The Dangers of Using an Ombudsman for Fraud and Antitrust Violations: Undermining Accountability and the Legal Process

A Discussion Paper

Using an ombudsman to investigate fraud and antitrust violations is highly ill-advised and could significantly undermine subsequent investigations, litigation, or prosecution. The primary role of an ombudsman is to act as a neutral third party who facilitates informal conflict resolution and addresses complaints within organizations. However, fraud and antitrust violations are serious legal matters that require specialized knowledge, forensic investigation, and formal legal processes. Allowing an ombudsman to intervene in such matters risks not only compromising accountability but also jeopardizing the entire legal process.

1. Lack of Legal Expertise and Authority

An ombudsman, by design, lacks the formal legal training and authority required to investigate criminal conduct such as fraud or antitrust violations. Fraud investigations often involve the examination of financial records, contracts, and communications to uncover deceptive practices, while antitrust violations require an understanding of complex market dynamics and competition law. These tasks are typically conducted by experts in regulatory agencies like the Department of Justice (DOJ) or the Federal Trade Commission (FTC), along with law enforcement. An ombudsman is neither equipped nor empowered to carry out these legal duties, and using one in such investigations can lead to inadequate or improper handling of critical evidence.

2. Risk of Undermining Formal Investigations

By allowing an ombudsman to take the lead in addressing fraud or antitrust violations, there is a significant risk that key evidence may be mishandled, overlooked, or improperly documented. Unlike regulatory authorities, ombudsmen lack the procedural rigor and investigative powers to subpoena documents, compel testimony, or conduct thorough forensic audits. This lack of formal investigative capability can compromise the integrity of evidence, making it difficult for law enforcement or regulatory agencies to pursue further action. The informal nature of ombudsman investigations can also lead to information being collected outside the strict rules of evidence, rendering it unusable in court or formal proceedings.

3. Weakening Accountability

Fraud and antitrust violations demand high levels of accountability, not just to the victims but also to the broader public, as these acts often result in significant financial and societal harm. Allowing an ombudsman to mediate or investigate these matters dilutes the necessary accountability mechanisms that come with formal legal processes. Ombudsmen generally lack the enforcement power to impose penalties, file charges, or bring cases to court. As a result, wrongdoers may evade the full consequences of their actions if an ombudsman is the only body investigating the issue, leading to a perception of injustice and undermining trust in regulatory systems.

In serious cases such as these, accountability is ensured by a clear chain of legal responsibility, where wrongdoers are held to account through transparent investigations, prosecutions, and legal judgments. In contrast, ombudsman processes are informal and often confidential, which can lead to deals or resolutions that lack the necessary transparency to uphold public trust. Worse, ombudsmen typically rely on voluntary cooperation, which means that powerful entities like health plans involved in fraud or antitrust violations can simply refuse to participate or limit the scope of the investigation.

4. Potential to Undermine Litigation or Prosecution

The involvement of an ombudsman in cases of fraud or antitrust violations may also jeopardize any potential litigation or prosecution. Formal legal investigations operate under stringent procedural rules, ensuring that evidence is gathered, preserved, and presented in a manner that complies with the law. If an ombudsman, who lacks the authority to secure evidence or enforce subpoenas, handles the case, critical details may be lost or compromised. This could weaken any subsequent prosecution or civil litigation efforts, as key evidence may not meet the standards required in court, allowing wrongdoers to evade justice.

Additionally, allowing an ombudsman to mediate solutions in cases involving serious legal violations could lead to inappropriate settlements or agreements that do not reflect the gravity of the offenses. Such informal resolutions could hinder future litigation by creating confusion over the legal status of the case or diminishing the seriousness of the charges, ultimately weakening the ability of regulatory authorities or law enforcement to pursue justice.

5. Blurring the Lines Between Mediation and Legal Enforcement

Ombudsmen are fundamentally mediators, not enforcers of the law. Their role is to foster communication, mediate disputes, and propose solutions that satisfy both parties. In cases of fraud or antitrust violations, however, what is required is not mediation but legal enforcement. Fraud and antitrust laws are designed to protect the integrity of markets, competition, and consumer rights, and violations of these laws warrant public accountability through formal prosecution and penalties. By allowing an ombudsman to handle these matters, the distinction between informal dispute resolution and legal enforcement becomes dangerously blurred. This can dilute the severity of the violations and lead to inadequate responses that fail to deter future misconduct.

Conclusion: Undermining the Legal Process and Accountability

Using an ombudsman to address fraud and antitrust violations is not only inappropriate but dangerous to the pursuit of justice. It undermines accountability by allowing informal mediation to replace the formal legal processes that are necessary for holding individuals and organizations accountable for serious violations. Fraud and antitrust violations require rigorous investigation, the enforcement of legal standards, and public accountability, none of which an ombudsman is equipped to provide. Allowing an ombudsman to intervene in these matters risks compromising evidence, weakening future litigation or prosecution, and ultimately failing to ensure that wrongdoers are held responsible for their actions.

DISCLAIMER and PURPOSE: This discussion document is intended for training, education, and or research purposes only. The information contained herein is based on the data and perspectives available at the time of writing. It is subject to revision as new information and viewpoints emerge.

For more information see: https://www.mentorresearch.org/disclaimer-and-purpose