By Neil Roland

April 17 (Bloomberg) — The U.S. Postal Service doesn’t provide effective oversight of government-issued credit cards that are used by employees for postal-vehicle services, exposing tens of millions of dollars to waste, abuse and possible fraud, auditors said.

The federal agency failed to confirm $13.7 million in vehicle fuel purchases and maintenance and repairs in fiscal 2007, and a number of other transactions were marked as verified when they hadn’t been, a report on the Postal Service inspector general’s Web site indicates.

Many Postal Service managers lacked proper training, didn’t ensure the security of the Voyager Cards, failed to maintain current employee PIN lists and didn’t keep proper documents , according to the report, which was dated March 21 and posted today.

“While we did not identify any fraudulent Voyager Card transactions, the Postal Service sites were at greater risk of fraud, waste and abuse because required internal controls for the Voyager Card Program were not in place,” the 31-page report said.

Since January 2000, the Postal Service has had a contract with U.S. Bancorp, the sixth-biggest commercial bank in the U.S., for the cards. The agency issued about 250,000 Voyager cards in the U.S. as of 2006; last year, there were about 9.3 million Voyager card transactions, for a total of $389.3 million, the report said.

Postal Service management agreed with the findings and directed subordinates to tighten oversight of the Voyager Card program, the report said. Postal Service spokesman David Partenheimer had no immediate comment. U.S. Bancorp spokesman Steve Dale declined to comment.

The findings come as the Postal Service, a government agency required by law to set rates to cover costs, tries to cope with a possible $2 billion loss this year after a$5.1 billion deficit last year. Postmaster General Chief Executive John Potter said last month he’s trying to find ways to cut $2 billion in costs. First-class stamps will rise a penny to 42 cents on May 12.

Department of Justice Press Release: 

SAN FRANCISCO – United States Attorney Kevin V. Ryan announced that Janet Ortega was indicted on charges of defrauding the U.S. Postal Service by submitting and approving fake invoices for over $60,000 in medical services that were never performed. Ms. Ortega, 44, of Daly City, California, was charged with seven counts of mail fraud on November 14, 2006.

According to the indictment, Ms. Ortega – while employed as a contract nurse for the Postal Service – created fictitious invoices for services allegedly performed by a physician named Dr. John De Leon. In fact, the indictment alleges, Dr. De Leon never existed. The indictment charges that Ms. Ortega submitted these false invoices to the Postal Service and then used her authority to authorize payments for these alleged services, knowing that the services were never performed. In all, Ms. Ortega obtained more than $60,000 from the scheme.

The maximum statutory penalty for each count of bank fraud in violation of Title 18 U.S.C. § 1341 is 20 years and a fine of $250,000, plus restitution. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

An indictment contains only allegations against an individual and, as with all defendants, Ms. Ortega must be presumed innocent unless and until proven guilty.

Stacey Geis is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Legal Technician Ana Guerra. The prosecution is the result of a one year investigation by the U.S. Postal Service’s Office of Inspector General.

Department of Justice press release: 

Los Angeles, CA - An Aliso Viejo man has pleaded guilty to federal health care fraud charges for conspiring to pay kickbacks to an employee of the United States Postal Service in exchange for the illegal referral of postal workers to his physical therapy clinic.

Daniel Gallacher Parker Jr., 54, pleaded guilty in United States District Court in Los Angeles Monday afternoon to conspiracy, two counts of paying kickbacks and seven counts of health care fraud. The case against Parker relates to his operation of Cooperative Care Medical Group in Aliso Viejo. The clinic was later called Performance Health Medical Group, which also had operations in Garden Grove and Torrance.

The Department of Labor, Office of Workers’ Compensation Program (OWCP) administers the workers’ compensation program for employees of federal agencies, including the Postal Service. The OWCP pays for medical care for federal employees injured at work, but the program will not pay for medical services or items that are provided as the result of a kickback paid by a medical professional.

By pleading guilty, Parker admitted that he conspired to pay kickbacks to an Injury Compensation Specialist at the Postal Service who agreed to refer injured postal employees to Parker’s clinics. Parker used a middleman to enter into an agreement with the Injury Compensation Specialist to disguise the true nature of the kickback scheme and to provide “legal insulation” for Parker. Parker had his co-conspirator pay the Injury Compensation Specialist $1,000 a month for the illegal referrals, but promised more money if enough referrals were made to Parker’s clinics.

After being asked to participate in the illegal kickback scheme, the Injury Compensation Specialist contacted administrators at the OWCP and fully cooperated in the subsequent investigation.

Parker is scheduled to be sentenced on January 22, 2007 by United States District Judge Margaret M. Morrow. Parker faces a statutory maximum sentence of 85 years in federal prison, although his actual sentence will be determined by the judge.

The case was investigated by the United States Postal Service - Office of Inspector General, IRS - Criminal Investigation Division, and the Department of Labor - Office of Inspector General.

The Postal Service is seeking comments on a proposal to conduct “an ongoing matching program to identify any current Postal Service employees, who are required by state law to register on a state’s public registry of sex offenders”. Read the rest of this entry »

A postalnews.com reader posted the following in response to the Federal Times editorial calling for the PMG to take action against Azeez Jaffer:

The Federal Times obviously does not have a crack legal staff or they would have seen that Jaffer was given a Kalkines warning which means he was forced to talk. Forced to talk with the IG because prosectuion was declined by the prosecutor. Which means the IG at least did try to present the case for prosection but got the thumbs down sign. Once that was done and the Kalkines was given the waters are too murky now for any prosecution to be revisited.
actionjackson

What’s a Kalkines warning? When some investigative functions were shifted between the IG’s office and the Inspection Service last year, the APWU Magazine published a discussion of employee rights, which included this on Kalkines:

In Kalkines v. United States (1973), the U.S. Court of Claims elaborated on the Supreme Court’s holdings, finding that an employee can be asked to “answer pertinent questions about the performance of an employee’s duties … when that employee is duly advised of his options to answer under the immunity granted or remain silent and face dismissal.” In other words, if an employee is given immunity, but nonetheless decides not to answer questions, the government may discipline the employee for not answering the questions…

The Kalkines ruling is an attempt to balance the Fifth Amendment’s right against self-incrimination with the Supreme Court’s holding that the government has the right to have its employees answer questions about the performance of their official duties. In getting this information from employees, according to Kalkines, the Fifth Amendment is not violated so long as the government also grants the employee immunity from prosecution based upon that information.

Kalkines immunity (correct me if I’m wrong on this, readers!) is what’s known as ‘use immunity’, meaning that the individual’s testimony can’t be entered as evidence against him, rather than a blanket grant of immunity from any prosecution. It does, as actionjackson points out, muddy the waters. It’s worth noting that the “disposition” in the IG’s report says “Referred to the Postal Service for administrative action.”

The LA Daily News story about lengthy delays in processing mail in Los Angeles is a serious matter by itself (see Congressman Waxman’s letter requesting a full investigation by the OIG). But it should also serve as yet another reminder to the USPS that the public, the media and the politicians have a very different view of what service means than we sometimes do.

In discussing proposed consolidations, USPS spokespersons have focused on overnight delivery standards, while the APWU has raised a host of other issues, from collection box cutoff times to delivery times. That has allowed the union to argue that all it’s concerned about is the welfare of our customers, not the convenience of its members. Regardless of how you feel about that, you can’t deny that it worked in Rockford.

If Rockford and the other AMP controversies demonstrated a broadened view of ’service’, the LA case show that one piece of paper can drastically narrow the focus. Henry Waxman doesn’t care what LA’s overnight EXFC score was in Quarter 3- he wants to know why there was six day old first class mail in the inventory on May 4, 2006.

Do postal employees have the right to remain silent when questioned by members of the Inspection Service, or agents of the USPS Inspector General? No. That’s the surprising assertion made by IG David C. Williams in a letter to APWU Director of Industrial Relations Greg Bell.

Williams was responding to an article by Bell in the November/December 2005 issue of the APWU’s American Postal Worker magazine, entitled ‘What’s Behind the Changes in Internal Investigations?’. Bell wrote that “You have the right to remain silent. A historic Supreme Court ruling (Miranda v. Arizona, 1966) holds that not only must a law enforcement officer advise an individual of certain rights, the officer must be sure that these rights are understood.”

In his letter, Williams responds “I am concerned that the article incorrectly states that APWU members have an unequivocal right to remain silent during an interview by the Office of the Inspector General by virtue of Miranda v. Arizona. The article suggests that OIG agents must provide Miranda warnings to all employees prior to their interview, and that the employee may always refuse to answer questions absent a grant of immunity. This is incorrect.”

Which, not surprisingly, provoked a response from Bell.

‘What’s Behind the Changes in Internal Investigations?’

Letter from IG David Williams to the APWU’s Greg Bell

Letter from Greg Bell to David Williams