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State of Louisiana STATE OF LOUISIANA OFFICE OF STATE INSPECTOR GENERAL Stephen B. Street, Jr., State Inspector General Annual Report For the 12 Months Ending June 30, 2010 Date Issued: May 4, 2011 Table of Contents Transmittal Letter to Governor Jindal and Members of the Joint Legislative Committee on the Budget Introduction 1 History of the Office 1 Resources and Staffing 2 Organization Chart 3 Investigative and Audit Processes 4 State Inspector General Speaking Engagements 5 Analysis of Complaints 7 Case Highlights 8 Page 1 2010 Annual Report Introduction he designation in 2008 of the Office of State Inspector General as a law T enforcement agency with a statutory mission to root out fraud and corruption in the executive branch of state government has provided us with a unique role in state government. We submit that this new mission has now begun to bear fruit. This designation has resulted in a shift from our agency being one that primarily generates reports, to an agency focused primarily on white-collar criminal activity. As a law enforcement agency, the office is statutorily authorized to access confidential criminal databases maintained by the FBI and Louisiana State Police, can obtain and execute criminal search warrants, and apply for and serve criminal investigative subpoenas. Our staff members who are criminal investigators, as well as the Inspector General himself, are trained and certified under Peace Officer Standards and Training (POST) to carry and use firearms, and have received Special Officer Commissions from the Louisiana State Police. They work shoulder-to-shoulder with experienced auditors who conduct forensic audits and complement the work of our criminal investigators. The establishment of the Inspector General as a statutorily independent law enforcement agency within the Office of the Governor, staffed with seasoned law enforcement, financial investigation, and audit personnel, is unprecedented in Louisiana. The office will continue its efforts to increase public confidence and trust in state government by providing the public with a means to report concerns and have those concerns thoroughly investigated. History of the Office he Office of State Inspector General was originally created April 1, 1988, by T executive order of Governor Buddy Roemer (BR 88-10) and retained by subsequent governors. The office became statutory when Governor Bobby Jindal signed Act 12 of the First Extraordinary Session of 2008. This historic legislation more firmly established the office by embedding it in statute. Further, the enabling legislation meant that the Inspector General would be able to function more independently, by providing that the person serving in that role could only be removed by the Governor if that decision was ratified by a majority of each house of the Legislature. Subsequently, Act 831 of the 2008 Regular Session expressly designated the office a law enforcement agency. Office of State Inspector General Page 2 Thus far, Louisiana has had only three State Inspectors General. Governor Roemer appointed Bill Lynch as the first Inspector General in April 1988. Mr. Lynch served until his death in February 2004. In March 2005, Governor Kathleen Blanco appointed Sharon B. Robinson as Louisiana’s second State Inspector General. Governor Jindal appointed Stephen B. Street, Jr., as the third State Inspector General in January 2008. Resources and Staffing or fiscal year 2009-2010, after incurring mid-year and year-end budget F reductions of approximately $132,000, the office received a revised budget of $1.54 million (nearly 87% of which provided salaries and related benefits). Besides the State Inspector General, the staff consists of the State Audit Director, two State Audit Managers, five State Auditors, four Investigators, two Administrative Assistants, and General Counsel. Except for the General Counsel and the State Inspector General, all other employees are members of the classified service. The General Counsel is an Assistant Attorney General under an interagency agreement with the Louisiana Office of Attorney General. Employee service in this office ranges from less than one year to more than 23 years, with two staff members having served since the office’s inception. Many of the office’s staff maintain professional certifications and are commissioned law enforcement officers. Those certifications and commissions include the following: Certified Inspector General 2 Certified Public Accountants 2 Certified Forensic Accountant 1 Certified Internal Auditor 1 Certified Fraud Examiners 3 Certified Inspector General Investigator 4 Certified Inspector General Auditor 4 Commissioned Law Enforcement Officer 8 The office also provides continuing professional education opportunities to all staff members to help improve their skills, as well as to maintain any certifications earned. Page 3 2010 Annual Report Organization Chart (As of June 28, 2010)1 Office of State Inspector General State Inspector General Stephen B. Street, Jr. Administrative Asst. 4 General Counsel Kathy B. Noto Robert Collins State Audit Director Greg Lindsey Administrative Coord. Richard Dupont Division of Audit State Audit Manager Division of Investigation Cindy Summers State Audit Manager Greg Phares State Auditor 3 State Auditor 2 Augustus “Mike” Davis Vacant Compliance Investigator 5 State Auditor 3 State Auditor 2 Thomas Boulton Gordon Devall Tracy Richard State Auditor 3 State Auditor 2 Lionel St. Martin Virginia Brandt Compliance Investigator 4-A Shane Evans Compliance Investigator 3 Spence Dilworth Compliance Investigator 1 Larry Hayes 1 The organizational chart has changed since June of 2010, with the office undergoing a major business reorganization. In order to create an organizational chart more in keeping with OIG’s law enforcement designation, the field personnel have now been organized into two squads, each comprised of both criminal investigators and forensic auditors. This is consistent with the law enforcement model employed by agencies such as the Federal Bureau of Investigation. Office of State Inspector General Page 4 Investigative and Audit Processes e conduct our work in accordance with the Principles and Standards for W Offices of Inspector General as promulgated by the Association of Inspectors General (May 2004 revision). These principles guide the quality of our audits and investigations. Any individual may file a complaint with the Office of State Inspector General. He or she may do so in person, or by telephone, fax, mail, or completing the electronic complaint form on our website. If desired, a complaint may be filed anonymously. The office’s contact information is as follows: Office Office of State Inspector General Mailing Post Office Box 94095 Address Baton Rouge, LA 70804-9095 Or Office of State Inspector General 150 Third Street, 3rd Floor Baton Rouge, LA 70801 Telephone (225) 342-4262; Toll Free Fraud Hotline (866) 801-2549 Fax (225) 342-6761 Internet http://oig.louisiana.gov At the internet web site, a complainant may complete the form online and submit it electronically or print the form and mail it. Each complaint received by the Inspector General is carefully screened to determine if it is a matter this office needs to explore or one that would be better addressed by another entity. Within 30 days, we decide whether to open a formal investigation, refer the matter to another agency for disposition or close the complaint without taking further action. If a formal investigation is opened, it will be assigned to either criminal investigators, forensic auditors, or both, depending on the nature of the complaint. If we open a criminal investigation, staff with law enforcement and white-collar investigation background conduct a thorough inquiry. If evidence of criminal conduct is uncovered, we work closely with prosecutors and fellow law enforcement agencies to obtain arrests, indictments and convictions. Although Page 5 2010 Annual Report from time to time we may issue a public report in conjunction with a criminal prosecution, in some cases a public report is not issued in order to avoid compromising a criminal prosecution. Our criminal investigators provide full support to prosecutors at every stage of the process, including testifying before grand juries and criminal courts. In many cases, the criminal process can be used to identify and recover monies taken through fraud and corruption. If a criminal investigation uncovers misconduct that does not rise to the level of formal criminal charges, then we have the option of issuing a public report to address those findings. A copy of that report, along with any written response, is provided to the Governor and the Joint Legislative Committee on the Budget. If an audit project is opened, staff with financial and accounting background will conduct a thorough forensic audit to determine whether there are reportable findings. If so, we issue a public report, along with any written response. As with reports on criminal investigations, these reports are provided to the Governor and the Joint Legislative Committee on the Budget. If an investigation or audit project finds that no criminal prosecution or public report is warranted, we may still send the agency head a letter outlining our findings and any recommendations, if that approach is applicable. Once such a letter is received by the agency head or his designee, we consider it a public record. State Inspector General’s Press and Speaking Engagements he State Inspector General regularly provides education and training on
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