Fraud News Update 01.19.17 – This week’s edition features: Financial Services Fraud Prevention (it’s time to do things differently), Cosmetology (it ain’t pretty), Visiting Mickey Mouse (results in fraud conviction), Corporate Crime (what a conundrum), Wiseguys (impacting the global economy) and Performer’s (a failure to entertain!).
As leaders in the fraud consulting arena, read on for more topical information and our insights, observations and unique commentary on some of the weekly fraud news stories.
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Fraud Prevention: Status Quo Doesn’t Cut It
I’ve said it before but it bares repeating: unique crime times call for unique crime prevention measures.
Given the rapidly changing financial crime landscape, it’s time for financial services entities to start thinking about ways to combat this epidemic differently than they have to date. Because status quo has definitely proven that it doesn’t work.
Not all verticals are targeted by lone wolves, and organized criminal entities, equally but the financial services industry definitely has a larger “bulls eye” painted dead center than all others.
Certainly, fraud is a part of the overall revenue equation in the financial services industry but doing things differently means striving towards “zero tolerance” versus “fraud losses are the cost of doing business” attitudes…which clearly aren’t helping here.
Beauty School – It Ain’t Pretty
Over the last couple of years, the U.S. Department of Education and U.S. Department of Education’s Inspector General’s Office have launched numerous investigations into “for profit” colleges and trade schools.
At the heart of the issue are federal student aid loans and the disproportionate amount of debt that student’s attending some of these schools have been saddled with.
Secondarily, is an analysis of student loan debt ratios and unemployment percentages compared to the prospects of gainful employment post program graduation. This ties directly to a school’s marketing and the (mis) representations some schools have made to students about job prospects post graduation.
The scrutiny has been intense and under the IG’s microscope, many of these colleges have “folded like a cheap suit, tent or lawn chair!” But wait, there’s more…there always is!
Education is big business and student loans are an integral part of the academic equation for most folks. As we know, the “follow the money” mantra, often leads to cases of fraud. And that’s exactly what happened at this school. Read on for more information about how the school scammed the federal student loan system leaving unsuspecting student’s initially holding the “cosmetic” bag (pun intended)!
Oh, and if you’re wondering, the U.S. government “did right” by many of these students.
Visiting “Mickey” Results in Fraud Conviction
For most of us, Disneyland is a magical place for family vacations.
It was a regrettable choice for one woman, however, as her trip to Florida produced a key piece of evidence in a disability fraud investigation being conducted against her by the federal government.
Surveillance is a viable option in disability and work comp investigations to either prove or disprove a claimant’s representations. This often results in continuous days of extended surveillance in order to develop patterns of behavior that are inconsistent with stated restrictions and activities of daily living.
Doing multiple days of continuous surveillance always helps minimize the “good day-bad day” defense. This is the claimant’s defense when investigators only do one day of surveillance, and document physical inconsistencies on that day, but have nothing to back it up with on day 2.
Insured’s who are staging or exaggerating an injury, and who are “claims savvy,” are very much aware that they may be surveilled around their residences. So, they rarely let their guard down when close to home and their physical behavior is typical of the stated limitations and restrictions as represented to the insurance company.
However, many claimant’s would never suspect that they’d be surveilled thousands of miles from home, while on vacation at Disney World, but that’s exactly what happened in this case. The woman is now a convicted felon awaiting sentencing.
As the song goes: M-I-C…K-E-Y…M-O-U-S-E!
Corporate Crook Conundrum
“Bad boys, bad boys, what ya gonna do, what ya gonna do when they come for you?” Well, for starters, hide overseas.
That’s the challenge facing current efforts to crack down on corporate crime committed by management of transnational businesses these days.
Sure, the corporations do business in the U.S. but many of the senior executives aren’t domiciled here. This makes legal logistics, extradition agreements between countries and prosecution of key wrongdoers challenging for the U.S. Attorneys Office, no matter how many U.S. consumers die as a result of the corporation’s intentional negligence.
The current Takata and VW cases are the perfect example of the challenges faced by prosecutors in their efforts to hold executives criminally accountable in the United States.
However, the recent arrest of VW executive Oliver Schmidt, who was in Florida vacationing and apparently headed back to Germany when apprehended by the feds, is clearly the warning shot fired over the international corporate bow.
While we may never see countries like Germany or Japan voluntarily agreeing to surrender corporate suspects back to the United States to stand trial, with Interpol arrest warrants in place, its corporate criminals beware. If you leave your country, pass through the U.S. or travel to a country that the U.S. has an extradition treaty in place with, your next stop may be a “glorious, all expense paid vacation” at the exclusive Club Fed (not of your choice)!
Now, THAT’S a challenging itinerary for your corporate travel agent!
Wiseguys & The Global Economy
If you think that wiseguys aren’t negatively impacting global economies…”fa-get about it!”
Traditional forms of organized crime (extortion, gambling, racketeering, hijacking, loan sharking, protection etc.,) still exist today.
However, global organized rings now mimic the structure, sophistication, org charts and product offerings of most transnational corporations, migrating into more profitable types of economic crime. Financial crimes are substantially less risky, don’t involve guns, typically involve lesser sentences than physical crimes and are far more lucrative than their violent crime counterparts.
A Failure to Entertain
Lastly, this piece caught my eye and caused me to ponder the following:
If insurance companies incur the risk for performers who don’t go on stage and entertain….who incurs the risk when they do… and totally tank?! See New Years Eve.
Logically, the answer isn’t Dick Clark productions or Ryan Seacrest but sadly, the people who shelled out their hard-earned money.
Here’s another abstract question. Have you ever stopped to ponder whether “lip syncing’s” a form of fraud?
Things that make ya go hmmm.
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