National News - Lubbock DEA audit shows sloppy accounting, theft

Published: Wednesday, July 15, 1998




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DEA audit shows sloppy accounting, theft

WASHINGTON (AP) - The Drug Enforcement Administration, stung twice this year by revelations that its own workers stole millions of dollars, has kept a sloppy checkbook, according to an audit that may explain how it got scammed.

The audit concludes the main U.S. drug fighter hasn't been able to "accurately and completely account" for the property it owns, the money that drug traffickers give undercover agents during sting operations or the seized drugs it has on hand.

In fact, the DEA's accounting was so poor in 1997 that the private accounting firm that conducted the audit under new government accountability laws said it could not form an opinion as to whether the agency's books are accurate.

"We were unable to satisfy ourselves as to the fair presentation of these balances and transactions," Peat Marwick reported after looking at DEA's 1997 books.

The audit cited DEA for several "material weaknesses," the most severe criticism in professional accounting. Some of the concerns had been brought to the agency's attention in previous years.

The agency agreed with the findings. The Justice Department, which overseas DEA, said Tuesday that while it hasn't seen the final audit it is aware of the concerns and believes they have been adequately addressed with a new accounting system DEA is implementing this year.

"The department is committed to addressing the problems that have been raised," said Chris Watney, a Justice Department spokeswoman.

"The department acknowledges there were concerns about DEA's antiquated financial system, and a new more modern system is being implemented now that addresses those concerns. The attorney general had made it a high priority to see those changes through."

A DEA official said Tuesday that all of the recommendations in the audit are being implemented.

The Senate Judiciary Committee is expected to quiz Attorney General Janet Reno about the problem at a hearing Wednesday.

Sen. Charles Grassley, R-Iowa, a key senator on that committee said Tuesday taxpayers should be concerned by the audit. "If an outside auditor cannot give your business a clean bill of health because you don't do a good job of keeping the books, then the investors have a right to be concerned," said .

While the language in the audit is dry and technical, the consequences of the shoddy bookkeeping took real human form in March when two separate criminal cases were brought against DEA workers who stole more than $6 million between them in schemes that went undetected for years.

In one, a just-retired DEA budget analyst was charged in a 74-count indictment with stealing $6 million between 1990 and 1997, spending it on an extravagant lifestyle for himself and his family.

The indictment accused David S. Bowman, 57, of Arlington, Va., of using the money to buy and renovate several homes, lease and purchase automobiles including a Lincoln Mark VIII, send his family on European vacations and buy jewelry, collector coins and art work.

The indictment accused Bowman, a 22-year agency veteran, of submitting hundreds of false payment vouchers in the name of a sham company, prompting the DEA to send checks to a post office box he controlled. The alleged fraud was only discovered by happenstance when a colleague became suspicious.

The audit of DEA's books didn't specifically address the criminal cases but disclosed that the agency's accounting practices were ripe for abuse.

"The DEA has not maintained a system to accurately and completely account for property and equipment," the audit said, claiming the agency doesn't always get invoices for purchases and in 1997 couldn't document more than $5 million in purchases.

Just a few days after Bowman was indicted, a second DEA employee pleaded guilty in a different scheme to conspiring with a colleague to order and steal nearly $500,000 in electronic equipment over five years.

The court records said Michael D. Hendrix, 53, a DEA telecommunications specialist, and an unnamed colleague submitted 37 purchase orders for electronic equipment that included a 50-inch television set, videocassette recorders, stereos and computers. The two kept the equipment for their own use or sold it.

The audit also noted that the DEA has no way of reporting exactly how much in seized drugs it has in inventory at the end of the year because the computer system the agency uses can't generate a historical report.

The DEA told the auditors it doesn't have the resources to perform "a physical inventory count at year end on each exhibit of evidence for which there are tens of thousands."

And the audit found that the agency "does not have a system and related controls in place to ensure that all trafficker-directed funds activities are recorded in the general ledger." That is money DEA undercover agents receive from drug traffickers during sting operations.

The DEA has agreed to ask its local offices to report those totals quarterly so they can be counted in the ledger.