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Semi-Annual Report to Congress for the Period of April 1, 2004 to September 30, 2004

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[Excerpt] am pleased to transmit this Semiannual Report to the Congress, which summarizes significant audit and investigative activities performed by the Office of Inspector General (OIG) from April 1 through September 30, 2004. During that time, the OIG issued 67 audits relating to Department of Labor (DOL) programs and operations, most of which can be viewed on our Web site at We identified $10.5 million in questioned costs and $15 million in other audit monetary recommendations. In addition, we closed 228 investigations, achieved 297 indictments, 186 convictions, and $103 million in investigative monetary accomplishments. During this period, the OIG completed significant work related to pension and employee benefit plans. An OIG audit found that the Employee Benefits Security Administration has not been successful in correcting substandard benefit plan audits intended to protect plan participants’ interests because it has insufficient legislative authority to hold auditors accountable. Among the results of our benefit plan investigations were guilty pleas by a union attorney and his associate on charges that included accepting and making bribes to influence the operation of a benefit plan. Other accomplishments over the last six months included audits and investigations related to Unemployment Insurance. An OIG audit found that 12 states were not using an effective method for detecting overpayments that involves comparing claims against new-hire data to identify claimants who have returned to work but continue to collect benefits. Our investigations resulted in the indictment and conviction of criminals who used stolen identities to unlawfully apply for and obtain millions in unemployment insurance benefits. In the area of employment and training, OIG audits questioned more than $8 million in costs charged to a Florida Welfare-to-Work formula grant. We also identified significant problems with an influx of Permanent Foreign Labor Certification applications submitted at a time when applications could be filed on behalf of alien workers already residing in the United States. This prompted concerns that applications that should be denied are being certified. Our efforts to help the Department maintain an effective management process also resulted in key audit findings. We found that DOL had not established adequate management controls over its equity interest in State Workforce Agencies’ real property and that real property equity in four states was understated by $30 million. We also identified vulnerabilities in DOL’s management of the migration of its payroll processing to the National Finance Center as part of an effort to consolidate Federal civilian payroll services. Among the results of our labor racketeering investigations was the sentencing of the former president of the International Longshoremen’s Association Local 1588 for conspiring to embezzle union funds. In addition, a member of a Laborers International Union of North America Local pled guilty to RICO conspiracy charges involving a violent scheme using actual and threatened force, destruction of property, and other means of extortion against businesses. The OIG remains committed to promoting the economy, integrity, effectiveness, and efficiency of DOL programs and detecting waste, fraud, and abuse against those programs. We will continue to work constructively with the Secretary of Labor and DOL managers to ensure that the rights and benefits of American workers and retirees are safeguarded.

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Office of the Inspector General; Department of Labor; audit; employee integrity; fraud; Congress


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