Fraud, Waste and Abuse Annual Report

2023 City of Los Angeles


The cover of the report. It says Annual Report 2022, Fraud, Waste, & Abuse. There's a City of LA logo and the Kenneth Mejia LA City Controller logo. There's a corgi in a sherlock outfit and a photo of City Hall.

REPORT SUMMARY

Our Fraud, Waste, and Abuse (FWA) Unit works to protect your tax dollars by deterring fraud, waste, and abuse in City government.

A chart defining Fraud, waste, and abuse. Fraud is: Any intentional act or omission designed to deprive the City of its resources to which the individual or person is not entitled, including but not limited to: making false statements or submitting false documents; withholding or misrepresenting material facts;bribery; or unauthorized disclosure of confidential procurement documents. Waste is: The extravagant or excessive expenditure of City funds above and beyond the level that is reasonably required to meet the needs of the City or the consumption or use of City resources that is not knowingly authorized. Abuse is: The improper use of City resources in a manner contrary to law or City policy or the improper use of one’s position for private gain or advantage for themselves or any other person where not otherwise lawful. Source: Los Angeles Administrative Code, Division 20; Chapter 4; Article 2; Section 20.60.4.

Our work isn't easy - our FWA Unit has four staff members to oversee the entire City of LA, which consists of more than 40 City departments, over 50,000 employees, and a budget of almost $35 billion.

LA City:
40+ departments
50K+ employees
Nearly $35 billion budget

FWA Unit:

4 staff members  

4 FWA investigators is a very small team compared to other local governments' fraud units, based on # of employees and budget.

A chart showing LA City’s FWA team size compared to the fraud units of the County of LA and the City and County of San Francisco. LA City’s FWA team has 4 investigators at a ratio of 1 per 12,000 employees and 1 per $8.75 Billion. LA County’s team has 26 investigators, at a ratio of 1 per 3,800 employees and 1 per $1.6 billion. SF has 7 investigators, or 1 per 4,900 employees and 1 per $2 Billion.

Average FWA cases received:
2015-2018: 269 
2019-2022: 498

The two years with the highest recorded cases (2019 and 2021) coincided with the release of an updated FWA bi-annual training for City employees. 

A bar chart called “Complaints Received by FWA Unit (2012-2022), showing a significant increase starting in 2019.2012: 364,2013: 306,2014: 253,2015:337,2016: 173,2017: 223,2018: 343,2019: 543,2020: 460,2021: 523,2022: 464

FWA Case Intake
The FWA Unit can receive cases from any City Department/Office or employee, and any member of the public, through our Fraud Hotline bit.ly/controllerfwa/ 866-428-1514.

94% of cases in 2022 were received through the Fraud Hotline.

A bar chart called “Case Submission Method” for year ended Dec 31, 2022. Web and Phone are the biggest bars. Web is 53% and phone is 39%. Other is 8%

Whistleblowers can be anonymous.


2022 Reporter Anonymity:
- Anonymous: 62%
- Not Anonymous: 38%

City Departments and Offices are required to report possible FWA cases within 10 days of discovery. In 2022, departments that reported were: Building and Safety, Economic and Workforce Development, Fire, Recreation and Parks, and Water and Power.

A bar chart called “Reporter Anonymity” for year ended Dec 31, 2022. Anonymous is 62%. Not Anonymous is 38%

Cases can be determined to be:
- Outside FWA Unit's jurisdiction (May be referred to other entities)
- Non-FWA investigative matters (Referred to other City jurisdictions)
- FWA investigative matters (FWA Unit and/or City department to investigate

Case Analysis by Issue Type

Violations or abuse of City policy was the leading issue reported, comprising 12 of the 49 cases that required an investigation.

Leading issues:
- Violations or abuse of City policy (12 cases)
- Misuse of City Position (11 cases)
- Payroll Fraud (9 cases)
A chart titled “Investigated Cases By Issue Type for the Cases Closed During Calendar Year Ended December 31, 2022 - Issue Types, Totals, & %, Violations or Abuse of City Policy 12, 25%, Misuse of City Position 11, 23%, Payroll Fraud 9, 18%,Conflict of Interest 5, 10%,Waste or Abuse of City Resources 5, 10%,Contractor Selection Concerns 3, 6%,Theft of City Resources 2, 4%,Falsified Records 1, 2%,Contractor Fraud 1, 2%,Total: 49, 100%

Case Analysis by Department:
This table provides an overview of case metrics by department for cases requiring investigation or further review.
A chart called Schedule of Case Metrics by Department During Calendar Year Ended December 31, 2022.Columns are: Primary Department, Total Open Cases as of January 1, 2022, Opened Cases Requiring Investigation or Further Review, Closed Cases Investigated, and Total Open Cases as of December 31, 2022 Departments with the most cases are: Water & Power (21 Total Open cases cas of 1/1/22. 8 Opened cases requiring investigation or further review. 7 closed cases investigated & 22 Total open Cases as of Dec 31 2022).Transportation (3 Total Open cases cas of 1/1/22. 5 Opened cases requiring investigation or further review. 6 closed cases investigated & 2 Total open Cases as of Dec 31 2022). Airports (5 Total Open cases cas of 1/1/22. 3 Opened cases requiring investigation or further review. 5 closed cases investigated & 3 Total open Cases as of Dec 31 2022). Building and Safety (20 Total Open cases cas of 1/1/22. 6 Opened cases requiring investigation or further review. 4 closed cases investigated & 2 Total open Cases as of Dec 31 2022).

2022 Case Outcomes


Payroll Fraud
We reviewed several claims of payroll fraud.

For confirmed allegations, departments' resulting disciplinary actions varied (1 employee resigned; 1 was not penalized). City policy specifies falsifying city records should result in discharge.

Violations or Abuse of City Policy
A manager was allowing employees to receive bonuses for expired certifications.
The department is in the process of informing the employees they will not receive a bonus until they re-certify and will be required to repay bonuses received.

Misuse of City Position
A City employee was trying to get discounted services for themselves from a commercial customer of the City in exchange for the employee continuing to assist with their City customer account.
The department fired the employee.

Theft of City Resources
An employee had an excessive # of cash payment refunds that were unexplained and unaccounted for.
The employee was terminated.