By Richard Gaines
NOAA's Asset Forfeiture Fund, comprised of fines paid for Magnuson-Stevens Act fisheries violations, remains without controls that deter fraud, a newly published report by the U.S. Commerce Department inspector general has found.
Among key findings is that the fund — which has come to epitomize the past dysfunction of the National Oceanic and Atmospheric Administration's police and litigating units — is not effectively monitored.
That failure creates circumstances that can still allow the misappropriation of money "without detection," the inspector general found
"NOAA has no assurance that all proceeds from assessed fines, penalties and forfeitures are received and accurately recorded," said the report, which was sent Feb. 8 to NOAA Administrator Jane Lubchenco by Ann C. Eileers, principal assistant IG for audit and evaluation.
Agents and litigators are allowed to both collect, record and deposit fines and penalties, creating "opportunities for fraud," the report found.
U.S. Sens. John Kerry and Scott Brown and Coingressman John Tierney, whose district includes Cape Ann, read the report Wednesday as a troubling sign that NOAA has not begun regaining public trust.
At the end of March 2011, the fund had an unrestricted cash balance of $7.5 million after a $3.9 million write-off of accounts receivable, according to an independent audit commissioned by NOAA.
Although the Asset Forfeiture Fund figured centrally in the law enforcement scandal unearthed by the IG's office in 2010, the problems predated the Obama administration; under congressional pressure and in the face of a series of reports and revelations from IG Todd Zinser, Lubchenco reassigned law enforcement leaders and promised a full cleanup.
The most aggrieved industry victims, including businesses and fishermen in Gloucester, were given a Cabinet level apology and shared more than $600,000 in reparations.
But the new report indicates that the Lubchenco administration has not fixed the system of penalties and fines, whose worst excesses were concentrated in the Northeast Regional Office, based in Gloucester at the Blackburn Industrial Park.
Responding to the report, Tierney called on Commerce Secretary John Bryson to "freeze all expenditures" from the fund until the IG is satisfied the fund is effectively controlled.
Tierney also reiterated his call for "a change in the leadership at NOAA. Tierney, Brown and Congressmen Barney Frank, who represents the port of New Bedford, and Rep. Walter Jones of North Carolina have all urged President Obama to replace Lubchenco over a combination of the law enforcement scandal and a perceived anti-fishing ideology identified with Lubchenco.
Although Eilers wrote to Lubchenco, the official response came from Samuel D. Rauch, the acting head of NOAA Fisheries, who concurred with the general findings and recommendations. He added, however, that the agency was in the process of improving the "monitoring of deposits associated with the fund and to pursue and record fines and penalties ..."
"To the extent that the report provides recommendations not already underway," Rauch wrote to Eilers, "NOAA will modify its corrective action plan and begin implementing these further improvements."
"This reports reads like a manual on how not to safeguard your account," said New Bedford fisheries attorney Pamela Lafreniere. "The agency has had two years to rectify the problems listed by the IG reports on the AFF (Asset Fortfeiture Fund).
"Instead of solving the problems, at every level, at every stage, at every point, the agency found a way to fail in its duty to the stakeholders to maintain the AFF," Lafreniere said. "The AFF needs to be taken from this Agency that has illustrated that it is ill equipped to monitor or control the funds."
Kerry said the report showed that "a trust deficit still exists" at NOAA, "which has work to do in a hurry to accurately record and account for the hard earned dollars that fishermen pay in fines."
Recognizing what progress has been made to end "the culture of abuse and intimidation," he said the report "is a red flag that other problems have to be resolved" before "mistrust and suspicion" dissolve.
"NOAA can't count fish and they can't count dollars," said Brown. "They refuse to fix their own accounting problems, yet they expect fishermen to be perfect in accounting for their catches. The double standard between the regulators and the regulated is intolerable."
Last August, NOAA's Chief Financial Officer Maureen Wylie released an audit of the Asset Forfeiture Fund, covering the years 2005 to 2010, by a private firm; although Clifton Gunderson explicitly avoided reaching conclusive or evaluative statements and noted many "exceptions" — problems in record-keeping and accounting — Wylie covered the report with a press release claiming the auditor, which had been paid $427,000, found "no abuse of the fund."
IG Zinser disagreed publicly with Wylie.
"The numerous exceptions tell a different story than the news release tells," Zinser said in a telephone interview.
Zinser hired KPMG in 2009 to help his staff unravel the mysteries of the AFF as operated in the pre-Obama-Lubchebnco era. Discovered and reported was uncontrolled access to the fund by hundreds of agents and litigators who made charges against it for many dubious and improper reasons.
The fund helped finance a fleet of vehicles that outnumbered agents to use them, foreign travel to conferences unrelated to cases a luxury, undercover police boat.
In addition, the IG revealed that NOAA litigators used the fund for operating costs and to pay the administrative law judges in the U.S. Coast Guard system.
Richard Gaines can be reached at 978-283-7000 x3464, or firstname.lastname@example.org.