The Basics of Federal Program Fraud

Across the United States programs are funded by the federal government. These programs can range in purpose from education to defense and cover activities involving public safety, public welfare, and public works.

As you can imagine, these programs, whether fully or partly assisted by the federal government, receive considerable funds each year. The federal government has a substantial interest in ensuring these funds are appropriately distributed and used – leading to robust laws against federal program fraud.

When Are There Accusations of Federal Program Fraud?

The federal government is constantly monitoring the movement and use of federal funds. When it suspects or receives information that an individual stole or diverted resources from a federal program, there is an investigation into federal program fraud.

Instances of possible federal program fraud include defrauding private organizations, entities, local governments, and schools that receive federal funds. Federal program fraud is also applicable to instances when fraud is committed by a contractor or third-party to a contract assisting or facilitating a federal program.

Federal Statutes That Cover Federal Program Fraud

Charges for federal program fraud can fall under different federal statutes. For example, when it is a federal health care program that is defrauded, the False Claims Act, Anti-Kickback Statute, or Health Care Fraud Statute might create a criminal or civil right of action. Some of these laws are employed in other instances of fraud against the federal government, including fraud by federal grant recipients and most significantly when a government contractor is accused of fraud by a whistleblower or relator.

However, the government has taken specific steps to prevent federal program fraud beyond these broader statutes. Section 666 of U.S. Code makes it an express and explicit crime to defraud the federal government.

What Is a Crime Under Section 666 of the U.S. Code?

Prior to the passing of Section 666 of the U.S. Code, fraud against a federal program or service receiving federal assistance was limited to the federal theft statute. This application of the theft statute made it difficult for the federal government to investigate and prosecute individuals accused of federal program fraud.

Section 666 makes the criminal right of action much more clear and widely used by the federal government. The statute also places federal contractors, program administrators, and federal employees at greater risk of investigation and prosecution. According to the statute, federal program fraud is:

  • The agent of any organization, state or local government, Indian tribal government, or agency of the government;
  • Knowingly embezzles, steals, defrauds, or diverts funds, intended for a federal program, activity, or service; and
  • The funds equal $5,000 or more or were under the control or authority of such entity.

It is also a crime under federal program fraud when an agent of any organization, state or local government, Indian tribal government, or agency of the government bribes or attempts to bribe an agent of a federal program, activity, or service in exchange for anything valued at $5,000 or more.

What Should You Do If Accused of Federal Program Fraud?

The repercussions of federal program fraud are clearly stated. Section 666 of the U.S. Code explicitly states that a conviction for federal program fraud can result in a prison sentence and imposition of a criminal fine. The maximum length of the prison sentence is a substantial 10 years.

Whether you are guilty or innocent, the stress of facing these potential repercussions of federal program fraud is overwhelming. You need to dispute all accusations of federal program fraud to limit any chance of criminal charges for federal program fraud or a criminal conviction. Here are the tops tips for fighting accusations of federal program fraud.

  • Address accusations of federal program fraud early and if possible before an investigation by a federal agency is underway.
  • Be forceful in your objections to federal program fraud and do not admit any mistake or misunderstanding without the advice of a federal defense lawyer.
  • Cease actions that indicate guilt or provide further evidence of federal program fraud.
  • Ensure your organization has procedures and rules in place for handling federal funds or facilitating a federal program, activity, or service and perform an internal audit on whether those procedures are followed.
  • Collect documentation that aids in your argument of innocence, but do not provide this information to federal investigators unless advised by a lawyer or required by subpoena.
  • Hire a top federal defense lawyer with experience fighting charges for federal program fraud.

Find a knowledgeable federal program lawyer immediately.