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U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL
Early Warning Report:
Internal Controls and
Management Actions
Concerning
John C. Beale's Travel
Report No. 14-P-0037
December 11, 2013

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Report Contributors:	Michael Davis
Jennifer Hutkoff
Yeon Kim
Heather Layne
Edward Rivers
Vanessa Rodriguez-Moya
Abbreviations
EPA	U.S. Environmental Protection Agency
OIG	Office of Inspector General
Hotline
To report fraud, waste or abuse, contact
us through one of the following methods:
email:	OIG Hotline@epa.gov
phone:	1-888-546-8740
fax:	1-202-566-2599
online:	http://www.epa.gov/oig/hotline.htm
write: EPA Inspector General Hotline
1200 Pennsylvania Avenue, NW
Mailcode 2431T
Washington, DC 20460
Suggestions for Audits or Evaluations
To make suggestions for audits or evaluations,
contact us through one of the following methods:
email:
OIG WEBCOMMENTS@epa.oov
phone:
1-202-566-2391
fax:
1-202-566-2599
online:
http://www.epa.g0v/0i0/c0ntact.html#Full Info
write:
EPA Inspector General

1200 Pennsylvania Avenue, NW

Mailcode 241OT

Washington, DC 20460

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^	Li.5. bnvironmentai Krotecti
\ Office of Inspector General
/ en
U.S. Environmental Protection Agency	Report No 14-P-0037
£	T>	December 11, 2013

\.o At a Glance
Why We Did This Review
John C. Beale, a former Senior
Policy Advisor within the
U.S. Environmental Protection
Agency (EPA) Office of Air and
Radiation, committed fraud
against the EPA The EPA
Office of Inspector General
(OIG) concluded it would need
to determine conditions that
may have allowed Mr. Beale's
actions to take place.
On August 27, 2013, the
Ranking Member of the Senate
Committee on Environment and
Public Works requested that
the EPA OIG initiate work to
determine "the agency's
policies and processes that
facilitated Mr. Beale's fraud."
This report addresses the
following EPA theme:
• Embracing EPA as a high
performing organization.
For further information,
contact our public affairs office
at (202) 566-2391.
The full report is at:
www.epa.qov/oiq/reports/2014/
20131211-14-P-0037.pdf
Early Warning Report: Internal Controls and
Management Actions Concerning John C. Beale's
Travel
to $45,094 in fraudulent
travel expenses, and
additional expenses are
questionable.
What We Found
The EPA's lack of management oversight and weak jQhn C. Beale admitted
internal controls that the EPA had in place enabled
Beale's travel abuse. Beale's travel abuse included:
•	Using premium class travel.
•	Incurring expenses above per diem amounts.
•	Charging questionable travel and transportation costs.
EPA's management actions while Beale was working at the EPA that contributed
to Beale's fraudulent travel were:
•	Limited review of vouchers or receipts.
•	Dismissed questions raised about Beale's travel.
•	Expenses not questioned because Beale's reviewing official was also a
Deputy Assistant Administrator (a peer to Beale).
•	Concern that Beale's "behavior and travel expenses" were supported by
another senior executive."
Management Actions Taken
The EPA Office of the Chief Financial Officer identified internal control
improvements made or that will be made to prevent or detect travel-related
issues, including:
•	Since 2012, vouchers for other than coach travel must include an
approved waiver supporting premium class travel, and 100 percent review
of all vouchers before payment.
•	Effective November 15, 2013, eligibility regarding medical documentation
supporting premium class travel waivers are to be made by EPA's Office of
Reasonable Accommodation.
•	Starting in the second quarter of fiscal year 2014, second line supervisors
are to approve lodging amounts that exceed a designated percentage over
per diem and require Senior Resource Official approval of any single trip
exceeding $5,000.
•	By February 2014, internal control assessments are to be completed for
travel in the areas of premium class travel, above government rate travel
reimbursement and executive travel approvals.
The OIG has not verified the implementation and adequacy of the agency's
identified improvements.

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^ED sx
I	\	UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
1	I	WASHINGTON, D.C. 20460
41 PROl*
THE INSPECTOR GENERAL
December 11, 2013
SUBJECT: Early Warning Report: Internal Controls and Management Actions Concerning
John C. Beale's Travel
Report No. 14-P-0037
FROM: Arthur A. Elkins Jr.	u' (ryr^~
TO:	Gina McCarthy, Administrator
This is our early warning report, prepared by the Office of the Inspector General at the request of the
Honorable David Vitter, Ranking Member, Committee on Environment, and Public Works, United States
Senate. This report addresses the area of travel in which John C. Beale, the former Senior Policy Advisor
for the U.S. Environmental Protection Agency's (EPA) Office of Air and Radiation, defrauded the EPA.
If you or your staff have any questions regarding this report, please contact Richard Eyermann, Acting
Assistant Inspector General for Audit, at (202) 566-0565 or at evermann.richard@epa.gov; or Michael
Davis, Director, Efficiency Audits, at (513) 487-2363 or davis.michaeld@epa.gov.

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U.S. EPA
Office of Inspector General
Internal Controls and
Management Actions Concerning
John C. Beale's Travel
December 11,2013

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Background
•	John C. Beale committed fraud against the U.S. Environmental
Protection Agency (EPA).
•	OIG concluded it needed to determine the conditions that
may have contributed to Mr. Beale's actions.
•	August 27, 2013: Ranking Member of the Senate Committee
on Environment and Public Works made request to review
matter.
•	September 27, 2013: Beale pleaded guilty to theft of
government property and:
-	Agreed to pay $886,186 in restitution to EPA.
-	Agreed to a forfeiture money judgment of $507,207.
•	Work completed in conjunction with an ongoing travel review.

U.S. ENVIRONMENTALPROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Beale Admitted Fraudulent Travel
•	Beale claimed six trips to Los Angeles for work but
actually just visited family in Bakersfield, California.
-	Trips made October 2005, July 2006, November 2006,
June 2007, January 2009 and November 2009.
-	Total estimated cost of trips was $45,094.
•	Did not stay in lower cost hotel at per diem rate.
-	Trip in July 2008 at London, England, hotel.
-	Total hotel cost - $5,659 for 5 nights.
-	Maximum allowable lodging - $354 per night.
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Assignment Objective
•	Determine the policies that facilitated Beale's
fraud.
•	This assignment was conducted in accordance
with Generally Accepted Government Auditing
Standards	(GAGAS).
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Scope of Report
•	Report covers the policies that enabled Beale's
fraud in connection with travel.
•	The EPA Office of Inspector General (OIG)
review included:
—	Examination of Beale's travel authorizations and
vouchers.
—	Interviews with agency management.
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Extent of Beale's Travel
2003 to 2011
Activity
Number
Costs
Trips taken
33
$266,190
Cancelled trips
12
$493
Total Planned Trips
45
$266,683
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Summary of Results
• Lack of management oversight and ineffective
internal controls that the EPA had in place
enabled Beale's travel abuse regarding:
— Premium class travel.
—Actual expenses above per diem amount.
-Questionable travel and transportation
costs.
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Travel Oversight
Poor Management Oversight
•	Limited management review of vouchers or receipts.
•	Dismissed questions raised about Beale's travel.
•	Expenses not questioned because Beale's reviewing
official was a Deputy Assistant Administrator (a peer to
Beale).
•	The Deputy Assistant Administrator for the Office of Air
and Radiation at the time stated it was hard to
question Beale's behavior and travel expenses when it
was supported by another senior executive."
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Travel Internal Controls
Ineffective Internal Controls
•	Limited review and approval of Beale's travel.
- Acting Director, Office of Program Management
Operations, Office of Air and Radiation, stated:
Assumed	Beale's	supervis
Vouchers were approved regardless of costs as long as
remarks	and explanations
•	EPA Travel Manual requires supervisors to authorize,
review and approve travel documents.
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Beale Premium Class Travel
•	Beale obtained medical and EPA approval for
premium class travel for travel more than 2
hours.
•	Beale took two first class trips that were less than
2 hours.
•	Beale flew first class 70% of the time even though
required to use business class if available.

U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Beale's Premium Class Travel by Year
Premium class travel - 23 of 33 trips (70%)
Premium Class Travel $179,353"
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$-
Total Cost
Premium Class
2003 2004 2005 2006 2007 2008 2009 2010 2011
Highest price: $25,111-98 (multiple destinations: Los Angeles and England, Sweden and
India). Lowest price: $1,319 (Boston/less than 2 hrs)
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Agency Identified Corrective
Measures
•	Effective November 15, 2013, eligibility
regarding medical documentation supporting
premium class travel waivers to be made by
EPA's Office of Reasonable Accommodation.
•	Since 2012, vouchers for other than coach
travel must include an approved waiver
supporting premium class travel.
* Agency corrective measures have not been confirmed and evaluated by the OIG.
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Actual Expenses Above Per Diem
•	Actual lodging approved above per diem.
- 17 of 33 trips (52%).
•	Most travel authorizations did not contain
documentation to justify expenses above per
diem.
•	EPA's travel manual requires reimbursement for
actual expenses be justified and authorized in
advance.

U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Examples of Lodging Over Per Diem
Year
Destination
Per Diem
Lodging
Claimed
Amount
Over Per
Diem
Percent
Over Per
Diem
Total
Over Per
Diem
Lodging
2004
London, UK
$272
$414
$142
52%
$849
2006*
Bakersfield, CA
$70
$98
$28
40%
$168
2006
London, UK
$307
$563
$256
83%
$1,792
2007
Ann Arbor, Ml
$86
$206
$120
140%
$120
2008*
London, UK**
$354
$752
$398
112%
$2,692



$904
$550
155%

2009
Sierra Vista, AZ
$83
$120
$37
45%
$222
*Beale admitted fraudulent activity associated with these two trips.
**Different amounts charged per night for same trip.

U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Agency Identified Corrective
Measures
• Second quarter of fiscal year 2014, require
second line supervisors to approve lodging
amounts that exceed a designated percentage
over per diem.
* Agency corrective measures action has not been confirmed and evaluated by the OIG.
U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Questionable Travel - London
• Claimed lodging and meals & incidental
expenses while flying overnight.
-	On 1/11/09, departed for London from Los Angeles at
4:54 PM, arrived in London on 1/12/09 at 11:25 AM.
-	For 1/11/09, claimed lodging expense of $279, but no
lodging charged to hotel bill for 1/11/09.
-	Claimed London rate of $137 for meals & incidental
expenses for 1/11/09, but did not arrive in London
until 1/12/09. He should have claimed the Santa
Monica rate of $64.

U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Questionable Transportation Costs
•	Approved international trips plan identified one trip per day.
•	In London, on 11/17/03 and 11/18/03, claimed 12 taxi trips costing
$285 for the two days.
•	In London, on 7/9/08 through 7/15/08:
-	Arrived in London on 7/9/08 at 9:55 pm, claimed taxi cost of $44
to the U.S. Embassy, also claimed $166 taxi cost to hotel.
-	On 7/10/08, claimed 5 taxis totaling $254 and public transit
costs of $310 with no explanation on travel voucher (chauffeur
service that was included on the hotel bill).
-	In London, on 1/12/09 through 1/17/09, claimed public transit
of $932 for 2 to 6 taxis per day (22 total taxi trips).

U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Agency Identified Corrective
Measures
•	Since 2012, the Office of the Chief Financial Officer has
performed 100% voucher review before payment.
•	In second quarter of fiscal year 2014, agency is to
require Senior Resource Official approval of any single
trip exceeding $5,000.
•	By February 2014, agency is to complete
comprehensive internal control assessments for travel.
—	Premium class travel.
—	Above government rate travel reimbursement.
—	Executive travel approvals.
* Agency corrective action has not been confirmed and evaluated by the OIG.

U.S. ENVIRONMENTAL PROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Future OIG Report
• EPA travel report will be issued covering:
—	Executive Level (ES, SES, SL, etc..) travel.
—	Trips by frequent travelers (5 or more trips a year).
—	High-cost travel ($5,000 or more).
—	Length of time for travelers to submit vouchers.

U.S. ENVIRONMENTALPROTECTION AGENCY
OFFICE OF INSPECTOR GENERAL

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Appendix A
EPA Distribution
Administrator
Deputy Administrator
Office of the Administrator
Chief of Staff
Assistant Administrator, Office of Air and Radiation
Chief Financial Officer
General Counsel
Agency Follow-Up Coordinator
Associate Administrator for Congressional and Intergovernmental Relations
Associate Administrator for External Affairs and Environmental Information
Deputy Assistant Administrator, Office of Air and Radiation
Audit Follow-Up Coordinator, Office of Air and Radiation
Audit Follow-Up Coordinator, Office of the Chief Financial Officer
Audit Follow-Up Coordinator, Office of General Counsel

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