A Celebration of Heroes:

Working with Whistleblowers

May 25, 2017

2:00 p.m. ET
James H. Holzrichter
Non-Attorney Member/Owner
Protectus Law/Holzrichter Consultancy
2017 Association of Certified Fraud Examiners, Inc.
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JAMES H. HOLZRICHTER CONSULTANCY
"A Just Cause" Speaking, Training,
Technical Assistance

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 Every day in the United States of America, most
citizens and everyday heroes report to work seeking
nothing more than doing a good job, having a good
life, and providing for family, community, and
country.

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 It is the nature of organizations and people working
together for problems or questions to arise in terms
of performance and efficiency at the very least.
Other problems or questions can arise that also
raise issues and challenges with the specter of
legal, moral, and public-safety concerns.

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 In most cases, this is or could be a positive
opportunity for problem solving, better
communication, and improved performance. In too
many other cases, it is a situation in which simply
having particular knowledge or expressed concerns
creates risk and unwanted conflict or outright
jeopardy simply because of what one knows or
dared to address.

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 The well being of these people, their families, and all
those who support them are integral to and essential
for the basis of The American Dream. Taken
separately together as a whole, they are inherently -

A Just Cause

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Mentoring Project

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 A wide range of professionals and organizations will
encounter in-jeopardy employees and their families
up to and including formally declared
whistleblowers. This includes those in the media
and those in the highest levels of government as
well as those handling legal cases and/or providing
support and assistance from mental health to short-
term financial aid and emergency housing. These
generally capable and dedicated people and groups
often need additional informed support in readily
accessing information on the needs of this clientele,
relevant resources, and in gaining both expert and
emotional support for themselves in dealing with
them.

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 The greatest and most immediate need for in-
jeopardy individuals and families (facing, caught up
in, and/or recovering from conflicts with
governmental agencies and/or employers) is
someone or some place to turn to that can give: 1)
some solid empathetic grounding; 2) some realistic
expectations; and,3) concrete steps to cope with
and find their way through. Formal mentorship can
be developed in or promoted through almost
limitless settings and missions.

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A Whistleblowers Story

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 United States ex rel. Robinson and
Holzrichter
v.
Northrop Grumman
Northern District of Illinois, 89 C 6111

Documentary Evidence

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 Letter:
From DCAA to Northrops
George Luper, Director,
Government Relations

January 22, 1988

In accordance with Deputy Assistant Secretary of

Defense for Procurements, 10 December 1987
memorandum, we need immediate answers to
these questions concerning key elements
necessary for NCDSDs material accounting
system to be acceptable for Government contract
costing purposes.

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 Letter
From Duane Emling
To Michael W. Paulini, U.S.
Divisional Administrative
Contracting Officer,

May 9, 1988

NCDSD has found that the Material Management

and Accounting System is generally compliant with the
M/MAS key elements criteria.

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 Memo
From Jack McNaughton
To Russell Bercier

March 27, 1989

This situation is untenable in light of potential progress

payment withholds.

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A Walk Through Northrops
Long-Secret Files

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 Memo:
Duane Emling, Manager,
Material Accounting, Finance

June 20, 1986

Integrity of the Inventory Management System

is questionable, at best

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 Internal View
Graph Presentation
August 5, 1987

*AVAILABLE DATA HAS INSUFFICIENT INTEGRITY*

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 Internal View
Graph Presentation
August 5, 1987

B-1/135 UPDATE
PROBLEMS EVERYWHERE

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 Deposition
Wallace Solberg, Division
Manager & Chief Executive
Officer, Northrop

we were afflicted by the GIGO problem.

Q. The which problem?
A. The GIGO problem.
Q. Which problem is that?
A. Garbage in, garbage out.

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 Memo
Horrocks to Watts

January 30, 1988

The Division President [has

told management that]
systems are a necessary evil
and have no effect on the
economic well being of the
organization

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 Memo
Horrocks to Watts

January 30, 1988

The work were doing is about as enthusiastically

received as results of an AIDS test

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What Northrop Was Saying to
the United States Government

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 Presentation
Northrop to United States

May 6, 1985

THE MANUFACTURING TRACKING

SYSTEMS ARE SUFFICIENT
THE PROCESS IS EFFICIENT, ACCURATE
AND EFFECTIVE

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 Memo
George Luper, Director of
Government Relations
to Robert Carey, Supervisory
Auditor, U.S. Defense Contract
Audit Agency (DCAA)

November 29, 1988

1. Inventory Accuracy
NCDSD has clearly demonstrated the general
accuracy of its inventory system to DCAA

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 Memo
Duane Emling
to Michael Paulini

December 1, 1988

NCDSD concludes that is has generally

completed an acceptable demonstration of its
MMAS system.

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Northrops Cover-Up

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 Internal Northrop
Presentation
February, 1986

PARs OR WHAT WILL THE CUSTOMER ACCEPT AS

REASONS
(WE CANT TELL THE TRUTH)
IN OTHER WORDS, WE SHOULD TRAIN THE CAMs TO
VIOLATE THE SYSTEM WITHIN THE GUIDELINES OF
THE SYSTEM DESCRIPTION

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 Distribution List
MCS Steering Committee

February 1986

D. Emling
A. Selen
S. Licata
J. McNaughton
W. Solberg

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 Memo:
From McNaughton
To Wallace Solberg

October 23, 1987

objectives of [Material Management Council]

activities are to:
Position DSD to be able to respond positively
and proactively to DCAAs imminent material
systems audit plans and investigations
management approval will be sought to proceed
in executing the necessary retroactive transfer
adjustments.
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 DCIS Investigative
Report
(Interview of CH-05)

August 27, 1988

CH-05 said management at Northrop is very

concerned that the DOD may become aware of the
financial reconciliation program. CH-05 elucidated
by stating the primary purpose of the program is to
fool the DOD when it reviews Northrops business
records. CH-05 said Northrop is trying to juggle the
books of different programs in an attempt to mislead
the government inspectors and auditors.

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 Letter:
From D. Emling to M. Paulini

May 31, 1988

Northrop Corporation, Defense Systems Division

(NCDSD), herein submits the plan to conduct a
detailed demonstration/audit of NCDSDs Material
Management and Accounting System (MMAS).

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 Letter:
From D. Emling to M. Paulini

May 31, 1988

Each of the selected part numbers will be traced

through the entire MMAS system.During the
conduct of these traces, it will be necessary for
NCDSD to cycle count the selected parts. DCAA
will be invited to participate in the cycle count. Any
data corrections identified will be included in the
documentation package. Such corrections will be
reviewed with DCAA prior to input to the system.

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 Memo:
From Duane Emling to
R. Davenport

December 16, 1987

Clean Up
What can be done to clean up any bad data
which may exist in the report before DSD has
to turn the report over to the auditors?

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 Memorandum
From: S. Licata
To: D. Emling

August 8, 1988

Having completed subject on 15 of 50 parts, the

following discrepancies are noted for further internal
review and/or correction. These discrepancies are
over and above those reported to the DCAA during
the walk-through.

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 Memorandum
From: S. Licata
To: D. Emling

September 2, 1988

Of the 30 parts covered to date, 22 do not

balance out.

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 Letter
From: Duane Emling
to: Michael W. Paulini,

October 13, 1988

herein submits the results/findings of the

completed audit
DCAA participated in all cycle counts

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 Letter
From: Duane Emling
to: Michael W. Paulini,

October 13, 1988

On-hand Cycle Count Results Accuracy

A Parts 99.9%
B Parts 99.7%
These results are all within the inventory
accuracy guideline of 95% specified in the
key element criteria.
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 Report:
Arthur Young Audit Report to
Northrop

January, 1989

INCORRECT COUNTS
39%

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 Report:
Arthur Young Audit Report to
Northrop

January, 1989

INCORRECT COUNTS
15%

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 Memo:
From Duane Emling

June 18, 1987

I have prepared an initial analysis of each of

the 10 potential deficiencies. These are
included as Attachment D. This analysis was
prepared in a very positive manner. It was
intended to demonstrate that DSDs systems
are compliant with current regulations.

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 Deposition:
Duane Emling regarding
that same Memo

July 26, 1996

Q. When you prepared this draft response

to the DCAA MRP survey, did you attempt to
prepare it as accurately as possible? Let me
rephrase it. Did you strive to make the
statements in this document accurate?
A. They would have been accurate, not
necessarily complete.

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 Memo:
From Duane Emling to
E. Foley and G. Luper

March 25, 1986

CAS 401 Cost Impact Audit

The recommendations contained in this audit
report are both proper and reasonable
considering the amount of material DSD
procures each year. We really should take
action to begin to account completely for
material. It really is in our best interest.

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 Memo:
From Duane Emling to
E. Foley and G. Luper

March 25, 1986

Action:
I believe that we are probably better off to
directly attack the audit

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 Letter:
From George Luper to
Contracting Officer Karen Boyle

May 26, 1987

Audit reports are suppose[d] to reflect facts and

documentation not supposition or slander. When question-
able methods are used to perform an audit, wild and com-
pletely false accusations such as this should certainly not be
published. This demonstrates an adversarial position with no
regard for the potential harm which could be inflicted upon
NCDSDs reputation.

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 Letter:
From J.W. Topham to
Supervisory Auditor Robert J.
Carey

August 11, 1988

NCDSD objects to continual

harassment on topics that have been
addressed and documented over and
over again.

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 Letter:
From Duane Emling to
Robert Carey

October 4, 1988

Northrop Corporation Defense Systems Division

(NCDSD) has reviewed your audit report. We are
stunned with your evaluation of our Material
Management Accounting System.

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 Proposal Development
Handbook
March 11, 1989

The famous bank robber Willy Sutton was asked,

Why did you rob the bank.
He responded, Because that is where the money is

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 Deposition:
Karen Sarley

July 2, 2002

THE WITNESS: Yesterday when I saw these

documents for the first time I was hurt. I was
questioning my own feelings about relying on people
and assuming people were truthful and honest.
But today Im more angry than anything else, I
guess. Because these people were not only lying to
us, meaning the people within the office there, they
were lying to their own government and to the people
of the United States

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 Wall Street Journal
Feature Article

April 19, 2004

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 Incentivizing Integrity
OR Why the FCA Works

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Whistleblower Awards Work for the
Benefit of All - Video

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United States ex rel. Robinson and Holzrichter
v.
Northrop Grumman
Northern District of Illinois, 89 C 6111

Questions?

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 ProtectUS Law
jholzrichter@protectuslaw.com
JAMES H. HOLZRICHTER CONSULTANCY
"A Just Cause" Speaking, Training, Technical
Assistance
Dedicated to promoting resource development,
public awareness, and critical support for all those in
the workplace and their families whose lives and
conjoined commitment to truth & public good is a
just cause
Jameshholzrichterconsultancy.com
holzrichterconsultancy@aol.com

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 Question and Answer
If you have a question during the presentation, please
use the Q & A tab at the bottom of your screen and
click Ask Question. Type your question into the box
and click Submit when you are finished.

2017 Association of Certified Fraud Examiners, Inc. 62 of 64

A Celebration of Heroes: Working with
Whistleblowers

May, 25, 2017

Thank you
James H. Holzrichter
Non-Attorney Member/Owner
Protectus Law/Holzrichter Consultancy

2017 Association of Certified Fraud Examiners, Inc.

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