ABC15 uncovers out-of-control waste, abuse and fraud inside federal power agency

Posted at 7:35 PM, Feb 27, 2017
and last updated 2017-02-27 22:45:08-05

For years, employees at the Western Area Power Administration potentially wasted millions of dollars on thousands of questionable – and sometimes fraudulent -- purchases using government credit cards, according to multiple whistleblowers and documents obtained by ABC15.

The out-of-control waste was present throughout the federal agency and was able to persist because of lax or non-existent oversight, internal reports show.

“We’re talking about a culture of corruption that goes back more than just a couple of years,” said Keith Cloud, the agency’s Director of Security, who’s now blowing the whistle to ABC15 and Congress.

Through a spokesperson, officials for the Western Area Power Administration, or WAPA, declined ABC15’s interview requests. Instead, the agency issued a written statement.  

“WAPA recognized the seriousness of the issues identified and instituted a corrective action plan reinforcing management oversight and internal controls,” the statement said.

WAPA is a division of the United States Department of Energy that sells power to wholesale electric utilities, municipalities, tribes and other agencies in 15 western states, including Arizona. It's a little-known agency that has a big impact on tens of millions of people and their electric bills, experts said.

“It’s one of the most important agencies in the western United States that nobody knows about,” said Kris Mayes, a former two-term Arizona Corporation Commission and Arizona State University Professor. “And I think that probably needs to change.”


Through open record requests and sources, ABC15 obtained hundreds of pages of reports, records and credit card statements and receipts.

An internal report written in 2016 examined waste and potential fraud within the purchase card throughout WAPA and its regional offices.

In a two-year period (2012 – 2014), auditors discovered 11,600 questionable purchases totaling $6.8 million that required further review. The report also highlights broad categories of those questionable purchases, including $271,000 spent at book stores and $196,000 at sporting good stories.

WAPA employees also spent hundreds of thousands of dollars upgrading government vehicles with “unnecessary” equipment, devices and features.

The report shows that many employees had cards with high purchase and monthly limits.

WAPA Capping Report by Dave Biscobing on Scribd

Credit card statements and receipts obtained by ABC15 highlight the high-dollar and extremely questionable purchases:
- An employee bought $2,933 of ammunition even though WAPA employees don’t have government-issued guns.
- There were thousands of dollars spent on specialized weapons gear, including multiple  $1,200 rife scopes.
- Dozens of handwritten receipts – some for thousands of dollars, were submitted and approved.
- One employee bought himself a $14,000 ATV, Cloud said. Receipts show the employee spread the loan payments out over several months on his government credit card.

“We found a lot of really questionable purchases along the way – high dollar purchases,” said Cloud, whose team of internal security officials investigated the purchases. “We had an individual who was exceeding over $50,000 a month.”

Cloud says managers signed off on all the questionable expenses, rubber-stamping approvals every month. He also said “90 percent” of things that were purchased under questionable circumstances are “unaccounted for.”

WAPA officials disputed that there has been “millions of dollars in fraud.”  A spokesperson said a further review of the purchases identified in the internal report found that $1.3 million were potentially fraudulent.

But records show, after the investigation into the credit card waste began, officials cut down the number of card holders. The agency's monthly credit exposure was reduced by more than $100,000 a month. 

Cloud and other sources also said the internal report only looked at a two-year period and wasn’t based on a full investigation. 

“They shut our investigations down, Cloud said. “They didn’t think we would find the stuff that we found.”

Many of the extreme examples provided to ABC15 occurred in WAPA’s Desert Southwest Region, which is located in Phoenix. Cloud said there was also widespread abuse in other regions his team never got to fully investigate.

Multiple sources told ABC15 there are other types of questionable expenses that still need further scrutiny, including fleet cards and overtime and travel expenses.

 “They last thing (WAPA) needs the public to know is that they have fraud going on,” Cloud said.

A WAPA spokesperson said the agency could not respond to the alleged retaliation. “We cannot discuss your specific questions due to their relation to current personnel matters and pending litigation.”


The House Committee on Oversight and Government Reform has started requesting documents and conducting interviews, records show.

Committee leaders said they are investigating financial and facility mismanagement based on allegations made by several whistleblowers, including Keith Cloud.

There is also a criminal investigation underway by the Department of Energy Officer of Inspector General .

ABC15 learned one employee, George Molina, recently accepted a plea deal on a felony theft charge. Molina is the employee who purchased the ATV, records show.

Cloud and at least two other employees also have pending retaliation cases against WAPA. Depositions in those cases are scheduled to occur in the next several weeks.

Contact ABC15 Investigator Dave Biscobing at