EPA Uncovered: Following the Money — Podcast Transcript

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Nic: We conducted a large-scale law enforcement operation consisting of 10 physical arrests and numerous search warrants. The U.S. Attorney's Office for the District of Maryland charged 16 defendants. Due to our painstaking process, 15 of those defendants pled guilty and one still remains a fugitive from justice.

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Kim: Hello and welcome to another episode of EPA Uncovered, the official podcast of the EPA Office of Inspector General. I’m your host, Kim Wheeler, and today we’re digging into an investigation in which EPA OIG special agents helped dismantle a multi-million-dollar fraud network. In this conspiracy, a group of sixteen fraudsters laundered millions of dollars in stolen pandemic-era disaster loans. Over several years, this group, created shell companies, they opened fraudulent bank accounts, they moved stolen funds through a maze of transactions to hide where the money came from. The scheme crossed multiple states and targeted all kinds of victims—from government agencies to nonprofits, schools, even a medical center. 

Investigators eventually unraveled the operation, tying it to a larger network responsible for significant losses across multiple states. Several people have already been sentenced, others have pled guilty, and at least one suspect is still on the run. So today, we’re going to walk through this scheme, how it operated, how it grew so big, and how special agents, including ours, finally shut it down. 

To get into it with us is our acting Assistant Inspector General for Investigations, Nic Evans. Nic, thanks for being here.

Nic: Thanks for having me. I'm really excited to discuss this case.

Kim: So, before we get started, I think some listeners might be surprised to hear that the EPA OIG has special agents or that we would be involved in a major money laundering investigation.
Can you talk a little bit about the OIG’s Office of Investigations and what kind of cases our agents work on?

Nic: Sure, the Office of Investigations is the entity within EPA OIG responsible for conducting criminal investigations related to the programs and operations of the EPA and the U.S. Chemical Safety and Hazard Investigations Board. Our investigations cover everything under EPA programs and operations to include their contracts and grants, serious employee misconduct program fraud, or in this case, a business e-mail compromise regarding a trust that was under EPA’s court-ordered oversight.

Kim: And you said business e-mail compromise, can you talk a little bit about that scheme? What is that?

Nic: So, a business e-mail compromise is a targeted fraud where attackers use e-mail to trick organizations into sending money or sensitive data to the wrong place. A business e-mail compromise leans on social engineering and account takeover to impersonate others and to redirect payments.

Kim: OK. And the fraud case that we're getting ready to talk about—that is what happened here. 
So can you talk a little bit about how your investigators became aware of this business e-mail compromise scheme and what they found when they started looking into it?

Nic: Sure. In June 2021, an environmental trust under court ordered EPA oversight received an e-mail from an unknown individual who informed them that a subcontractor had changed its payment policy and was now requesting direct wire transfers to pay for services. In July 2021, the same trust complied with the new wire transfer policy and sent over $1.5 million via a wire transfer. The account identified by the unknown individual as belonging to the subcontractor. In September 2021, the Environmental Trust sent a second payment totaling over $1.1 million to the same account. The environmental trust became aware of this fraud in September 2021, when a legitimate employee of the subcontractor contacted the Trust and requested payment for completed work.

Kim: So, without revealing your investigative techniques here, what were some of the key indicators that help your investigators kind of identify and connect what was happening here?

Nic: So, one of the things that we do is, you know, we're able to trace the money as it's being transferred and what we do is we look at where the money went and then whether the money stayed there or whether it was transferred out to another account. In the case of business e-mail compromises, the money is often transferred through numerous bank accounts very, very quickly in an effort to hide where the money has gone. And, you know, as we start doing that, what we're looking for is a where the money has gone. But then any other, you know, incoming funds to those accounts. Very often, we identify that our subjects are involved in numerous schemes and there is also, you know, other victims out there who are falling prey to these schemes.

Kim: And something that really stood out to me about this case is exactly what you're talking about.
It's just the scale of it because investigators ultimately tied this conspiracy to more than $20 million in laundered funds. They had victimized 15 organizations. How do fraud schemes grow to this size before they're detected?

Nic: Well, one of the things that we try to do is to reach out to other, you know, federal law enforcement agencies in an effort to deconflict our investigations. In this case, we reached out to the Department of Homeland Security’s Homeland Security Investigations, and they identified that they also had an active investigation involving many of the same subjects and victims. And we were able to merge our investigations and act as a force multiplier and, really, that's when everything got going for us. Throughout 2022 and 2023, we chased the stolen funds through numerous bank accounts, identifying additional victims and subjects in building a much more robust case.

Kim: So, let's talk. I mean lots of work, lots of resources. Partnership with other federal agencies.
What was the end result? What happened with this case?

Nic: In February 2024, we conducted a large-scale law enforcement operation consisting of 10 physical arrests and numerous search warrants. Approximately 100 law enforcement agents at the federal and state level assisted us with this successful operation. After the arrest, numerous proffers and reverse proffers were conducted. As a result, the U.S. Attorney's Office for the District of Maryland charged 16 defendants in connection with this conspiracy. Due to our painstaking process,
15 of those defendants pled guilty and one still remains a fugitive from justice. We couldn’t have made this case without our partners at Homeland Security Investigations, the IRS Criminal Investigation, and the U.S. Attorney’s Office for the District of Maryland. 

Kim: Wow, that's really impressive. Now, normally when you hear about these large scale fraud schemes, you know it feels like they seem tied to like benefits programs,
like maybe Medicaid or Medicare, but it sounds like, you know, other government programs where money is is exchanging hands, they’re also at risk, can you talk a little bit about that?

Nic: Sure. You know, business e-mail compromises are common for any business that is involved in wiring money. And in this case, you know, the court-ordered entity, the trust fund here, they did business through wiring money, but so does the EPA. The EPA is involved in grants, you know, where they will receive an invoice and make a payment to the grantee via a wire transfer. The same thing with our contractors as well as, you know, the EPA also receives and sends settlements via wire as well. It's the most common way to do banking these days is to transfer money over the Internet.

Kim: So, fraudsters are constantly adapting. Business e-mail compromise seems to be a big problem right now that, you know, you and your agents are actively looking to disrupt, but once you've attacked that, a new scheme will emerge. How does the OIG keep pace with this?

Nic: We have to keep up with what is developing, and one of the things that we try to do as part of this is to make sure that the public is aware of these schemes and that they know where to report it. One of the things that we do is to issue fraud alerts, both internally to the EPA to make them aware of schemes as well as externally to, you know, people who might be potential victims of fraud. Some of these related to like romance schemes that we've seen before where people pretend you know that the EPA is levying fines against them and you know they will utilize electronic means to get in touch with people who are lonely and, you know, develop relationships with these people and get them to wire money to them. You know, and it's again very much like one of these business e-mail schemes in which they are pretending to be somebody that they're not. Often that is, you know, somebody on an oil rig in Alaska or something like that, and they claim that the EPA is levering fines against them or their business and they're looking to have protection for that and they … they just prey on people who are lonely. So, we try to reach out to the Agency and to the public to make them aware of these schemes and make them understand that we are an entity that they might not have ever heard of that will investigate these matters and bring people to justice. 

Kim: So, you know, fighting fraud, it's a big job and it's one of the core functions of our office, but it's also the responsibility of everyone at the Agency, entities that receive EPA funds, and you mentioned the public. So, employees, contractors, members of the public, all of these folks can play a role in helping to identify potential fraud by contacting you and your investigators. How would they do that?

Nic: That's a great question. This is a team effort. The EPA OIG has a hotline. There is a web form available you can e-mail in your you know referral or there is a telephone number that you can call and leave a voicemail as well to tell us about whatever you're seeing out there.

Kim: And is that the best way? What if you don't know for sure? What if you just have suspicions?
Is that still something you should report?

Nic: Sure. Yes, it is. We don't ask people to solve these cases for us. Our agents have specialty training. You know, we work a lot of this stuff. We know how to work it, you know, efficiently and we understand the different processes to be able to obtain the information that we need to be able to bring these cases and certainly we're not asking for EPA employees or the general public to conduct their own investigation. We're just asking to be made aware of the issue so that we can review it to see whether or not it’s something that requires further investigation from our organization.

Kim: And coming back to this case is how did we become aware of of this particular case, which blew up to be such a large scheme? 

Nic: So, for this case in particular, the OIG received the information through our hotline.

Kim: Wow this case really goes to show how important it is to be on the lookout for suspicious activity when it comes to government funding, and if you see something to say something. 
Well, that’s all the time we have for today. Nick, thank you so much for joining us and taking us behind the scenes of this investigation and thanks to our listeners for joining us for this episode of EPA uncovered. If you believe you have information about potential wrongdoing involving EPA programs or funds, as Nic said, you can report it quickly and confidentially to our OIG hotline.

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Complete an online complaint form or find our hotline email address and phone number at www.epaoig.gov.

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