Leahy, Grassley Introduce Wartime Fraud Legislation

 

Bill Would Extend Law To War Fraud Related To Iraq, Afghanistan

 

WASHINGTON (Friday, April 18, 2008) – Senate Judiciary Committee Chairman Patrick Leahy (D-Vt.) and Sen. Chuck Grassley (R-Iowa) today introduced legislation to improve the enforcement of contracting fraud in the wars in Iraq and Afghanistan.  The Wartime Enforcement of Fraud Act (WEFA) would close a loophole in current law and give the government the power to prosecute contracting fraud, even after the wars are over.  If passed, the government could prosecute individuals or corporations that commit criminal fraud in government contracts delivering defective products or overbilling the government. 

 

The legislation would update a law first passed by the Congress during World War II that suspends the statute of limitations for contracting fraud offenses during times of war.  The Wartime Suspension of Limitations Act became law in 1942, and allowed the government to investigate and prosecute contracting fraud up to three years after the end of a war.  The 66-year-old law, however, does not apply to the conflicts in Iraq and Afghanistan, which are not declared wars.

 

The Leahy-Grassley bill introduced Friday would update the World War II-era law to apply when Congress specifically authorizes the use of military force, as well as during declared wars.  Under WEFA, an official act of the president or a concurrent resolution of Congress would officially conclude the war and start the tolling of the statute of limitations.  The legislation would also extend the statute of limitations from three to five years after the end of hostilities, consistent with the current statute of limitations for criminal offenses. 

 

“In times of war, we often do not learn about serious fraud until years after the fact,” said Leahy.  “What we do know is that tens of billions of dollars are unaccounted for, and potentially lost to fraud.  The problem is not new, and Congress has the opportunity now to address it, starting with the wars in Iraq and Afghanistan.”

 

“This legislation makes sure the law Congress passed during World War II applies to criminal conduct by contractors involved in military actions authorized under the War Powers Act, such as the conflicts in Iraq and Afghanistan,” said Grassley.  “The law already on the books is designed to allow prosecutions of criminal fraud after the war is ended so that investigations don't have to occur while conducting military operations.  Our bill would update this law by making the suspension period equal to the statute of limitations for criminal fraud.  It’s a common sense reform that’s good for taxpayers and good for public confidence that war contracting is not a free-for-all with no criminal accountability.”

 

In the last six years, billions of dollars have been awarded in contracts to companies that have delivered defective products, including unsafe bullet proof vests and faulty ammunition, to American troops in Afghanistan and Iraq. 

 

The Wartime Enforcement of Fraud Act would:

 

• Suspends the statute of limitations for war contracting fraud when Congress has authorized the use of military force consistent with the War Powers Resolution, and apply current law suspending the statute of limitations to the wars in Iraq and Afghanistan
• Extends the statute of limitations from three to five years after the end of a war, consistent with the current statute of limitations for criminal offenses
• Mandates that the tolling of the statute of limitations period must be an official act of the president with notice to Congress, or a concurrent resolution of Congress
• Clarifies that the term “war” includes Congressional authorizations for the use of military force consistent with the War Powers Resolution

 

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Leahy statement on introduction of the Wartime Enforcement of Fraud Act of 2008

Section-by-Section Analysis (for background)

Text of Wartime Enforcement of Fraud Act

 

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Statement Of Senator Patrick Leahy

Chairman, Senate Judiciary Committee

On The Introduction Of “The Wartime Enforcement Of Fraud Act Of 2008”
April 18, 2008

 

This country recently marked the five-year anniversary of the war in Iraq – a war that the Bush administration refuses to end.  The losses in this war have been staggering.  More than 4,000 American soldiers have been killed and nearly 30,000 wounded.  Hundreds of billions in taxpayer dollars has been spent to fight this war, money which could have been – and should have been – used to help American needs here at home. Estimates for the cost of the President’s adventure in Iraq are now into the trillions.    

 

And through it all, the Bush administration has chosen essentially to ignore one of its primary obligations during wartime – to protect American taxpayers from losses due to fraud, waste, and abuse of military contracts.  Sadly, these problems are all too common in times of war, and have been particularly pervasive in Iraq. 

 

Over the past year, I have chaired hearings in the Appropriations and Judiciary Committees focused on the billions that have been lost to contracting fraud, waste, and abuse during this war.  The testimony at those hearings has exposed the Bush administration's failure to take aggressive action to enforce and punish wartime fraud.  It has also shown how difficult it can be for investigators to uncover and prosecute fraud amidst the chaotic environment of war. 

 

These problems have been exacerbated time and time again by the Bush administration, as tens of billions of dollars in "no-bid" and "cost-plus" contracts have been awarded with little, if any, oversight or accountability.  Billions in cash – physical, paper money – have been flown to Iraq and handed out in paper bags, often without records of who received what, and when.  Billion dollar contracts for training services cannot be audited because the records are incomplete, lost, or in disarray.  The government has been billed for defective products, like faulty ammunition, unsafe bulletproof vests, and even unsanitary drinking water for the troops. 

 

Too often we do not learn about serious fraud until years after the fact.  What we do know is that tens of billions of dollars are unaccounted for, and potentially lost to fraud, and little has been done to hold anyone accountable and recover the lost money. 

 

This problem is not entirely new.  Our nation has faced challenges in past wars.  During World War II, President Franklin Delano Roosevelt spoke out against "war millionaires" who made excessive profits exploiting the calamity of war.  President Harry Truman, when he served in the Senate, held historic public hearings to expose gross fraud and waste by military contractors during the war. 

 

Unlike the current President, however, Presidents Roosevelt and Truman took action to ensure that wartime fraud could be successfully investigated and prosecuted despite the difficulties presented by an ongoing war.   

 

In 1942, President Roosevelt signed the Wartime Suspension of Limitations Act, which made it possible for criminal fraud offenses against the United States to be prosecuted after the war was over.  President Truman signed a bill making that law permanent in 1948. 

 

Everyone understood then that it was unrealistic to believe that all contracting fraud could be tracked down immediately in the midst of a war.  The law provided for the suspension of the statute of limitations until the war was over.  Congress supported this law overwhelmingly, as they had with a similar provision during World War I.  President Roosevelt wrote: "The crisis of war should not be used as a means of avoiding just penalties for wrongdoing."   

 

While the provision for post-war enforcement against fraud is still the law today, the ongoing conflicts in Iraq and Afghanistan are exempt from its requirements.  This Roosevelt-era law only applies "when the United States is at war."  The military operations in Iraq and Afghanistan were undertaken without Congressional declarations of war.  In recent decades, Congress has considered authorizations for the use of the Armed Forces, rather than formal declarations of war.  I voted for the authorization to strike back at Osama bin Laden in Afghanistan.  I voted against the ill-conceived authorization to go into Iraq.

 

Today we introduce the Wartime Enforcement of Fraud Act of 2008, which updates President Roosevelt's law for our times.  This will allow us better to protect American taxpayers from contracting fraud today, just as we did during World War II.  I thank Senator Grassley for his co-sponsorship of this important legislation.  He has been a leader in Congress on efforts to investigate and combat fraud against the United States.

 

This bill would make current law suspending the statute of limitations during wartime applicable to the ongoing conflicts in Iraq and Afghanistan.  In doing so, we would allow investigators and auditors to continue their efforts to uncover criminal fraud and for those who commit fraud to be brought to justice after the conflicts end.  If left unchanged, under the current statute of limitations, each passing day of the conflicts in Iraq and Afghanistan could amount to immunizing fraudulent conduct by war contractors that has gone undiscovered during the Bush Administration or during the conflicts.   

 

This legislation would make three simple changes to current law.  First, it would suspend the statute of limitations not only to when the United States is technically engaged in a declared war, but also when Congress has enacted a specific authorization for the use of the Armed Forces consistent with the War Powers Resolution.  In doing so, this language would apply the existing World War II-era law to the ongoing conflicts in Iraq and Afghanistan, and to similar actions in the future.  It would not apply, however, to international peacekeeping missions under the auspices of the United Nations or to military actions not specifically authorized by Congress. 

 

Second, the legislation would extend the statute of limitations for five years after the end of the conflict.  The statute of limitations today for criminal fraud offense is five years from the time of the offense, and this bill would just toll the running of the statute during the conflict itself and not a day longer.  

 

Three, the bill would make clear that a Presidential proclamation ending hostilities, and thus ending the tolling of the statute of limitations period, must be a formal proclamation with notice to Congress.  Secret proclamation by the President or a self-serving “mission accomplished” speech will not do the trick. 

 

The statute of limitations is an important check on the proper use of government power, and we should not act to suspend it except in extraordinary circumstances.  Wars provide exactly such circumstances, and current law recognizes this common sense reality by suspending the statute of limitation for fraud offenses during wartime.  It would be wrong to exempt the wars in Iraq and Afghanistan from this law and to allow war profiteers immunity for their illegal and unpatriotic conduct during wartime. 

 

President Roosevelt called upon Congress to act on this important matter during World War II.  Today, I echo his concerns and call upon the Senate to pass this legislation to protect the American taxpayers from war contracting fraud.  This Congress should pass – and the President should sign – the Wartime Enforcement of Fraud Act of 2008 without delay.

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Section-by-Section Analysis of the Wartime Enforcement of Fraud Act of 2008

For Background

 

Sec. 1. Short title. 

 

The short title of the bill is the AWartime Enforcement of Fraud Act of 2008.@

 

Sec. 2. Suspends the Statute of Limitations When Congress Has Authorized

            The Use of Military Force.

 

The bill amends Section 3287 of Title 18, which suspends the statute of limitations "when the United States is at war," to include circumstances where Congress has authorized the use of military force consistent with the War Powers Resolution.  Technically, Section 3287 only applies to declared wars, not circumstances where Congress has authorized the use of military force, as in the recent wars in Iraq and Afghanistan.  The amendment to Section 3287 specifically tracks the text of the Congressional authorizations for the use of the Armed Forces in Iraq and Afghanistan, and refers only to those authorizations described in the War Powers Resolution.  As a result, only significant military actions requiring Congressional action would trigger this suspension of the statute of limitations.  This amendment is not intended to apply to peacekeeping missions under the auspices of the United Nations, or military actions not specifically authorized by Congress pursuant to the War Powers resolution.  This language is intended to apply the suspension of statute of limitations to the wars in Iraq and Afghanistan. 

 

The bill extends the statute of limitations for five years from the termination of hostilities, as opposed to the three years under current law.  When the original Wartime Suspension of Limitations Act was passed in 1942, the criminal statute of limitations was only three years, and today it is five years.  This change is consistent with the standard statute of limitations for all criminal fraud provisions and is necessary to update the law for modern times.  See 18 U.S.C. § 3282. 

 

The bill also makes clear that the act that ends the tolling of the statute of limitations period must be an official act of the President with notice to Congress, or a concurrent resolution of Congress.  This change is necessary so that the date ending the authorization of military force is clear, so courts, prosecutors, and litigants can be sure when the statute of limitations starts to run.  This change will avoid any confusion or unnecessary litigation in enforcing fraud cases in the future.

 

Lastly, the bill clarifies that for purposes of applying the definitions in Section 103 of Title 41 in Section 3287 of Title 18, the term "war" shall include Congressional authorizations for the use of military force pursuant to the War Powers resolution.  This is just a conforming amendment so the definitions in the law can properly be applied.

 

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110TH CONGRESS

2D SESSION

 

S. ____

 

To promote the prosecution and enforcement of frauds against the United States by suspending the statute of limitations during times when Congress has authorized the use of military force.

__________________________

 

IN THE SENATE OF THE UNITED STATES

 

Mr. LEAHY (for himself, Mr. Grassley) introduced the following bill; which was read twice and referred to the Committee on

 

__________________________

 

A BILL

 

To promote the prosecution and enforcement of frauds against the United States by suspending the statute of limitations during times when Congress has authorized the use of military force.

 

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

 

SECTION 1. SHORT TITLE.

 

This Act may be cited as the ‘‘Wartime Enforcement of Fraud Act of 2008’’.

 

SEC. 2. SUSPENSION OF STATUTE OF LIMITATIONS WHEN CONGRESS HAS AUTHORIZED THE USE OF MILITARY FORCE.

 

Section 3287 of title 18, United States Code, is amended—

 

(1) by inserting ‘‘or Congress has enacted a specific authorization for the use of the Armed Forces, as described in section 5(b) of the War Powers Resolution (50 U.S.C. 1544(b)),’’ after ‘‘is at war’’;

 

(2) by inserting ‘‘or directly connected with or related to the authorized use of the Armed Forces’’ after ‘‘prosecution of the war’’;

 

(3) by striking ‘‘three years’’ and inserting ‘‘5 years’’;

 

(4) by striking ‘‘proclaimed by the President’’ and inserting ‘‘proclaimed by a Presidential proclamation, with notice to Congress,’’; and

 

(5) by adding at the end the following: ‘‘For purposes of applying such definitions in this section, the term ‘war’ includes a specific authorization for the use of the Armed Forces, as described in section 5(b) of the War Powers Resolution (50 U.S.C. 1544(b)).’’.

 

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