by Ben Vernia | December 5th, 2012
The New York Times reported on December 5, 1862 of a fraud scheme with an ironic twist:
CHEATING AS A FINE ART. As an evidence of the perfection to which the art of defrauding the Government has been carried in this city, on Wednesday last, a lot of wood, furnished to the Old Capitol Prison, was discovered to be about twenty per cent. short of the amount bought! This, too, for the use of the very prison now largely occupied by prisoners arrested for similar frauds! The great game has been to get contracts at low prices and cheat in the amounts delivered.
Comment: The reporter who wrote this was quite accurate: many fraud schemes through the False Claims Act’s 150-year history have involved shortchanging the government on goods in terms of amounts or quality. The first fraud case I handled for the Department of Justice in the mid-1990s involved the “shortweighting” of vegetable oil by a USAID contractor. His company would only partially fill gallon cans of oil destined for poor people overseas, and then sold the excess oil on the market. He was able to go undetected for several years by bribing a USDA inspector stationed at the plant.