Section 1. Short title
This Act may be cited as the Federal Responsibility and Accountability for Unchecked Dereliction Act or the FRAUD Act.
(a) Reporting requirement
Not later than 180 days after receiving a fraud warning involving covered Federal funds, a covered official shall report such warning to the Director of the Federal Bureau of Investigation.
(b) Condition of receipt of Federal funds
In order to be eligible to receive Federal funds for a fiscal year, the chief executive of a State shall certify to the head of the Federal agency providing such funds that during the previous fiscal year the covered officials of the State have substantially complied with the requirement under subsection (a).
(c) Offense
Whoever, being a covered official, knowingly— shall be fined under title 18, United States Code, imprisoned for not more than 10 years, or both.
(1) violates the requirement under subsection (a); or
(2) obstructs, interferes with, or impedes a Federal, State, or Inspector General investigation involving fraud involving covered Federal funds,
(d) Debarment
The head of an agency that oversees the distribution of Federal funds, with respect to which a covered official has been convicted of an offense under subsection (c), may prohibit such covered official from overseeing the distribution of such funds.
Section 3. Rule of construction
Nothing in this Act shall be construed to—
(1) authorize the Federal Government to remove a State official from elected office; or
(2) violate principles of federalism under the Tenth Amendment to the Constitution of the United States.
Section 4. Definitions
In this Act:
(1) Covered official
The term covered official means—
(A) the Governor of a State;
(B) the head of a State agency that administers, oversees, distributes, or certifies expenditures of covered Federal funds; and
(C) any State Inspector General, or equivalent State official established by law, with statutory responsibility for investigating, auditing, or overseeing covered Federal funds.
(2) Fraud warning
The term fraud warning means a written allegation of a specific instance of fraud involving covered Federal funds, supported by documentary evidence, which may include a written finding, a referral, an audit, an investigative report, or a whistleblower complaint, alleging the misuse, theft, diversion, or improper expenditure of not less than $250,000 in covered Federal funds.
(3) Covered Federal funds
The term covered Federal funds means any Federal funds provided to a State or State agency through a grant, cooperative agreement, reimbursement program, direct appropriation, or other Federal funding mechanism.