Practical Ways to Fight Fraud & Corruption

CAFAC PRESENTS PRACTICAL WAYS TO FIGHT FRAUD AND CORRUPTION IN GHANA

US IMMIGRATION SERVICE AS A CASE STUDY

In the fight against fraud and corruption, Corruption And Fraud Audit Consortium (CAFAC) Ghana Ltd is of the view that simply giving a list of methodologies or strategies to implement against corruption has its place but it is not nearly as effective as case studies or real life examples of actual fraud and corruption cases and how they were solved. The case study approach is not only interesting, but it is also very practical and leaves the party interested in fighting corruption that replication is very possible because “history does indeed repeat itself” and life is full of cycles.

Therefore, starting today CAFAC will be presenting a series of actual fraud cases, some of which CAFAC principals were directly involved, some of which other fraud professional colleagues were involved and others are part of the general literature. The goal is to educate the Ghanaian public, the government and private companies on what preventive, detective and corrective methods are utilized in advanced countries, which we all agree are more successful in their efforts to curb corruption. Since an educated consumer is indeed the best customer, we hope that this education will be put to good use.

A case study for discussion took place in no other place than New York, New York. It involved an FBI agent by name Mr. J. T. Wells (the current president of ACFE who has also documented this case in his publications). He was transferred from El Paso, Texas to New York and assigned to the Manhattan office. The case involved allegations of a highly placed US Federal Government civil servant, Herman Klegman. He worked for the Immigration and Naturalization Service (INS), now part of the US Department of Homeland Security and held the title of District Director. Klegman’s area covered all of New Jersey.

As the District Director for INS, Klegman had the ultimate authority to issue all green cards in his district. For the uninitiated, a green card gives a non-US citizen the right to live and work in the country without becoming a permanent citizen. Green cards are strictly allotted by foreign country and can be very hard to come by legitimately, depending on the country of residence. At that time citizens from mainland China were especially likely to have their green card applications rejected, so many of them immigrated illegally. Once in the United States, these illegal immigrants would find their way into the Chinese community. In New York, many of them would become employed by the numerous restaurants in Chinatown.

Unconfirmed rumors about Klegman’s ethics had apparently circulated for years in INS circles. Finally someone - presumably an employee- wrote the FBI an anonymous letter claiming Klegman was “on the take” from a New York Chinese restaurateur, Stanley Yee. No details were forthcoming and Mr. Wells had no idea whatsoever where to start. So he spoke with the FBI Corruption Squad’s most experienced agent Boyd Henry. He was a veteran of at least 1,000 bribery cases and really knew how to cut through the fog. Mr. Wells asked him how to prove such a case.

Mr. Boyd said, “If someone is taking payoffs, then they are doing something they should not officially be doing. Look for what that something is, and you will find the answer.” Boyd was able to sum up the essence of investigating corruption in this gem of a statement and Mr. Wells never forgot. Armed with this ammunition, Mr. Wells went to work. He reasoned that Klegman must be issuing green cards to Yee’s workers in exchange for kickbacks. But this theory had obvious flaws. Klegman’s authority was limited to New Jersey and Yee’s Chinese restaurants - two of them - were all located in New York.

Mr. Wells discussed the theory with Boyd who said, “That must be it-Klegman is probably somehow issuing green cards to Chinese restaurant workers in New York City through his office in New Jersey. You need to focus on exactly how he could pull that off.” Boyd’s approach made perfect sense to Mr. Wells. Sol Saletra was Mr. Wells’s contact at INS who explained that an application for green card is filed in the district of the immigrant’s residence, so if Klegman issued green cards to workers in New York City, they would show a New Jersey residence. Otherwise, it would look too suspicious to the compliance auditors at INS who periodically check the procedure for issuing green cards. The first step in proving the address theory was to find the personnel records of all the employees of Yee’s 20 restaurants - about 400 people in total. Mr. Wells and his team of investigators issued subpoenas to all the restaurants for their records. Once they had the names of Yee’s Chinese workers they searched them against INS records in New York and New Jersey. LO! AND BEHOLD THE EUREKA MOMENT HAD ARRIVED!!!!

The search revealed a mysterious pattern with a dozen or so immigrants. It seemed their original immigration files were initiated in New York. Then each of these immigrants at different times sent a letter to the INS stating that they had moved from New York to New Jersey. Their applications for green cards were thereafter processed in New Jersey INS office by - you guessed it- Klegman himself. After their green cards were issued, each of these immigrants sent a letter to the New Jersey INS office stating that they had moved back to New York. Interestingly, to the naked eye all the letters looked like they had been prepared on the same typewriter.

Mr. Wells went back to Boyd Henry for expert advice and he said to him “Joe, you are on to something, but you have still got a long way to go to prove that Klegman has done something he should not have done in his official capacity. First to put a circumstantial case together, Boyd reasoned that a highly placed official like Klegman would never personally approve green cards even though he had authority to do so. Sol Saletra of the INS confirmed that it would be very unusual for the district director’s signature to be on an application. The only way to find out if this was the case was to examine every immigration file for the period under investigation looking for Klegman’s signature. This would also be excellent evidence in court.

After hundreds of hours of tedious labor, the investigative team found what they needed - out of thousands of immigration applications in his district, Klegman’s signature appeared only on the dozen or so Chinese immigrant’s applications. Then through Chinese FBI interpreters the restaurant workers were interviewed. To a man they all denied paying for their green cards. But during the interview process, Mr. Wells and his team obtained bank account information from the suspects and subpoenaed those records. In each and every case, the restaurant workers had made a $10,000 cash withdrawal from their respective account. Interestingly, each withdrawal closely coincided with the approval date of that immigrant’s application.

Mr. Boyd smiled at Mr. Wells’s progress in the case but he said to him. “In order to prove a bribery case, you’re going to have to prove that Klegman got a ‘thing of value’ as required by the statute. If you find where Klegman has stashed his bribe money, I think you have enough for a conviction.”

Unfortunately finding the location of the stash proved very difficult. The investigators looked at Klegman’s bank statements - Nothing was there. They looked at his lifestyle - no new homes, cars or boats. Then the Assistant United States Attorney Robert Bolt Beller who was interested in prosecuting the case pulled Klegman before the grand jury. Klegman didn’t take the fifth amendment- he cooperated fully but denied everything.

Then as is standard in corruption cases, Bolt offered a deal to Stanley Yee that he could not refuse: Cooperate with the government and we will go easier on you. Eventually Yee came into the FBI office with his lawyer. In exchange for a reduced sentence, Yee furnished the key information. Yes, he had paid Klegman, he admitted. They had an arrangement - for every green card issued to one of Yee’s restaurant workers, the illegal immigrant would pay Yee $10,000. In turn Yee would pay that money to Klegman. The arrangement had been going on for years and Yee estimated he had paid Klegman at least $250,000 in bribes

But where did Klegman stash the ill-gotten wealth? In Israel, Yee said, in a secret bank account Klegman had set up in Tel Aviv. Mr. Wells and his team confirmed that through their international contacts. Klegman was indicted for bribery. A few days before his trial Herman Klegman entered a guilty plea and drew a modest prison term. Yee walked.

From CAFAC’s point of view the lessons learned from such a difficult corruption case is that they are very difficult to prove but with determination and perseverance plus help from tipsters (this calls for strong and effective whistleblower and witness protection laws), and willing collaborators success is achievable. We need highly qualified investigators, a strong judicial system (grand jury etc.) and a no nonsense prosecutor to push the fraud and corruption situation to the front burner. Ghana has taken the initial step with the passing of the Whistle Blower Act of 2006, but just like many such Acts passed by parliament, they are just toothless bulldogs. Politicians simply cry wolf but they don’t bite and like sheep led for the slaughter the general population just sits back without crying aloud about the ills and greed in our society that are perpetrated by the people we have chosen to serve us. They rather prefer to be served and in doing so they grab anything they can find in their pathway to the detriment of the suffering masses. This Act should be given a serious look and made strong and effective for people with credible evidence against those found to engage in corrupt practices in both private and public sectors to come forward and report such cases without fear of reprisal.

As an independent organization, CAFAC is willing to be the repository of sensitive information/evidence leveled against any government official found to be corrupt which can lead to prosecution. We will do this painstakingly without rushing to justice. There should be no fishing expedition when it comes to investigating and fighting fraud and corruption. The goal of fraud investigation is to collect relevant and organized evidence to enable prosecutors answer questions about possible fraud cases like: who, what, when, where, how, and why there was illegality. CAFAC will assist organizations to solve their corruption and fraud issues and we will do so carefully, patiently and purposefully. To be effective in prosecuting fraud and corruption, our prosecutors should remove any form of political flavor from their investigations leading to prosecutions. All that needs to be accomplished through fraud investigation is to determine that a law of the land has been been broken and the culprit must be brought to justice.

CAFAC’s fraud experts will use these case studies as vehicles to educate the people of Ghana. CAFAC will not pick cases and simply throw them away without going to the bottom of such cases to determine their relevancy for the courts and prosecutors. CAFAC has the repertoire of skills and experience and will painstakingly carry its responsibilities as mainstream fraud and corruption fighters in Ghana.

Now we open the discussion to forum members. We want this case to generate very lively and interesting discussion. These are some thought provoking questions or statements to consider in your comments.

Does something like the above case go on in Ghana? How often? Seldom, frequently or all the time?

How often are such perpetrators found out in Ghana?

What is happening in Ghana that is different and therefore preventing similar corrupt officials from being brought to book?

What can be done in Ghana to ensure that such corrupt officials can be investigated and made to face the full rigors of the law?

What lessons do we learn from this case?

What recommendations would you give to the Ghanaian authorities in their fight against corruption using the lessons from this case?

As stated in some of our earlier publications, CAFAC is encouraging all Ghanaians to be on the alert and hands on the deck in the fight against fraud and corruption so that we can get rid of or at least minimize this cancer in our beautiful Ghana.

Co Authors: Hector Boham & Sam Rockson Asamoah

www.cafacghana.com, training@cafacghana.com