Twenty-Four Defendants, Including Alleged Aryan Circle Gang Members and Associates Indicted on Racketeering, Firearms, and Drug Charges in Multiple States

Five indictments in three different states were unsealed today indicting a total of twenty-four defendants, including alleged Aryan Circle (AC) gang members and associates, on charges of racketeering conspiracy, violent crimes in aid of racketeering, drug conspiracy, and unlawful firearms trafficking. 

The indictments were announced by Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney Stephen J. Cox of the Eastern District of Texas, U.S. Attorney Robert M. Duncan, Jr. of the Eastern District of Kentucky, and U.S. Attorney Mike Hurst of the Southern District of Mississippi.  These indictments are part of a larger investigation into the AC, Operation Noble Virtue, that has targeted AC leadership and has resulted in seventeen federal convictions in six jurisidictions to date. 

One of the indictments in the Eastern District of Texas charges six alleged AC members and associates with a racketeering conspiracy that includes acts involving murder, five alleged AC members with assault resulting in serious bodily injury in aid of racketeering, and two alleged AC members with kidnapping and conspiracy to commit kidnapping in aid of racketeering.  Among those charged are alleged current and former high-ranking gang leaders including William Glenn Chunn, aka “Big Head,” 38, of Texas; Michael Martin, aka “Aryan Prodigy,” aka “AP,” 37, of Texas; Kevin Kent, aka “Big Kev,” 35, of Indiana; and Malachi David Wren, 51, of Texas.  Other alleged AC members charged include Jesse Paul Blankenship, aka “JP,” 39, of Missouri; Timothy Long, aka “Timmy,” 41, of Arkansas; Jeremy Chad Dennis, aka “JD,” 43, of Texas; Becky Westbrook, 49, of Mississippi; Rodney Holt, aka “Turbo,” 48, of Texas; Bobby Dayle Boney, aka “Bear,” 50, of Texas; and Glynnwood Derrick, 46, of Texas. One additional defendant remains at large. 

Another indictment in the Eastern District of Texas charges Rodney Holt, aka “Turbo”; as well as his associate who is not known to be an AC member, Eric Hoccheim, 39, of Texas, with five counts including firearms trafficking and conspiracy.  Operation Noble Virtue also resulted in a third indictment in the Eastern District of Texas, which charges Jeremy Klintman, aka “Shamrock,” 37, of Texas; Eulalio Torres-Cadenas, aka “Yayo,” 43, of Mexico; Shane Louque, 45, of Lousiana; and Breanna Beckley, 39, of Texas, with conspiracy to distribute controlled substances.  These defendants are not known to be afilliated with the AC.

The indictment in the Southern District of Mississippi charges William Glenn Chunn, aka “Big Head”; Aaron Matthew Rentfrow, aka “Mongo,” 40, of Indiana; Jeremy Chad Dennis, aka “JD”; and Johnathon Aaron Reynolds, 38, of Tennessee with violent crimes in aid of racketeering relating to the stabbing of an inmate at USP Yazoo.  That indictment also charges Daniel Wade Holler, aka “Knucklehead,” 34, of Texas, with accessory after the fact relating to the same attack. 

The indictment in the Eastern District of Kentucky charges Mitchell Leon Farkas, aka “Lifter,” 51, of Louisiana; Jonathan Tucker Gober, aka “Tucker,” 36, of Texas; James Matthew Poole, aka “Redwood,” 35, of Texas; and Andrew Dwayne Tinlin, aka “Tin,” 39, of Iowa, with violent crimes in aid of racketeering relating to the stabbing of an inmate at USP Big Sandy. 

According to court documents, the AC is a violent, race‑based organization that operates inside federal prisons across the country and outside prisons in states including Texas, Arkansas, Louisiana, and Missouri.  The AC was established in the mid‑1980s within the Texas state prison system (TDCJ) after a period of turmoil within the Aryan Brotherhood of Texas (ABT) resulted in rejected and ex-ABT members creating the AC.  The AC was relatively small in comparison to other prison‑based gangs, but grew in stature and influence within TDCJ in the 1990s, largely through violent conflict with other gangs, white and non-white alike.  In recent years, the AC’s structure and influence expanded outside of prisons to rural and suburban areas in numerous states. 

Court records further indicate that the AC enforces its rules and promotes discipline among its members, prospects and associates through murder, attempted murder, assault, and threats against those who violate the rules or pose a threat to the organization.  Members, and oftentimes associates, are required to follow the orders of higher-ranking members without question.  The criminal acts charged in the indictments described above include shootings, stabbings, beatings, and “patch-burnings,” which are violent attacks that result in removal of a victim’s gang tattoo.

An indictment is merely an allegation.  The defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law

This case is being investigated by an Organized Crime Drug Enforcement Task Force (OCDETF) consisting of the Bureau of Alcohol, Tobacco, Firearms and Explosives; Drug Enforcement Administration; Federal Bureau of Prisons; Texas Department of Public Safety; Houston Police Department-Gang Division; Montgomery County (TX) Precinct One Constable’s Office; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; Texas Department of Criminal Justice; New Jersey Department of Corrections-Special Investigations Division; Indiana State Police; Fort Smith (AR) Police Department; Arkansas Department of Corrections; Arnold (MO) Police Department; Jefferson County (MO) Sheriff’s Department; St. Louis Metropolitan Police Department; St. Louis County (MO) Police Department; Indiana Department of Corrections; Carrollton (TX) Police Department; Waller (TX) Police Department; Montgomery County (TX) Sheriff’s Office; Travis County (TX) Sheriff’s Office; Tarrant County (TX) Sheriff’s Office; Evangeline Parish (LA) Sheriff’s Office; Smith County (TX) Sheriff’s Office; McCurtain County (OK) Sheriff’s Office; Montgomery County (TX) District Attorney’s Office; Liberty County (TX) District Attorney’s Office; Harris County (TX) District Attorney’s Office; Mercer County (NJ) District Attorney’s Office; Evangeline Parish (LA) District Attorney’s Office; and the Sebastian County (AR) District Attorney’s Office.

The cases are being prosecuted by Trial Attorneys Bethany Lipman, Rebecca Dunnan, Lakeita Rox-Love, and Alexander Gottfried of the Criminal Division’s Organized Crime and Gang Section, Assistant U.S. Attorney Christopher Rapp of the Eastern District of Texas, Assistant U.S. Attorney Jeremiah Johnson of the Eastern District of Kentucky, and Special Assistant U.S. Attorney Michael FiggsGanter of the Southern District of Mississippi, with the assistance of the U.S. Attorney’s Office for the District of New Jersey, the U.S. Attorney’s Office for the Western District of Louisiana, and the U.S. Attorney’s Office for the Eastern District of Missouri.

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The lack of complete and consistent data limits HHS’s and others’ ability to monitor trends in the burden of the pandemic across states and regions, make informed comparisons between such areas, and assess the impact of public health actions to prevent and mitigate the spread of COVID-19. Further, incomplete and inconsistent data have limited HHS’s and others’ ability to prioritize the allocation of health resources in specific geographic areas or among certain populations most affected by the pandemic. To improve the federal government’s response to COVID-19 and preparedness for future pandemics, GAO recommends that HHS immediately establish an expert committee comprised of knowledgeable health care professionals from the public and private sectors, academia, and nonprofits or use an existing one to systematically review and inform the alignment of ongoing data collection and reporting standards for key health indicators. HHS partially concurred with this recommendation and agreed that it should establish a dedicated working group or other mechanism with a focus on addressing COVID-19 data collection shortcomings. Drug Manufacturing Inspections FDA is responsible for overseeing the safety and effectiveness of all drugs marketed in the U.S., including those manufactured overseas, and typically conducts more than 1,600 inspections of foreign and domestic drug manufacturing establishments every year. 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GAO recommends that FDA (1) ensure that inspection plans for future fiscal years identify, analyze, and respond to the issues presented by the backlog of inspections that could jeopardize its goal of risk-driven inspections, and (2) fully assess the agency’s alternative inspection tools and consider whether these tools or others could provide the information needed to supplement regular inspection activities or help meet the agency’s drug oversight objectives when inspections are not possible in the future. FDA concurred with both recommendations. Number of FDA-Conducted Domestic and Foreign Drug Manufacturing Establishment Inspections, Fiscal Years 2019–2020, by Month Federal Contracting Federal agencies are using other transaction agreements to respond to the pandemic, which are contracting mechanisms that can enable agencies to negotiate terms and conditions specific to a project. 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Specifically, the Occupational Safety and Health Administration (OSHA) has adapted its enforcement methods for COVID-19 to help protect agency employees from the virus and address resource constraints, such as by permitting remote inspections in place of on-site inspections of workplaces. However, gaps in OSHA’s oversight and tracking of its adapted enforcement methods prevent the agency from assessing the effectiveness of its enforcement methods during the pandemic, ensuring that its adapted enforcement methods do not miss violations, and ensuring that employers are addressing certain identified violations. To improve its oversight, GAO recommends that OSHA (1) develop a plan, with time frames, to implement the agency’s oversight processes for COVID-19-adapted enforcement methods, and (2) ensure that its data system includes comprehensive information on use of these enforcement methods to inform these processes. The agency neither agreed nor disagreed with these recommendations. Additionally, OSHA’s data do not include comprehensive information on workplace exposure to COVID-19. For example, OSHA does not receive employer reports of all work-related hospitalizations related to COVID-19, as disease symptoms do not appear within the required reporting time frames. Employers may also face challenges determining whether COVID-19 hospitalizations or fatalities are work-related because of COVID-19’s incubation period and the difficulties in tracking the source of exposure. GAO recommends that OSHA determine what additional datamay be neededfrom employers or other sources to better target the agency’s COVID-19 enforcement efforts. The agency neither agreed nor disagreed with this recommendation. Assistance for Fishery Participants The CARES Act appropriated $300 million in March 2020 to the Department of Commerce (Commerce) to assist eligible tribal, subsistence, commercial, and charter fishery participants affected by COVID-19, which may include direct relief payments. After administrative fees were assessed, $298 million of the $300 million appropriated was obligated for fishery participants.Widespread restaurant closures in the spring of 2020 led to a decrease in demand for seafood, adversely affecting the fisheries industry. As of December 4, 2020, all funds had been obligated and only about 18 percent ($53.9 million) of the CARES Act funding obligated for fishery participants had been disbursed, which is inconsistent with Office of Management and Budget guidance on the importance of agencies distributing CARES Act funds in an expedient manner. Commerce’s National Oceanic and Atmospheric Administration (NOAA) officials said they expect that the vast majority of funds will be disbursed to fisheries participants by early 2021. However, the agency does not have the needed information centralized to help ensure that funds are being disbursed expeditiously and efficiently. GAO recommends that NOAA develop a mechanism to track the progress of states, tribes, and territories in meeting established timelines to disburse funds in an expedited and efficient manner. NOAA concurred with this recommendation. Program Integrity GAO continues to identify areas to improve program integrity and reduce the risk of improper payments for programs funded by the COVID-19 relief laws now that federal agencies have obligated a total of $1.9 trillion and expended $1.7 trillion of the $2.7 trillion appropriated for response and recovery efforts as of November 30, 2020. Federal relief programs remain vulnerable to significant risk of fraudulent activities because of the need to quickly provide funds and other assistance to those affected by COVID-19 and its economic effects. In this report, GAO identifies concerns about overpayments and potential fraud in the unemployment insurance (UI) system, specifically in the federally funded Pandemic Unemployment Assistance (PUA) program, which provides UI benefits to individuals not otherwise eligible for these benefits, such as self-employed and certain gig economy workers. As of January 11, 2021, states that had submitted data to DOL reported more than $1.1 billion in PUA overpayments from March through December 2020. While DOL requires states to report data on PUA overpayments, as of the beginning of 2021, the agency was not tracking the amount of overpayments recovered, limiting insight into the effectiveness of states’ efforts to recoup federal funds. To better track the recovery of federal funds, GAO recommends that DOL collect data from states on the amount of PUA overpayments recovered. DOL concurred with this recommendation, and has taken the first step toward implementing it by issuing new guidance and updated instructions for states to report PUA overpayment recovery data. GAO also remains concerned about SBA’s management of internal controls and fraud risks in the Economic Injury Disaster Loans (EIDL) program. COVID-19 relief laws made qualifying small businesses and nonprofit organizations adversely affected by COVID-19 eligible for financial assistance from the EIDL program. Some approval requirements were also relaxed, such as requiring each applicant to demonstrate that it could not obtain credit elsewhere, through December 31, 2021. As of December 31, 2020, SBA officials said they had approved about 3.7 million applications for loans related to COVID-19, totaling about $200 billion. SBA rapidly processed loans and advances to millions of small businesses affected by COVID-19. GAO’s analysis of SBA data shows that the agency approved EIDL loans and advances for potentially ineligible businesses. For example, SBA approved at least 3,000 loans totaling about $156 million to potentially ineligible businesses in industries that SBA policies state were ineligible for the EIDL program, such as insurance and real estate development, as of September 30, 2020. GAO recommends that SBA develop and implement portfolio-level data analytics across EIDL loans and advances made in response to COVID-19 as a means to detect potentially ineligible and fraudulent applications. SBA neither agreed nor disagreed with this recommendation. As of January 15, 2021, the U.S. had about 23 million cumulative reported cases of COVID-19 and more than 387,000 reported deaths, according to the Centers for Disease Control and Prevention. The country also continues to experience serious economic repercussions. Four relief laws, including the CARES Act, were enacted as of November 2020 to provide appropriations to address the public health and economic threats posed by COVID-19. As of November 30, 2020, of the $2.7 trillion appropriated by these four laws, the federal government had obligated a total of $1.9 trillion and expended $1.7 trillion of the COVID-19 relief funds, as reported by federal agencies. In December 2020, the Consolidated Appropriations Act, 2021, provided additional federal assistance for the ongoing response and recovery. The CARES Act includes a provision for GAO to report on its ongoing monitoring and oversight efforts related to the COVID-19 pandemic. This report examines the federal government’s continued efforts to respond to and recover from the COVID-19 pandemic. GAO reviewed data, documents, and guidance from federal agencies about their activities and interviewed federal and state officials and stakeholders. GAO completed its audit work on January 15, 2021. GAO is making 13 new recommendations for agencies that are detailed in this Highlights and in the report. For more information, contact A. Nicole Clowers at (202) 512-7114 or clowersa@gao.gov.
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    In U.S GAO News
    What GAO Found As of November 2020, the Department of Education (Education) had distributed $6.19 billion in grants to 4,778 schools (colleges and other institutions of higher education) that had applied for emergency student aid funds from the Higher Education Emergency Relief Fund (HEERF) established by the CARES Act, which was enacted in March 2020. After many schools closed their physical campuses in spring 2020 in response to COVID-19, Education provided these grants to schools, based on a statutory formula, to give emergency financial assistance (student aid) to students who incurred related expenses, such as for housing, technology, and course materials. The majority of these HEERF student aid funds have been awarded to public schools (see figure). The average amount Education awarded per school was about $1.3 million, while amounts schools received ranged from less than $2,000 to more than $27 million, with half of schools receiving awards of $422,000 or less. Education data show that, as of November 2020, schools had drawn down about 90 percent—or $5.6 billion—of their HEERF student aid funds. About 70 percent of schools had drawn down all of their student aid funds, and an additional 24 percent of schools had drawn down at least half. Department of Education’s Higher Education Emergency Relief Fund (HEERF) Awards to Schools for Emergency Student Aid under the CARES Act, by School Sector Notes: Schools of less than 2 years are included in the 2-year school categories above. The Department of Education also awarded about $24 million to 2-year private, nonprofit schools and about $1.7 million to the Commonwealth of Puerto Rico Department of Education. Sector-level figures do not add up to $6.19 billion because of rounding. Schools used a variety of approaches to determine student eligibility and distribute funds to students. According to GAO’s analysis of a sample of school websites and data from Education, schools had distributed approximately 85 percent of all emergency student aid funds by fall 2020, with an average amount per student of about $830. Determining student eligibility. Approximately half of schools reported that they required a completed Free Application for Federal Student Aid (FAFSA)—the form used to apply for federal financial aid—to determine student eligibility for HEERF student aid. For example, one school reported requiring students who did not have a FAFSA on file to complete one by June 2020 to be eligible for student aid. Other schools did not require a FAFSA to establish eligibility, according to their websites, but reported using alternative methods. For example, a 4-year public school reported that graduate students applying for emergency aid had the option of submitting a school-provided affidavit certifying they were eligible to receive federal financial aid, an option described in Education’s interim final rule on student eligibility. Awarding funds to students. Schools reported using two main methods for awarding HEERF emergency student aid to students: requiring students to complete a school-developed application or using existing school records. Approximately 18 percent of schools used a combination of both methods. For example, a 4-year nonprofit school reported on its website that it awarded $300 to $500 to eligible students in its first round of funding based on existing student financial aid records, and then allowed students who had more expenses related to COVID-19 to apply for additional funding. Determining award amounts. Schools reported using various factors to determine award amounts for HEERF-eligible students. Over half of schools reported on their websites that amounts were based on individual circumstances, such as students’ general financial need, access to essential items such as food or housing, or a combination of these factors. About 20 percent of schools also reported using full-time or part-time status to determine aid amounts. For example, a 4-year public school reported that it distributed grants, ranging from $150 to $1,000, to all eligible students based on their enrollment status and financial need based on students’ FAFSA information. Why GAO Did This Study In June 2020, GAO issued the first of a series of reports on federal efforts to address the pandemic, which included a discussion of HEERF student aid grants to schools. At that time, limited information on how schools distributed HEERF funds to students was available. This report provides additional information and examines (1) how HEERF emergency student aid funds were provided to schools under the CARES Act, and (2) how schools distributed emergency student aid to eligible students. GAO analyzed Education’s obligation data as of November 2020, after Education had obligated most of the HEERF emergency student aid funds. GAO also analyzed information about HEERF student aid that Education requires schools to report on their websites by selecting a generalizable random sample of 203 schools for website reviews. These schools were representative of the more than 4,500 schools that received HEERF student aid funds as of August 2020. GAO also collected non-generalizable narrative details about how schools distributed funds to eligible students.
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  • Disaster Response: Agencies Should Assess Contracting Workforce Needs and Purchase Card Fraud Risk
    In U.S GAO News
    The efforts of selected agencies to plan for disaster contracting activities and assess contracting workforce needs varied. The U.S. Forest Service initiated efforts to address its disaster response contracting workforce needs while three agencies—the U.S. Army Corps of Engineers (USACE), the U.S. Coast Guard, and Department of the Interior (DOI)—partially addressed these needs. The Environmental Protection Agency indicated it did not have concerns fulfilling its disaster contracting responsibilities. Specifically, GAO found the following: USACE assigned clear roles and responsibilities for disaster response contracting activities, but has not formally assessed its contracting workforce to determine if it can fulfill these roles. The Coast Guard has a process to assess its workforce needs, but it does not account for contracting for disaster response activities. DOI is developing a strategic acquisition plan and additional guidance for its bureaus on how to structure their contracting functions, but currently does not account for disaster contracting responsibilities. Contracting officials at all three of these agencies identified challenges executing their regular responsibilities along with their disaster-related responsibilities during the 2017 and 2018 hurricane and wildfire seasons. For example, Coast Guard contracting officials stated they have fallen increasingly behind since 2017 and that future disaster response missions would not be sustainable with their current workforce. GAO's strategic workforce planning principles call for agencies to determine the critical skills and competencies needed to achieve future programmatic results. Without accounting for disaster response contracting activities in workforce planning, these agencies are missing opportunities to ensure their contracting workforces are equipped to respond to future disasters. The five agencies GAO reviewed from above, as well as the Federal Emergency Management Agency (FEMA), collectively spent more than $20 million for 2017 and 2018 disaster response activities using purchase cards. GAO found that two of these six agencies—Forest Service and EPA—have not completed fraud risk profiles for their purchase card programs that align with leading practices in GAO's Fraud Risk Framework. Additionally, five of the six agencies have not assessed or documented how their fraud risk for purchase card use might differ in a disaster response environment. DOI completed such an assessment during the course of our review. An Office of Management and Budget memorandum requires agencies to complete risk profiles for their purchase card programs that include fraud risk. GAO's Fraud Risk Framework states managers should assess fraud risk regularly and document those assessments in risk profiles. The framework also states that risk profiles may differ in the context of disaster response when managers may have a higher fraud risk tolerance since individuals in these environments have an urgent need for products and services. Without assessing fraud risk for purchase card programs or how risk may change in a disaster response environment, agencies may not design or implement effective internal controls, such as search criteria to identify fraudulent transactions. The 2017 and 2018 hurricanes and California wildfires affected millions of people and caused billions of dollars in damages. Extreme weather events are expected to become more frequent and intense due to climate change. Federal contracts for goods and services play a key role in disaster response and recovery, and government purchase cards can be used by agency staff to buy needed items. GAO was asked to review federal response and recovery efforts related to recent disasters. This report examines the extent to which selected agencies planned for their disaster response contracting activities, assessed their contracting workforce needs, and assessed the fraud risk related to their use of purchase cards for disaster response. GAO selected six agencies based on contract obligations for 2017 and 2018 disasters; analyzed federal procurement and agency data; reviewed agencies' policies on workforce planning, purchase card use, and fraud risk; and analyzed purchase card data. FEMA was not included in the examination of workforce planning due to prior GAO work. GAO is making 12 recommendations, including to three agencies to assess disaster response contracting needs in workforce planning, and to five agencies to assess fraud risk for purchase card use in support of disaster response. For more information, contact Marie A. Mak at (202) 512-4841 or makm@gao.gov.
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These groups were all directed by Congress to complete their studies, which were published between 2014 and 2020. Their reports also cite ways in which NNSA's oversight may have contributed to increased costs or reduced mission capabilities. NNSA's Burdensome Regulatory Requirements report explicitly identifies 91 requirements that M&O contractors found burdensome; these include requirements found in sources such as DOE and NNSA directives, federal regulations, and statutes. NNSA's approach to collecting and reporting information on requirements that M&O contractors identified as burdensome. NNSA first collected information on the requirements the contractors viewed as burdensome, and second, asked the contractors to rate these requirements based on the likelihood that the requirement could be changed and the effects such a change would have on cost savings, morale, recruitment and retention, and mission capability. While NNSA did not provide a definition to its contractors of what constituted a "burdensome" requirement, some contractors created their own definitions, while others told us the definition was understood based on the previously published related reports. GAO interviewed M&O contractor representatives and found that their definitions of what constituted a "burdensome requirement" varied. Also, the seven M&O contractors used different approaches to identify and rate requirements they considered burdensome. However, multiple M&O contractors identified the same requirements, or sources of those requirements, as burdensome. For example, one contractor identified the entire DOE Order for Program and Project Management of the Acquisition of Capital Assets (DOE Order 413.3B) as burdensome, while another contractor identified specific requirements within the same order as burdensome. NNSA actions to address matters that M&O contractors identified as burdensome. In its report, NNSA included a list of 16 matters that it committed to reviewing based on the rating data it collected from M&O contractors and input from members of the Operations and Efficiencies Board, an internal body established to improve coordination and collaboration across NNSA's sites. According to NNSA officials, 10 matters are under revision or have been changed; two matters were reviewed, but no changes were made; and four matters were reviewed, and M&O contractor input will be considered should the regulation undergo a revision in the future. NNSA's list of matters included DOE directives, federal requirements, and an M&O contract change. According to agency officials, NNSA chose to prioritize its review of certain matters because the agency did not have the resources to review all 91 requirements that M&O contractors identified as burdensome. NNSA provided technical comments on a draft of this report, which were incorporated as appropriate. Why GAO Did This Study NNSA is responsible for maintaining a safe, secure, and reliable nuclear stockpile and relies on and oversees contractors who manage and operate its laboratory and production sites. NNSA's M&O contracts include requirements for contractors to adhere to laws, regulations, and DOE and NNSA directives. NNSA also has processes to hold contractors accountable for meeting these requirements. Senate Report 115-262, accompanying the John S. McCain National Defense Authorization Act for Fiscal Year 2019, directed NNSA to collect information from its M&O contractors on specific requirements they deemed particularly burdensome and to publish this information in a report. Senate Report 115-262 also included a provision for GAO to review NNSA's report. GAO's report provides information on (1) a comparison of NNSA's findings with findings reported by external groups, (2) NNSA's approach to collecting and reporting information on requirements the M&O contractors identified as burdensome, and (3) NNSA's actions to address the requirements that the M&O contractors identified. GAO reviewed NNSA's 2019 report and supplemental documents and interviewed NNSA officials and M&O contractor representatives. For more information, contact Allison Bawden at (202) 512-3841 or bawdena@gao.gov.
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  • Aviation Consumer Protection: Increased Transparency Could Help Build Confidence in DOT’s Enforcement Approach
    In U.S GAO News
    The Department of Transportation's (DOT) enforcement approach generally uses a range of methods to encourage compliance with consumer protection regulations, including conducting outreach and information-sharing, issuing guidance, and sending non-punitive warning letters for those violations that do not rise to the level that warrants a consent order. DOT usually enters into consent orders when it has evidence of systematic or egregious violations. Such orders are negotiated between DOT and violators (e.g., airlines) and typically include civil penalties. DOT officials see benefits from using consent orders, which can include credits for actions taken to benefit consumers or to improve the travel environment. Annual consent orders increased from 20 in 2008 to 62 in 2012, but then generally declined to a low of eight in 2019. GAO's analysis showed that the decline in consent orders was most marked among those issued against non-air carrier entities (e.g., travel agents), those addressing certain types of violations such as advertising, and orders containing smaller civil penalty amounts. DOT officials said that the agency did not change its enforcement practices during this time. Examples of DOT's Compliance Promotion and Enforcement Efforts Airlines and consumer advocates GAO interviewed said that DOT's enforcement process lacked transparency, including into how investigations were conducted and resolved and about when and why DOT takes enforcement actions. Moreover, DOT publishes limited information related to the results of its enforcement activities, notably information about the number and type of consumer complaints it receives as well as issued consent orders. DOT does not publish other information such as aggregated data about the number or nature of open and closed investigations or issued warning letters. DOT is taking some actions to increase transparency, such as developing a publicly available handbook, but none of those actions appears to fully address the identified information gaps such as information about the results of investigations. Some other federal agencies provide more information about enforcement activities, including publishing warning letters or data about such letters. Publishing additional information about how DOT conducts investigations and enforcement, and about the results of enforcement activities, could improve stakeholders' understanding of DOT's process and help build confidence in its approach. Consumer advocates, airlines, and other stakeholders have raised concerns about how DOT enforces aviation consumer protection requirements. DOT has the authority to enforce requirements protecting consumers against unfair and deceptive practices, discrimination on the basis of disability or other characteristics, and other harms. The FAA Reauthorization Act of 2018 contained a provision for GAO to review DOT's enforcement of consumer protection requirements. This report examines: (1) DOT's approach to the enforcement of aviation consumer protections and the results of its efforts, and (2) selected stakeholder views on this approach and steps DOT has taken to address identified concerns. GAO reviewed DOT data on consent orders and consumer complaints; reviewed other DOT documentation related to its enforcement program; interviewed DOT officials and selected industry and consumer stakeholders, including advocacy organizations, which we identified from prior work and a literature review; and identified leading practices for regulatory enforcement. GAO is making two recommendations, including: that DOT publish information describing the process it uses to enforce consumer protections, and that DOT take additional steps to provide transparency into the results of its efforts. DOT concurred with these recommendations. For more information, contact Andrew Von Ah at (202) 512-2834 or vonaha@gao.gov.
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  • Information Technology: Key Attributes of Essential Federal Mission-Critical Acquisitions
    In U.S GAO News
    Federal agencies are undertaking information technology (IT) acquisitions that are essential to their missions. GAO identified 16 of these acquisitions as particularly critical to missions ranging from national security, to public health, to the economy (see table). GAO has previously reported on these acquisitions and the programs they support, and has made numerous recommendations to agencies for improvement. The amount agencies expect to spend on the selected acquisitions vary greatly depending on their scope and complexity, as well as the extent of transformation and modernization that agencies envision once the acquisitions are fully deployed. For example, the Department of Defense plans to spend $10.21 billion over 21 years on its health care modernization initiative, while the Department of Homeland Security intends to spend $3.19 billion over 30 years on its system supporting immigration benefits processing. Agencies reported potential cost savings associated with 13 of the 16 mission-critical acquisitions after deployment due to factors such as shutting down legacy systems, eliminating physical paper processing, and improving security, monitoring, and management. Eleven of the 16 selected acquisitions were rebaselined during their development, meaning that the project's cost, schedule, or performance goals were modified to reflect new circumstances. Agencies reported a number of reasons as to why their acquisitions were rebaselined, including delays in defining the cost, schedule, and scope; budget cuts and hiring freezes; technical challenges; and changes in development approach. As shown below, ten of the acquisitions relate to an additional programmatic area that GAO has designated high risk. Federal Agency Mission-Critical Information Technology Acquisitions Department of Agriculture Modernize and Innovate the Delivery of Agricultural Systems Department of Commerce 2020 Decennial Census* Department of Defense Defense Healthcare Management System Modernization* Global Combat Support System-Army* Department of Homeland Security Student and Exchange Visitor Information System Modernization* U.S. Citizenship and Immigration Services Transformation* Department of the Interior Automated Fluid Minerals Support System II* Department of Justice Next Generation Identification System Terrorist Screening System Department of State Consular System Modernization Department of Transportation Automatic Dependent Surveillance-Broadcast Department of the Treasury Customer Account Data Engine 2* Integrated Enterprise Portal* Department of Veterans Affairs Electronic Health Record Modernization* Small Business Administration Application Standard Investment Social Security Administration Disability Case Processing System 2* Legend: *= Acquisition relates to a programmatic area that GAO has previously designated as being high risk. Source: GAO analysis of agency data. | GAO-20-249SP The acquisition of IT systems has presented challenges to federal agencies. Accordingly, in 2015 GAO identified the management of IT acquisitions and operations as a high-risk area, a designation it retains today. GAO was asked to report on federal IT acquisitions. GAO's specific objective was to identify essential mission-critical IT acquisitions across the federal government and determine their key attributes. To identify acquisitions for the review, GAO administered a questionnaire to the 24 agencies covered by the Chief Financial Officers Act of 1990 asking them to identify their five most important mission-critical IT acquisitions. From a total of 101 acquisitions that were identified, GAO selected 16 mission-critical IT acquisitions to profile in this report. The selection was based on various factors, including the acquisition's criticality to providing service to the nation, its total life cycle costs, and its applicability to the President's Management Agenda. For each of the 16 selected acquisitions, GAO obtained and analyzed documents on cost, schedule, risks, governance, and related information; and interviewed cognizant agency officials. GAO requested comments from the 12 agencies with acquisitions profiled in its draft report and the Office of Management and Budget. In response, one agency (the Social Security Administration) provided comments that discussed the planned use of its system. For more information, contact Carol C. Harris at (202) 512-4456 or harriscc@gao.gov.
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    Since 2015, Congress has not changed parts of the U.S. Bankruptcy Code (Code) related to financial companies or the Orderly Liquidation Authority (OLA). However, the Federal Deposit Insurance Corporation (FDIC) and the Board of Governors of the Federal Reserve System (Federal Reserve) have updated the resolution planning process to better match resolution planning requirements to the risks of companies. OLA is a regulatory alternative to bankruptcy for resolving failed, systemically important financial institutions, and resolution plans describe how a financial company may be resolved in an orderly manner if it fails. In November 2019, FDIC and the Federal Reserve finalized amendments to the Resolution Plans Required rule, establishing different filing cycles and content requirements for resolution plans based on the asset size and risk profile of companies. Regulators also finalized other rules related to OLA and resolution planning and proposed several additional rules. The 2007–2009 financial crisis and the failures of large, complex financial companies led some financial and legal experts to question the adequacy of the U.S. Bankruptcy Code for effectively reorganizing or liquidating these companies. These experts, government officials, and members of Congress responded by proposing changes to the Code and the supervisory process leading to a bankruptcy filing. The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) established OLA as a regulatory alternative to bankruptcy. Under OLA, the Secretary of the Treasury may appoint FDIC as a receiver to resolve systemically important financial institutions. In addition to OLA, the Dodd-Frank Act requires financial companies to file periodic resolution plans with the Financial Stability Oversight Council, Federal Reserve and FDIC describing how they could be resolved in an orderly manner in the event of material financial distress or failure. The Dodd-Frank Act also includes a provision for GAO to study, at specified intervals, the effectiveness of the Code in facilitating the orderly liquidation or reorganization of financial companies and ways to make the orderly liquidation process under the Code more effective. This report examines (1) proposed or enacted changes to the Code related to financial companies and OLA since 2015, and (2) regulatory actions related to resolution planning and OLA. GAO reviewed proposed legislation, regulations, prior GAO reports, and agency reports and presentations on financial company bankruptcies, OLA, and resolution planning. GAO also reviewed comment letters to the 2019 proposed Resolution Plans Required rulemaking. GAO interviewed officials from the Administrative Office of the United States Courts, FDIC, and the Federal Reserve. GAO also interviewed six industry stakeholders, including academics, a consumer group, industry associations, and former regulatory officials, about the 2019 Resolution Plans Required Rule. For more information, contact Michael Clements at (202) 512-8678 or ClementsM@gao.gov.
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  • Rural Hospital Closures: Affected Residents Had Reduced Access to Health Care Services
    In U.S GAO News
    GAO found that when rural hospitals closed, residents living in the closed hospitals' service areas would have to travel substantially farther to access certain health care services. Specifically, for residents living in these service areas, GAO's analysis shows that the median distance to access some of the more common health care services increased about 20 miles from 2012 to 2018. For example, the median distance to access general inpatient services was 3.4 miles in 2012, compared to 23.9 miles in 2018—an increase of 20.5 miles. For some of the less common services that were offered by a few of the hospitals that closed, this median distance increased much more. For example, among residents in the service areas of the 11 closed hospitals that offered treatment services for alcohol or drug abuse, the median distance was 5.5 miles in 2012, compared to 44.6 miles in 2018—an increase of 39.1 miles to access these services (see figure). Median Distance in Miles from Service Areas with Rural Hospital Closures to the Nearest Open Hospital that Offered Certain Health Care Services, 2012 and 2018 Notes: GAO focused its analysis on the health care services offered in 2012 by the 64 rural hospitals that closed during the years 2013 through 2017 and for which data were available. For example, in 2012, 64 closed hospitals offered general inpatient services, 62 offered emergency department services, 11 offered treatment services for alcohol or drug abuse, and 11 offered services in a coronary care unit. To examine distance, GAO calculated “crow-fly miles” (the distance measured in a straight line) from the geographic center of each closed rural hospital's service area to the geographic center of the ZIP Code with the nearest open rural or urban hospital that offered a given service. GAO also found that the availability of health care providers in counties with rural hospital closures generally was lower and declined more over time, compared to those without closures. Specifically, counties with closures generally had fewer health care professionals per 100,000 residents in 2012 than did counties without closures. The disparities in the availability of health care professionals in these counties grew from 2012 to 2017. For example, over this time period, the availability of physicians declined more among counties with closures—dropping from a median of 71.2 to 59.7 per 100,000 residents—compared to counties without closures—which dropped from 87.5 to 86.3 per 100,000 residents. Rural hospitals face many challenges in providing essential access to health care services to rural communities. From January 2013 through February 2020, 101 rural hospitals closed. GAO was asked to examine the effects of rural hospital closures on residents living in the areas of the hospitals that closed. This report examines, among other objectives, how closures affected the distance for residents to access health care services, as well as changes in the availability of health care providers in counties with and without closures. GAO analyzed data from the Department of Health and Human Services (HHS) and the North Carolina Rural Health Research Program (NC RHRP) for rural hospitals (1) that closed and those that were open during the years 2013 through 2017, and (2) for which complete data generally were available at the time of GAO's review. GAO also interviewed HHS and NC RHRP officials and reviewed relevant literature. GAO defined hospitals as rural according to data from the Federal Office of Rural Health Policy. GAO defined hospital closure as a cessation of inpatient services, the same definition used by NC RHRP. GAO defined service areas with closures as the collection of ZIP Codes that were served by closed rural hospitals and service areas without closures as the collection of ZIP Codes served only by rural hospitals that were open. GAO provided a draft of this report to HHS for comment. The Department provided technical comments, which GAO incorporated as appropriate. For more information, contact James Cosgrove at (202) 512-7114 or cosgrovej@gao.gov.
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    In U.S Courts
    Through a combination of advance planning, expanded use of technology, and the dedication of thousands of employees, the federal Judiciary’s response to the pandemic has enabled courts to continue to operate, while ensuring the health and safety of the public and court personnel, U.S. Senior District Judge David G. Campbell told Congress on Thursday.
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