Free Markets, Free People


Widespread stimulus fraud? Say it ain’t so!

I know this will likely come as a huge surprise, but it appears that the almost trillion dollar stimulus bill, passed by Congress and signed into law by President Obama, has seen widespread fraud. 

Much of the stimulus was earmarked for transportation projects:

But federal investigators have uncovered widespread financial management problems with many of the projects. As of early March, federal authorities were investigating 66 cases of alleged false statements, bid rigging, fraud and embezzlement, according to a report by Calvin L. Scovel III, the Department of Transportation’s inspector general. Justice Department lawyers are scouring 47 of those cases for potential prosecution, according to Scovel.

Twenty-five of those cases involve alleged fraud by minority-owned or operated enterprises that received preferential treatment in the awarding of the contracts, while 22 involve allegations of false claims. Investigators are also looking into nine cases of alleged violations of the prevailing wage law, three involving corruption and one case involving embezzlement, according to a report Scovel presented to the House transportation appropriations subcommittee on March 29. A spokesman for Scovel’s office declined to provide further details of the ongoing investigation, but stressed, “We take very seriously any allegations of waste, fraud, abuse or violations of the law.”

Then, of course, there were the usual nonsensical projects (most of which, I would guess, can probably be traced back to people with political connections):

Those included  $4.7 million towards development of private supersonic jet travel years after the Concorde last flew, $2 million to help build a replica railroad as a tourist attraction in Nevada and nearly $1 million to help beef up security on a private entertainment cruise ship.

But back to the transportation projects.  As usual, purposeful discrimination (i.e. not awarding projects to the lowest bidder but instead to the applicant that best fits the favored demographic) has led to the expected outcome – expected by anyone with at least a passing understanding of human nature:

The inspector general’s office voiced particular concern about the potential for fraud within the so-called  Disadvantaged Business Enterprise program, which is aimed at increasing the number of government contracts awarded to minority-owned businesses. “There is a preference given to minority and female-owned firms and it’s to level the playing field, so to speak,” said the Inspector General’s spokesman.

A “typical scheme” involves a prime contractor  persuading a minority firm to front for it in obtaining a major federal contract and then receiving a kickback of a set percentage of the overall contract, according to the spokesman.

Of course this isn’t a new scheme or the first time it has happened, but apparently it is a scheme that government, in their hurry to hand out money, was unable to thwart.  And, of course, if government had simply made safeguarding the tax payers money the priority instead of trying to “level the playing field” it would have chosen the best qualified and lowest bidder to do these projects instead of basing their decision on skin color and gender.

But we’ve been over this a million times, haven’t we?

As usual, the government provides incentives to engage in fraud and then seem shocked when it occurs.  Yet it occurs every time they provide those incentives, doesn’t it?  It reminds you of a goose that wakes up in a new world every day.  Unfortunately the incompetence of the goose is bankrupting the nation.

~McQ

Twitter: @McQandO

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2 Responses to Widespread stimulus fraud? Say it ain’t so!

  • “It reminds you of a goose that wakes up in a new world every day.” Hey, Erp… McQ’s talkin’ about you…!!
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    Seems I read that Medicare fraud was on the order of 4x the COMBINED profits of all private health insurance. Talk about BIG BIG GOVERNMENT…!!!

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