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The Failures of the CNCS — Fraud Edition

Last week, the Committee on Education and the Workforce examined the Corporation for National and Community Service's (CNCS) ability to fulfill its purpose as a government agency. By and large, CNCS has failed its members and the vulnerable populations it serves on the issues of safety, compliance, and management.

It has jeopardized the security of its members and communities by consciously placing them in unsafe situations, it has failed to hold bad actors in its organization accountable, and it has seriously and chronically mismanaged its taxpayer funds.

All of these compounding problems alone are cause for concern, but perhaps the most intractable issue facing CNCS is its pattern of fraudulent conduct.

CNCS has a legal (as well as moral) obligation to be truthful and answerable for its actions. Without accountability and integrity, the Corporation’s credibility is compromised. Fraud deprives the needy and rewards dishonesty, and that’s what CNCS has done to the communities it claims to serve.

  • Child Care Subsidies Fraud. The OIG noted 12 cases in which AmeriCorps and VISTA members were fraudulently receiving both AmeriCorps Care or VISTA Care childcare subsidies and state childcare subsidies leading to a total loss to the federal government of more than $120,000. (2007) (SAR 07-01, SAR 07-02, the following cases were listed separately in the investigations section of SAR 07-01: 07-022, 07-023, 07-024, 07-025, 07-26)

  • Fraudulent Timesheets. A grantee agreed to repay $534,000 after the OIG found that officials had falsified timesheets and inflated member service hours leading to fraudulent certifications of 76 AmeriCorps members’ education awards. (2007[1]) (SAR 07-02)

  • Fraudulent Use of Education Award. A former AmeriCorps member was found guilty and debarred for a year after using fraudulent documentation for an education award to pay off a car loan and attempting to use a second education award to make payments on her mortgage. (2004) (SAR 04-02, SAR 05-01, SAR 05-02, OIG 04-035)

  • Fraudulent RSVP Grant. In 2016, the Office of the Inspector General (OIG) closed an investigation into a Senior Corps grantee which fraudulently obtained over $20,000 for an RSVP grant without enrolling a single volunteer. The CEO of a for-profit business used her “virtual” non-profit organization to direct funds back to her for-profit company. Once proven by the OIG, the Corporation required repayment of the funds, and debarred the CEO and the organizations for three years. (2015-2016) (OIG 2015-009)

  • False Claims to CNCS. From 2007 to 2010, the executive director of an AmeriCorps program allowed students to receive service hours for performing services independently required by their academic programs. The executive director approved false time sheets and falsely certified education awards, causing the erroneous disbursement of nearly $3 million in education awards and administrative costs. Out of over 1,000 students enrolled in the program, only a handful provided service to the community. In the largest recovery ever of Corporation funds, over $4 million from the program in damages and penalties was recuperated in a settlement with the grantee. (2007-2010) (SAR 15-01, OIG 2013-001)

  • Paying Living Stipends to Inmate. The OIG found evidence a VISTA executive director violated the grant’s provision prohibiting nepotism by enrolling members of her immediate family and other relatives as VISTA members. The grantee also paid a living allowance to a member while he was incarcerated for a period of 30 days. (2006) (SAR 07-01, OIG 06-040)

  • Embezzlement. A former AmeriCorps executive director was convicted of stealing over $325,000 in AmeriCorps grant funds. (2013[2]) (SAR 13-01)

  • Defrauding Taxpayers for Service Not Performed. The executive director of an AmeriCorps subgrantee pled guilty to defrauding the U.S. government after she allowed her two children, both AmeriCorps members, to submit timesheets that falsely claimed they performed AmeriCorps service for the subgrantee while they attended college in another state. The director was ordered to serve three years of probation and pay $16,000 in restitution. (2017) (OIG 2016-012)

  • Conspiracy to Defraud. The OIG and the FBI found an AmeriCorps executive director conspired with two individuals to steal over $30,000 in AmeriCorps funds. In exchange for half of their living stipend, the executive director enrolled the two individuals in the AmeriCorps program without them performing any service. (2013[3]) (SAR 13-02)

  • Fraudulently Enrolling Employees as AmeriCorps Members. An AmeriCorps grantee enrolled its employees as AmeriCorps members to supplement their salaries and benefits. Further, the AmeriCorps program director made materially false statements purposely misleading the state commission and leading to the improper awarding of over $520,000 in federal grant funds and education awards. (2013[4]) (SAR 13-01)                                                

[1]Estimated based on which Semi Annual Report it first appeared, as the OIG report does not disclose exact date.

[2] Estimated based on which Semi Annual Report it first appeared, as the OIG report does not disclose exact date.

[3] Estimated based on which Semi Annual Report it first appeared, as the OIG report does not disclose exact date.

[4] Estimated based on which Semi Annual Report it first appeared, as the OIG report does not disclose exact date.