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DIVISION OF INVESTIGATIONS

Louis B. Glavis, Director

The regular annual appropriation for this Division to conduct investigations for the Interior Department for the fiscal year 1935 was $362,560.

The average number of active field investigators, exclusive of special agents in charge, was 75; average number of clerks employed in divisional offices, 20; total force employed, including special agents in charge, and the Washington office, 100.

Due to the activities of field investigators, $30,638.65 was collected and turned into the Treasury and 224,214.59 acres were restored to the public domain, representing fraudulent entries, etc., canceled on proceedings based on their reports.

INVESTIGATIONS

On July 1, 1934, there were pending field investigation 8,476 cases. During the year 8,237 additional cases were received; 8,546 cases investigated, reported, and closed, leaving 8,167 cases pending investigation. Of the reports submitted, 2,512 were adverse and 6,034 favorable.

On the recommendation of this Department 27 civil suits were brought by the Department of Justice. Twenty-one cases were tried, of which 18 were won and 3 lost. As a result of the suits, $12,808.35 was recovered and 1,480 acres restored to the public domain. The criminal cases handled in the Division consisted of: Conspiracy, 21; criminal, 11; intimidation, 2; and unlawful enclosure, 18. Of the criminal cases tried 3 resulted in conviction and prison sentence was imposed in each case.

The cases investigated by the Division for the various bureaus of the Department, other than the General Land Office, were as follows: Office of Indian Affairs, 126; National Park Service, 25; Bureau of Reclamation, 7; miscellaneous, 7; Geological Survey, 4.

FEDERAL EMERGENCY ADMINISTRATION OF PUBLIC WORKS

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The Director of Investigations conducts all investigations for the Public Works Administration. His staff personnel on June 30, 1935. including the national office at Washington, consisted of 10 special agents in charge, 185 special agents, and 125 other employees.

Cases investigated by the Division of Investigations relate to expenditure of Public Works' funds, collusion and fraudulent bidding where contractors and subcontractors are involved, wages and disputes arising from rates of pay, irregularities in the employment of labor and use of materials, code violations, underpayment of employees, repayment to contractors of wages of employees, contracts relating to housing projects, governmental personnel, and misconduct of officers and employees of the Public Works Administration, activities of the National Reemployment Service and other governmental agencies, to which Public Works' funds are allotted.

These investigations, having to do with the allotment and expenditure of large sums of money, enabled the administrative officers to uncover numerous frauds and irregularities and prevent substantial losses to the Government. It is notable that a saving of $64,449,927.74 was effected by the Public Works Administration through activities of the Division of Investigations since inception of the administration in 1933.

The administrative expense of the Division of Investigations from the beginning to June 30, 1935, amounted to $1,337,350.90, or a fraction slightly more than 2 percent of the total amount saved.

This saving was accomplished by and through investigations covering such items as cancelation or rescission of contract bids and awards where fraud or collusion was found to exist, rescission of allotments for loans and/or grants due to irregularities or fraudulent representation; lack of economic soundness in projects investigated, inadequate financial ability of the borrower or his inability to liquidate loans, and the use of insufficient or inferior material in construction work.

There also was included penalties imposed on contracts for violation of the 8-hour law on Federal projects, reduction in allotments where it was found that the borrower had included excessive amounts in estimates covering overhead and engineering fees, reduction of allotments due to fictitious estimates and excessive appraisals covering the purchase of lands for projects sites and savings effected by requiring a change in the method of construction from force account to a contract basis.

The Division of Investigations also effected other savings not shown in this total. One of the more important of these was reimbursement of wages to labor where such pay was wrongfully withheld by contractors through what has been designated as the "kickback racket." It is estimated that this saving to labor by such reimbursements amounted to $258,331.14.

Thirteen thousand seven hundred and twenty-two cases were investigated and reported by special agents of the Division of Investigations; 10,520 cases were reported favorably and 3,202 cases were reported adversely. Included in the foregoing were 85 criminal prosecutions, resulting in 14 cases receiving court action, 16 cases resulting in indictments, and prison sentences were imposed in six cases.

The Director of Investigations conducted 107 investigations for the National Reemployment Service, Department of Labor, and 400 investigations were made for the Director of the Contract Division of the National Industrial Recovery Administration, involving code violations on P. W. A. projects.

OIL ENFORCEMENT

The Director of Investigations performed all investigations, under the supervision of the Secretary of the Interior in his capacity of administrator for the petroleum industry, in the enforcement of the provisions under the regulations pursuant to section 9c of the National Industrial Recovery Act, relating to the transportation in interstate commerce of oil produced in violation of State regulations, until the United States Supreme Court in the case of the Panama Refining Co., et al., dated January 7, 1935, held these regulations to be unconstitutional, and in the enforcement of the provisions of the Code of Fair Competition for the Petroleum Industry, until the decision in the case of A. L. Schecter Poultry Corporation and others, dated May 27, 1935, declared the code unconstitutional.

OIL CODE

The personnel until June 15, 1935, the date the code work ceased, consisted of 13 special agents in charge, 2 acting special agents in charge, 78 special agents, and 85 employees, inclusive of the personnel in the Washington office.

The total number of cases investigated was 8,885, of which 3,065 were reported on and closed. Of the total number of cases investigated, 420 were recommended for prosecution and in 341 cases prosecution was begun.

INVESTIGATIONS UNDER SECTION 9C

The investigations were carried on by the Director of Investigations by a personnel of 1 agent in charge, 23 special agents, and 14 clerks. The total number of cases investigated was 1,223, resulting in 25 cases prosecuted. Under section 35 of the Criminal Code, as amended, 11 prosecutions. Civil cases, resulting in court action, 2.

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CONNALLY OIL ACT

The Director of Investigations conducted investigations in all States other than Texas of violation of the Connally Act of February 22,1935 (Public, No. 14), relating to interstate and foreign commerce in petroleum and its products by prohibiting the shipment in such commerce of petroleum and its products produced in violation of State law.

The existing personnel of the Division of Investigations engaged in this work comprises an office force in Washington and a field force of 74 employees. The total number of cases investigated was 18. resulting in 4 recommended for prosecution and a permanent injunction secured in 1 case.

MARINE UNIT

The investigations of cases arising under the regulations under section 9c and the Connally Oil Act were made in conjunction with a marine section of 1 special agent in charge, 2 special agents, and 16 employees, operating a number of patrol boats, to inspect tanker cargoes of petroleum and petroleum products. Reports are made by the masters of all vessels transporting petroleum or petroleum products thereof, in the loading and discharging of cargoes, amounting to a total of 284.054,468 barrels, moved in interstate commerce from the State of Texas. The reports, approximating 125 per day, constitute the first attempt in the history of coastwise commerce for a governmental agency to secure an accurate record of coastwise and intercoastal movements of these products. The information is valuable to the Federal Government in the collection of taxes due on petroleum products.

CIVIL WORKS ADMINISTRATION

Investigations of irregularities in expenditures of funds allotted to the Federal Relief Administrator for civil relief, by the Public Works Administration, were conducted by the Director of Investigations until February 14, 1934. While there were no investigations of new cases during the past fiscal year, there were 23 cases pending with the United States attorneys for prosecution; 6 indictments secured; 5 cases resulted in court action; 4 cases involved prison sentences; 8 dismissed; and 9 are till pending action of the United States attorneys and the Department of Justice.

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