8/7/2019 Exhibit 27 - Corbett Case Pennsylvania Fraud Waste Wrongdoing

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Mgmt Rep Letter

From:Sent:To:Subject:

Page 1 of2Ottenberg, Douglas M.Tuesday, May 29,2007 7:23 PM (GMT)B ianco, Edward L. FW: Mgmt Rep Letter

Ed.Ton Kimmett had some heaftbur over the representation letter. I rvent over each point rvith hin. I did sonieresearch and found that#3 u'as wriften the rvay it was because of Sarbanes-Oxley. Once rve discussed that heseerned OK rvith #3.He does take exception to the "4. We are not aware of any fraud . . . " representation. I'rn not sure rvhy because weare clearly not arvare of any fraud. We found gross nrismanagement, but no fi'aud, He'll want to discuss this rvithyou, He is saying that the level of mistrauagetnent equates to fi'aud. I'd have to disagree rvith him.He might rvrite a qualification for #8 because of the conmissions paid outside the PCA holding period and unpaidillterest.We probably need to discuss this before our 2 p.m. meetng rvith hirn.Doug t. We have provided to you all available records and related data requested by your auditors toperform the audit. YES

We acknowledge our offrce's understanding of the objectives, evaluation criteria and scopeof the audit as stated in your engagement letter dated August 8, 2005. YESVy'e acknowledge our responsibility for the design and implementation of programs and

controls to prevent and detect fraud. By saying YES we are stating that management isresponsible for the internal controls. Now that Sarbanes-Oxley requires effective internalcontrols to "Prevent and Detect Fraud", this is a fair representation for the auditors to ask. Idon't know that we'd have the right to re-word it.We are not aware of any fraud involving management or employees who have significantroles in management controls, or any fraud involving others that could have an effect on thefunctions. While I think Jill's close personal relationship with senior managers of the privatecollection agencies is inappropriate and the mismanagement of dockets is grossly obvious,we have not uncovered any fraud. Could it exist? Absolutely, but I am not aware of anyfraud. In my opinion, the FES state fits the definition of gross mismanagement.Definitions:Fraud. Misfeasance. Nonfeasance or Malfeasance. Fraud, misfeasance, nonfeasance, ormalfeasance should be considered broadly as any alleged deliberate action which isapparently in violation of Federal statutes and regulations. This category includes, but is notlimited to, indications of bribery, forgery, extortion, embezzlement, theft of participantchecks, kickbacks from participants, intentional payments to a contractor withouf theexpectation of receiving services, payments to ghost enrollees, misuse of appropriated funds,and misrepresenting information in official repofts.

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file://L:\Concordance Load Files\Thomas Kimmett\Thomas Kimmett 112509\KIM004\KIM... 31912010

Case 4:08-cv-01496-JEJ-TMB Document 115 Filed 07/17/2010 Page 1 of 2

8/7/2019 Exhibit 27 - Corbett Case Pennsylvania Fraud Waste Wrongdoing

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Mgmt Rep Letter Page2 of}Gross Mismanagement. Gross mismanagement should be considered as actions or situationsarising out of management ineptitude or oversight, leading to major violations of FESprocesses, regulations, or contractlgrant provisions which could severely hamper theaccomplishment of program goals. These include situations which lead to waste ofGovernment resources and could jeopardize the project or reputation of the agency. Thiscategory includes, but is not limited to, unauditable records, unsupported costs, highlyinaccurate fiscal and/or program reports, and the lack of good intemal control procedures.

5. 'We are responsible for the compliance with all laws and regulation applicable to thefunctions. YES6. We have identified and disclosed to the auditors all laws and regulations that have a directand material effect on the functions. YES7. We have responded fully to all your inquiries during your audit. YES and very candidly8. There are no outstanding sanctions, litigation or disallowances of costs pending or underappeal that would have a material effect on the individual program. YEs...however,

depending on how you're going after the commission payments made outside the holdingperiod and the unpaid interest, this might have to be qualified.

From Bianco, Edward L.Sent: Friday, May 11, 2007 Bz42 AMTo: Ottenberg, Douglas M,Subjectr FW: Mgmt Rep LetterImpoftance: High

Ed

From: Bitting, Daniel fmailtordbitting@state.pa.us]Sent: Friday, May 11, 2007 B:30 AMTo: Bianco, Edward L.Cc: Simons, PhllipSubject: Mgmt Rep LetLerImpoance: HighMr. Bianco,As we discussed yesterday, here is a copy of the Management Representation Letter for someone in your officeto sign. Thanks