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Feds file charges, seek yacht in State contract fraud probe

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Kathleen McGrade was a contract specialist inside the State Department, but prosecutors say she didn’t live like one.

Steering tens of millions of dollars in work to a company controlled by her husband, McGrade bought a yacht, penthouse condo and lots of jewelry, according to charges unsealed Thursday in U.S. District Court in Virginia.

McGrade, 64, and her husband, Brian C. Collinsworth, 46, both of Fredericksburg, Va., face up to 20 years in prison on charges stemming from what authorities called a “secret scheme” by the couple to steer more than $60 million to a company they controlled.

Authorities said McGrade was a private contract employee assigned to work as a contract specialist inside the State Department. Though she kept the relationship with her husband a secret from colleagues, she signed off on payments to her husband’s company, authorities said.

In forfeiture papers filed in U.S. District Court in Alexandria on April 2, prosecutors also said McGrade was “involved in nearly every stage” of the contracting process. They say the scheme lasted from December to 2007 until August 2011.

Prosecutors are seeking three properties tied to the scheme along with a Steinway piano, a yacht, artwork and jewelry that includes a matching sapphire and diamond necklace and bracelet set that cost $136,500.

A phone number listed for McGrade in Virginia was disconnected, and attempts to reach her were unsuccessful.

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Proposed whistleblower protections for contract employees passes committee

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A Senate bill that would give federal contract employees the same whistleblower protections as federal employees passed the Senate Homeland Security and Governmental Affairs Committee today.

Senate bill 241, introduced by Sen. Claire McCaskill, D-Mo., would protect contractors who report improper spending or management on federal contracts from retaliation.

Contract employees who witness contract fraud currently can bring a civil claim, in the name of the government, against contractors under the False Claims Act. If the claim is successful, the whistleblower could receive up to 30 percent of the recovered funds.

However, the False Claims Act does not protect whistleblowers who witness waste, mismanagement and other illegal activities, the Project on Government Oversight (POGO) said in a statement Wednesday. POGO and other government accountability groups voiced support for the bill earlier this week.

“These contractors are on the front lines and often put themselves at great personal risk to protect the public and expose waste,” POGO said. “This new act would bridge the gaps in current coverage, and comprehensively apply best-practice protections similar to those in the stimulus to all federal funds recipient whistleblowers.”

Under the bill, contract employees that have been demoted, fired or otherwise discriminated against for reporting contract waste and abuse could submit a complaint to an inspector general. The inspector general would then have 180 days to decide if they want to investigate the complaint. If the complaint is investigated, the inspector general must report the findings to the employee who made the complaint, the complainant’s employer and the head of the government agency holding the contract.

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Well, not exactly. But the Government Accountability Office has set up a hotline to track stimulus fraud, and the agency is asking everyone — feds, contractors and private citizens — to report waste and abuse.

GAO is one of the agencies tasked with overseeing billions of dollars in stimulus spending, which would be a difficult task even if the agency had no other responsibilities.

“The public can help to identify improper activities or weaknesses in programs that warrant scrutiny,” said Gene Dodaro, the acting comptroller general.

Here’s the contact information for FraudNet, GAO’s new hotline:

By phone: 1-800-424-5454

By fax: 202-512-3086

By e-mail: fraudnet@gao.gov

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