Every Halloween, the cute traditional images re-emerge from our closets and the attics. Ghosts, gravestones, plastic pumpkins, and perhaps the most common of all – skeletons. Given the recent heightened status of Disadvantaged Business Enterprises (DBE) fraud prosecutions, the massive civil penalties, the prevalence of hotlines, and increased incentives for whistle-blowers, any contractor who participates in DBE programs should use Halloween as an annual reminder to take a closer look to see if they have other skeletons in their corporate attics.
According to recent government reports and audits, DBE fraud investigations have been on the rise, in hopes of deterring widespread abuses in the programs. According to a 2011 report from the DOT, between 2003 and 2008, the Office of Inspector General (OIG) investigations resulted in 49 indictments, 43 convictions, nearly $42 million in recovery and fines, and 419 months of jail sentences. Moreover, from 2009 and 2010, the number of DOT investigations increased by almost 70 percent. Based upon the headlines each month, the number of indictments keeps climbing, along with the civil and criminal penalties.
In view of these statistics and trends, one thing should be crystal clear. To the extent that DBE compliance may be a challenge, it is far better to discover the problems sooner, rather than later.
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