To catch a thief

John Battaglia was riffling through some billing invoices on his desk three years ago when he noticed something odd.

A certified public accountant, Battaglia was among the troops assembled by the Resolution Trust Corporation to pick through the wreckage of the country's savings and loan disaster.

Three years in the RTC's Dallas office had already left the ex-Marine disillusioned with the agency's dedication to its task. But the invoices that crossed his desk in 1993 from Texas Data Control--a major contractor hired to keep records for the RTC--were the most troubling Battaglia had yet seen.

TDC appeared to be billing the agency hundreds of thousands of dollars for work that should have only cost a fraction of what the RTC was paying for it, the accountant believed.

"I took it apart and found what appeared to be fraudulent activity," Battaglia recalls. "We were paying [TDC] $500,000 a month to basically print paper reports."

The irony of the situation was not lost on Battaglia. The RTC was specifically formed to recover some of the taxpayer money looted during the savings and loan scandals. But it appeared the agency was allowing its own pocket to be picked.

Battaglia shared his concerns with his bosses, but got little response. Their indifference marked the beginning of a three-year quest by Battaglia to prove that TDC illegally siphoned off millions from the RTC.

The RTC, its work supposedly done, has since been dissolved by an act of Congress. Battaglia is still fighting.

TDC officials have denied any improprieties. But Battaglia has managed to convince the U.S. Attorney's office and the Office of the Inspector General that his allegations may be true.

Last year, just months before the RTC ceased to exist, the accountant sued Texas Data Control, using an obscure federal statute known as qui tam.

A provision of the False Claims Act, qui tam allows federal employees and others to act as private whistle blowers, filing suit and recovering money that the U.S. government has lost because of false claims. (The name, according to Black's Law Dictionary, is short for "qui tam pro domino rege quam pro sic ipso in hoc parte sequitur," or, "Who as well for the king as for himself sues in this matter.")

Simply put, citizens like Battaglia can sue on behalf of the government, and keep a cut of the money if they win. Since September 1995, more than 245 qui tam cases have been filed in the United States, recovering more than $1 billion. People who have initially brought the suits have received more than $150 million as their share.

If Battaglia triumphs in his quest to prove the RTC was defrauded by TDC, he could walk away a rich man himself, keeping up to 30 percent of any money recouped by the government.

It would be a sweet victory for a man who was long a thorn in the side of his RTC superiors.

A former U.S. Marine, Battaglia eagerly transferred from the Federal Deposit Insurance Corporation to the RTC in 1990. He was excited by the challenge of helping the RTC liquidate billions of dollars in assets to recover some of the taxpayer money used to bail out the savings and loan industry.

Battaglia supervised 11 employees, trying to figure out how much government money would be needed to save failed thrifts in Texas, Mississippi, and Louisiana.

From the beginning, the accountant had concerns about how the agency went about its business. He questioned the way some accounting firms landed contracts. He worried about accountability:The Dallas RTC office oversaw $10 billion worth of assets--including $400 million in cash--but, he says, it had no centralized cash-management system.

Early on, Battaglia was optimistic that the problems would be resolved. "I thought they were systematic problems of an organization being created out of thin air, and they would start to get in shape after management took control," he says.

An earnest, amiable fellow, Battaglia was vocal about his concerns, pointing out areas that had the potential for abuse. But he says his concerns were met with either resistance or apathy.

"There would be a guy next to me who was responsible for inventorying all the collateral of the loans to see if they match what our books say," Battaglia says. "And he would just sit and play one of those computer golf games all day."

Battaglia soon found himself unpopular. Before long, the CPA was enmeshed in office imbroglios. A female worker filed sexual harassment charges against Battaglia, and Battaglia filed sexual harassment charges against two supervisors.

Battaglia began to believe his supervisors were quietly blaming him for problems. Ultimately, he was stripped of job responsibilities, and his enthusiasm turned to despair.

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Denise Mcvea