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Definitions of Fraud, Waste, and Abuse

There are many examples of what can be classified as fraud, waste, or abuse, and the determination of whether an act is fraud, waste, or abuse depends on the facts and circumstances of each situation, including the severity of the issue. However, the definitions and examples below can help determine if a situation should be reported to the OIG. Fraud, waste, or abuse should be reported when it is committed by BART’s employees, contractors, consultants, or vendors.

California Government Code section 53087.6(f)(2) collectively defines “fraud, waste, or abuse” as “any activity by a local agency or employee that is undertaken in the performance of the employee’s official duties, including activities deemed to be outside the scope of his or her employment, that is in violation of any local, state, or federal law or regulation relating to corruption, malfeasance, bribery, theft of government property, fraudulent claims, fraud, coercion, conversion, malicious prosecution, misuse of government property, or willful omission to perform duty, is economically wasteful, or involves gross misconduct.” These activities also are also collectively referred to as “improper governmental activities.”

Individual definitions can generally be described as follows:

Waste: Waste involves using or expending resources carelessly, negligently, extravagantly, or to no purpose, whether intentional or not, to the detriment of BART. Waste includes incurring unnecessary costs as a result of inefficient or ineffective practices, systems, or internal controls and often results from inadequate oversight.

Abuse: Abuse is behavior that violates a policy or is deficient, improper, or excessive when compared with behavior that a prudent person would consider reasonable and necessary. It includes using something in a manner that is contrary to the natural or legal rules for its use or extravagant or excessive use that is the result of someone abusing their position or authority.

Fraud: Fraud is an act of using dishonesty as a tool for personal gain. It involves obtaining something of value for personal or financial gain or depriving others, or an organization, of something of value through intentional deceit, misrepresentation, or concealment of something that should have been disclosed. Fraud can occur through the spoken word or by an individual’s conduct and actions. Whether an act is, in fact, fraud is generally determined through the judicial or other adjudicative system. If the IG concludes that an act was likely fraud, the case will be referred to the appropriate law enforcement agency for further review and a determination if prosecution should occur.

The following graphic shows the continuum of fraud, waste, and abuse, based on severity of the act:

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