million sample. The largest was described as “256 items making up 16 server configurations, each of which cost nearly $100,000.”

The report gave several more examples of improper, fraudulent or abusive transactions:

• A postmaster at USPS used his government purchase card to fraudulently subscribe to two Internet dating services over 15 consecutive months (April 2004 through October 2006). The monthly charges for these dating services were the only charges that appeared on the cardholder’s monthly statements during this period; yet each of these charges was authorized and paid for by USPS. The cardholder paid restitution of over $1,100 but faced no disciplinary action for this fraud.
• One USDA cardholder used year-end funds to acquire a Toyota Sienna and a Toyota Land Cruiser totaling nearly $80,000. Although the purchases were made at the request of two Foreign Agricultural Service offices, the cardholder violated agency policy by failing to acquire a GSA waiver. The cardholder also used four convenience checks, purchasing the Toyota Sienna with one check and splitting the payment for the Land Cruiser into three separate checks because its purchase price exceeded the convenience checks maximum purchase limit. Although documentation from USDA showed that the vehicles were shipped overseas to the units that requested them, we did not perform additional work to determine whether these vehicles represented a valid government need.
• One cardholder at DHS improperly bypassed competitive requirements of the FAR to purchase three personal computers totaling over $8,000. In this instance, the person who requested the computers provided the purchase cardholder with the specifications and a request that the items be purchased from the requesting individual’s preferred vendor. The cardholder did not apply due diligence by obtaining competitive quotes from additional vendors. Instead, the cardholder asked the requesting official to provide two “higher priced” quotes from additional vendors. In doing so, the cardholder circumvented the rules and obtained the items without competitive sourcing as required by the FAR [Federal Acquisition Regulation].
• USPS paid over $13,000 for 81 conference attendees to dine at an upscale steak restaurant in Orlando, Florida, in 2006. The dinner, which cost over $160 per person, included steaks, crab, appetizers, and over $3,000 in alcoholic beverages purchased over a 5-hour period. We define this transaction as abusive.
• At the National Aeronautics and Space Administration (NASA), a cardholder used the government purchase card to acquire two 60GB iPods. Although NASA officials maintained that the iPods were essential for official data storage, we found that the cardholder personalized the iPods with the requester’s and agency’s names and used the iPods to store songs and music videos. Although the iPods had some business files on them, we concluded that the purchase was abusive because other data storage devices without video and audio capabilities were available at lower costs.

— Governmentwide Purchase Cards: Actions Needed to Strengthen Internal Controls to Reduce Fraudulent, Improper, and Abusive Purchases (PDF)

The report lists many more examples along the same lines, including a Department of the Interior employee who just brazenly walked up to an ATM and used the card to get $24,000 in cash advances, and four Department of Defense employees who spent over $77,000 on clothing and sporting goods equipment. The $860 military clothing allowance just doesn’t cover the cost of a Brooks Brothers suit.

And remember, it’s money that was stolen from you that these bureaucrats are wasting on themselves. Many of them actually seem to think that it’s okay to take your money by threat of violence and spend it on themselves. How do you feel about April 15th now?