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## Los Angeles County Supervisors Take Action to Combat Fraud in Small Business Program

Los Angeles County supervisors have made the decision to strengthen efforts in cracking down on fraud within a program designed to support small businesses. This comes after auditors from within the county themselves first recommended improvements over three years ago, highlighting the urgent need for action.

The program in question is the Local Small Business Enterprise preference program, which aims to provide local small companies with an advantage when bidding for county contracts. However, recent reports have revealed that the initiative has become a target for fraudsters who see it as an easy way to access taxpayer funds.

The Office of County Investigations has launched 13 investigations into companies certified through the program and estimates that the county has spent at least $40 million on vendors suspected of scamming the government, sometimes with the involvement of county employees. As a result, five individuals have been criminally charged.

In response to the revelations brought forward by these reports, the supervisors have unanimously passed a motion directing the Chief Executive Office and the Department of Economic Opportunity, which has been overseeing the program since mid-2022, to collaborate with other county departments and provide recommendations on how to enhance the program’s oversight, compliance, and governance.

One of the key actions to be taken is conducting a random sample of certified companies to determine the number that are actually legitimate small businesses. Currently, the county defines a business as “small” if it is locally owned and independently operated with 100 or fewer employees.

Supervisor Hilda Solis, who co-authored the motion alongside Supervisor Janice Hahn, has emphasized the importance of cracking down on bid-rigging, split purchases, and other common procurement schemes. She believes that the manipulation of the system, whether by internal employees or in collaboration with them, is a direct loss for taxpayers.

The urgency for action became apparent in 2020 when county auditors highlighted “repeated abuses” of the program and provided recommendations to prevent fraud. However, no significant progress was made by the Internal Services Department and the Department of Consumer and Business Affairs, which were overseeing the program at the time.

Now, with the supervisors’ directive, the Department of Economic Opportunity is expected to implement the recommended improvements immediately. The department will be required to report back to the board within one month to demonstrate its progress.

Supervisor Janice Hahn expressed optimism regarding the new measures, hoping that they will enable departments to identify and prevent fraud effectively. She stressed the importance of ensuring that contracts are awarded to legitimate small businesses that genuinely require and deserve them.

Kelly LoBianco, the head of the Department of Economic Opportunity, has condemned contracting fraud as a severe breach of public trust. While acknowledging that no system is completely immune to fraud, she reassured the public that the department is taking steps to protect the program, including conducting internal audits and checking for conflicts of interest. The goal is to ensure that contracts are awarded to small businesses that have historically been excluded from county contracting and that compete fairly.

In light of these developments, the AI legalese decoder can play a significant role in supporting the efforts to combat fraud in the Local Small Business Enterprise preference program. By utilizing natural language processing and machine learning algorithms, the AI legalese decoder can analyze and interpret complex legal documents, contracts, and program guidelines. It can quickly identify potential inconsistencies, conflicts of interest, and other red flags that may indicate fraudulent behavior. Furthermore, the AI legalese decoder can assist in automating the evaluation process, saving time and resources while enhancing the efficiency and accuracy of fraud detection.

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