Year of Fighting Fraud podcast with IG Sean O’Donnell transcript


KellyJune: Hello and thank you for joining us today for another Fraudcast by the U.S. Environmental Protection Agency Office of Inspector General. I'm KellyJune, spokesperson for the EPA OIG. In this Fraudcast, we look back at calendar year 2024, which the EPA OIG dubbed the Year of Fighting Fraud and hear about the fraud fighting work. We'll also explore how tackling fraud this year set the stage for what's ahead in 2025. To walk us through the past, present, and future is EPA Inspector General Sean W. O'Donnell. Welcome to this Fraudcast, Inspector General O’Donnell. 

Inspector General O’Donnell: Thank you, KellyJune. I'm really excited to be here to talk about the great work that my office has done over the last year. 

KellyJune: In late 2023, your office declared 2024 would be the year of fighting fraud. Why was 2024 such a fraud-focused year? 

Inspector General O’Donnell: In 2021, the EPA started to see an influx of funds in supplemental appropriations. In particular, 2021 was the Infrastructure Investment Jobs Act and along with IIJA was dedicated funds for our oversight. So, we spent the first two years really focused on sharing with the Agency lessons learned from previous supplemental appropriations and identify needed controls for the new programs or the programs that would see these funds. Now that we're three years in, now that the dollars are starting to go out to the recipients, it was time for us to focus on fighting fraud, waste, and abuse in those programs and recipients. 

KellyJune: Well, now that 2024 is closed, would you say that the year of fighting fraud was successful? 

Inspector General O’Donnell: Absolutely and by every possible measure. Every office in the OIG participated in advancing our fight against fraud, waste, and abuse for the more than 60 reports we issued by our oversight professionals to the fraud fighting curriculum developed by our OIG University. 

KellyJune: Well, of course, I follow the fantastic work that has come out of our fraud fight, but for listeners, can you give an example? 

Inspector General O’Donnell: Sure. I can think of several, but the one that really comes to mind for me is the Clean School Bus program, which is a $5 billion program to fund the replacement of diesel school busses with clean or zero emission school busses. We issued just this year five reports that looked into how the EPA has allocated and will allocate these billions of dollars. In one report, our auditors found that the EPA allowed recipients to co-mingle the IIJA funds with other funds, or to put those IIJA funds into interest earning accounts, while the school districts or the other recipients waited to pay final invoices. And this really increases the risk that program funds will be used for a purpose other than what is intended. What I find particularly frustrating, and I think my staff does as well, is that these two issues in particular are featured as red flags of the numerous fraud awareness briefings we have provided the agency. In another one of those reports, KellyJune, our auditors found that the EPA failed to make sure that the clean school bus funding was properly allocated and accounted for. And in this report, we identified over $800 million in funds that the EPA was not properly monitoring. 

KellyJune: That is a great example from the IIJA Oversight. Are there any other examples from IIJA? 

Inspector General O’Donnell: Sure, there are many. As you know, the IIJA provided the EPA with an unprecedented amount of funding. So, there are a lot of programs to pick from. But for me, another really important example of our oversight work has been the EPA's $15 billion lead service line replacement program. In a recent report, our evaluators found that the EPA relied on poor data or unreliable data in allocating those funds, resulting, by our calculation, in at least $940 million being misallocated or at risk of being miss allocated. And our investigators recently helped lead an investigation into alleged scheme to defraud a States lead service line replacement program, a program funded in part by the EPA, resulting in the arrest of a construction company's chief executive officer and foreperson.

KellyJune: Okay. What's the big picture takeaway? 

Inspector General O’Donnell: Our oversight of these two programs is just the perfect example of how the EPA OIG is a sound investment of taxpayer dollars. For every dollar that we have spent on IIJA Oversight, we have seen a return of potential monetary benefit of $40. And we are just three years into our 13-year plan. 

KellyJune: All this amazing output in 2024. Would you talk more about how the EPA OIG increased overall awareness of fraud? 

Inspector General O’Donnell: This is another great example of a whole office approach we started in 2024. We see outreach to our stakeholders as an important tool in detecting and preventing fraud abuse. In that vein, our office conducted approximately 130 fraud awareness briefings to thousands of key stakeholders identifying really important fraud indicators like the ones that the EPA ignored in our school bus audit.

We issued fraud alerts to call attention to prevalent scams and key requirements for fraud reporting and whistleblower protection. We created this podcast series, our Fraudcast series, to discuss fraud related topics, and we used the best social media team in the IG community to find new ways to share our oversight work with what I see as our only paying customers, the American taxpayer.

KellyJune: That's right. And I'm going to take this as an opportunity to encourage our listeners to follow us on Instagram at EPA.IG.ON.IG. But in all seriousness, what about roadblocks? Were there any difficulties or lessons learned from the year of fighting fraud? 

Inspector General O’Donnell: As I said, 2024 has been a very successful year for the EPA OIG. But we face, as I counted, three enduring obstacles to independent oversight here at the agency. Probably the most significant obstacle to oversight is the lack of good data. For example, the EPA has, through the state revolving funds, distributed billions of dollars for water and wastewater infrastructure. The IIJA alone will add tens of billions of dollars more to the SRFs. But the EPA doesn't have good data across the entire enterprise, on take for example, who is bidding on infrastructure projects or whether the SRFs are conducting mandatory audits. Another obstacle has been the lack of funding for IRA oversight. Just recently, I think we all heard about the rush to distribute the $27 billion to the Greenhouse Gas Reduction Fund to what is really a handful of recipients.

But that's not where the dollars will stop. These recipients who have received billions will now distribute millions of those federal dollars to all kinds of new sub-recipients for new projects that the EPA has never funded before. So, the way this money was sent out and the way the money will be spent cries out for independent oversight to follow every dollar. Yet we were not given even $1 to do that kind of oversight. Even worse, our budget for the oversight of core EPA functions is at its lowest in over a dozen years. While the EPA's budget is just a basis for comparison, it’s at least 10% higher. That's not to say we won't do IRA oversight. In fact, we have a number of ongoing investigations related to those programs.

And this takes me to the third obstacle and one of the most significant obstacles to our fraud fight, which is the EPA’s resistance to our independent oversight. We have reported instances recently where the EPA refused to report possible fraud, such as the instance where a potential fraudster used falsified documents to attempt to defraud the EPA. Most problematic is that when we raised these concerns with the Agency, their response is to attack our oversight jurisdiction, to fight fraud, waste, and abuse related to its programs and operations.

And now I'm concerned that this resistance to the OIG fraud fight will only increase as we take on the responsibility of following every IRA dollar to every one of those final recipients. 

KellyJune: The EPA OIG has had an accomplished year overseeing the Investment Infrastructure and Jobs Act, or IIJA, programs, from clean school busses to state revolving funds, or SRF, and lead service lines. Looking forward, it sounds like the Inflation Reduction Act, or IRA, programs are on the radar. How will the EPA OIG keep up the momentum from 2024 as we move into 2025?

Inspector General O’Donnell: KellyJune, I'm very excited about the future of the EPA OIG. In September, we issued our new strategic plan for the next five years. A key component of that plan is innovation. I encourage my staff to be creative, to really lean in and to drive innovation. We are already exploring new tools such as machine learning and leveraging new skill sets, such as financial analysts, to improve our fight against fraud, waste, and abuse. You are already starting to see this at work. Take, for example, our recently issued Cyber Management application report.

By leveraging new tools and expertise outside of the environmental space, we were able to identify key vulnerabilities in the cybersecurity of large drinking water facilities. This is why we see 2025 as our year of innovation fighting fraud. 

KellyJune: Inspector General O'Donnell, congratulations on a successful 2024 and cheers to 2025s year of innovation. Thank you for joining us today. 

Inspector General O’Donnell: Thank you, KellyJune, for allowing me to join this broadcast. It's my first. I'm very excited to be able to share our achievements with your listening public. 

KellyJune: And we are very excited to have you. And to our listeners, thanks for joining us. You can find the reports mentioned in today's broadcast and other OIG reports and project notifications on our website at www.EPAOIG.gov. We urge anyone with information about fraud, waste, abuse, or mismanagement involving an EPA or U.S. Chemical Safety and Hazard Investigation Board operation or program to contact the EPA OIG Hotline by calling 888-546-8740, emailing OIG.hotline@epa.gov, or submit a complaint form via our website.