By Paige Winfield Cunningham

Tipsters reporting government fraud and abuse value their anonymity more than they value cold, hard cash—at least in Richmond.

After the Richmond City Council approved an awards program in 2005, responses to the city’s abuse hotline—known as the Fraud Squad—increased dramatically. But of the hundreds of citizens who have delivered allegations, only two have received rewards of $1,000 each.

That’s because to be rewarded, the city requires tipsters to reveal their identities. Since most of the callers are city employees, few are willing to step out of anonymity, says Richmond City Auditor Umesh Dalal.

“People don’t want to come forward and let their names be known,” said Dalal, who said that his office doesn’t track how many tips are anonymous but is certain they’re the vast majority. “We give them assurance there is going to be no retaliation for them complying—that is city ordinance—but we would have to go through accounts payable to request a check for them and when that happens, they fear peer-to-peer retaliation.”

And up-ing the ante hasn’t convinced more people to share their names. Because each of the two rewards issued were before 2007, the tipsters could receive $1,000 maximum even though Dalal says their tips resulted in savings of $73,000 and $107,000 for the city.

In 2007 the city changed the policy, increasing the possible award for a tip that results in money-savings. According to the auditor’s website, “city employees, who disclose misconduct which results in recovery or savings by the city in the amount $5,000 or more during one year, may be eligible to receive a monetary reward that equals ten percent of the money recovered or saved, up to $5,000.”

So far, no one has provided enough information to qualify for a reward equaling that ten percent. The size of an award is based upon how much the informant offers, says Audit Manager Chris Kalafatis.

“Every allegation should not qualify as an automatic 10 percent savings,” he said.

Richmond has offered the fraud hotline since 2001. While calls trickled in from time to time, it wasn’t until Dalal joined the city four years later and started publicizing the website that the pace picked up. Of the 353 allegations the city has received, 81 percent of them have been reported since 2006.

Dalal said a lot of the complaints have been substantive enough to lead to investigations. Of the 81 calls received by the Fraud Squad last year, 55 were investigated. Tips can be reported either by calling the Office of the City Auditor at 804-646-5697 or by filling out a form on the agency’s website.

And the hotline has produced several tips that have brought down public officials. In 2007, a tip led to an indictment of the former human resources director of the Richmond Behavioral Health Authority on charges of embezzling cash from the authority, using credit-card purchases for personal items and submitting false travel and expense reimbursements.

Two years ago, investigators found that employees of a city contractor were taking food in exchange for not issuing parking tickets, thanks to the hotline.

The state has attempted to establish a similar hotline for state employees, but it’s never gotten off the ground.

Two years ago Richmond Republican Del. Manoli Loupassi sponsored the Whistleblower Protection Act, which strengthened protections for state employees who report fraud and abuse and charged the state to create a reward fund similar to Richmond’s. But while the bill was signed into law, lawmakers failed to provide funding, says Jack Spooner, the state internal auditor.

“When it was passed a year or two ago, we really didn’t move forward at the time because there was no funding source provided,” Spooner said. “What we’re trying to do is propose one or two different ways of coming up with the money.”

Spooner said he’s spoken with Dalal’s office to get ideas for how to distribute the awards if funding was ever found for the program—only to hear that few had been awarded.

“They really didn’t have procedures because no one had really participated,” Spooner said.

But a month ago, Loupassi blamed government “bureaucracy” for why the rewards system hasn’t been established.

“They don’t want us to know where all the waste is, they don’t want us to know where all the stupidity’s happening,” Loupassi said. “To me, that tells me all I need to know.”