Amtrak’s Office of Inspector General has released a report outlining fraud risks “America’s Railroad” could face as it leverages significant federal investments for major acquisitions and capital projects.
According to the report (download below), historic levels of federal funding from the Infrastructure Investment and Jobs Act (IIJA) will, in part, advance the company’s long-term, large-scale infrastructure goals and significantly expand its traditional passenger rail operations mission to now include a major capital delivery mission. The sheer size and nature of this expansion will, however, increase the company’s fraud risk, the report said.
The report identified four high-risk fraud areas the company faces: contracts and procurements, health care, employee wrongdoing, and cybercrime. It includes examples of how such fraud manifests, and potential fraud mitigations for consideration. For example, the OIG noted that its prior work exposed contract steering and bid rigging schemes, overcharging by contractors, schemes in which employees conspired with doctors to bill Amtrak’s health care plan, employee theft, and cybercrimes involving Amtrak’s e-voucher program.
The OIG pointed out that “[i]f history is any indicator, funding from the Infrastructure Investment and Jobs Act—like other large spending bills—will be targeted by criminals through a variety of unlawful fraudulent schemes.”
To develop the report, the OIG said it leveraged its experience from 99 fraud-related investigations and 22 audits conducted since 2017, as well as industry research on fraud schemes and best practices to prevent and detect fraud.
The OIG credited Amtrak for establishing its Integrated Risk and Compliance Program (IRCP) to monitor fraud risks and establish capabilities to proactively identify fraudulent activity. The report noted that the IRCP could “bolster Amtrak’s enterprise-wide fraud defenses, a culture of integrity, and employee awareness of fraud schemes and indicators.”
For its part, the OIG committed in the report to “aggressively continuing [its] oversight mission, which includes actively investigating and prosecuting fraud cases, identifying opportunities to improve related internal controls, and proactively sharing [its] insights on fraud risks for company consideration.”
Separately, the OIG in April 2022 cited four areas of Amtrak management focus that will be “foundational to the success of the company’s IIJA-funded projects and to the future health of its core operations.”