Fraud News Update 09.04.14

Fraud News

Fraud News

Fraud News Update 09.04.14: This week’s Fraud Solutions news update features: continuing crimes of the cloth with a religious double-header, a look at the other side of the SNAP problem (it takes two to tango), big names continue to fall in the government’s bid rigging and price-fixing case, information as a tactical weapon and fraud (x2). Read on for more topical information and our insights, observations and unique commentary on the weekly fraud news.

Religious Double Header

As “Mr. Cub” Ernie Banks used to say “it’s a beautiful day for a ball game…let’s play two.”

So today it’s a Georgia double-header with the former leader of the Hindu Temple of Georgia being convicted on fraud and obstruction charges. This involved a religious twist on the old Illinois political “pay to play” scheme. This case, however was “pay to pray” (religious services) with prearranged pricing.

The rub: give your High Priest a credit card number and he spiritually charges more on it than the agreed upon price. Isn’t that special? The added income paid for his holiness’ lavish American lifestyle.

In an unrelated fraud news case, we have a phantom case with a religious twist. The feds have charged former DeKalb County (GA) Commissioner Elaine Boyer with wire fraud for running a phantom billing scheme. Allegedly, she submitted invoices for work done by a consultant for reimbursement but the work was never actually performed.

The majority of the proceeds from the fake invoices were then laundered back to her personal bank accounts. The religious connection here? According to the Atlanta Journal Constitution’s investigation of the government records, the fictitious consultant, who has yet to be named by the Feds, is  a 72-year-old evangelist.

Praise the Lord and pass the potatoes. The religious fraud cases just keep coming…will this never end?

SNAP Commerce

Government programs are ripe for fraud and often create an entire underground economy. Last week in a fraud news story we featured the results of the GAO survey on food stamp fraud and participants who used the card to barter for products and services including sex. Oh my! Lest we think that only recipients of the card are misusing the program, there are definitely two sides to this fraud fence.

In this fraud news from Alaska, a store owner has been indicted for his role in providing non food items and cash to recipients enrolled in the program which is a federal “no-no.” Think this is an isolated incident? Hardly!

The Feds are dialing up the investigative heat and stories about business owners participating in program abuses are starting to surface post GAO report. It’s definitely a “supply and demand” economy out there. When the government restricts or prohibits activity, there will always be an enterprising entrepreneur who steps up and fills that need… for a price. See prohibition and a cat named Al Capone.

Big Name Companies Continue to Fall

Recently, in one of our fraud news stories we covered the ongoing big rigging and price-fixing investigation in the auto industry. Big name companies are continuing to fall. In this fraud news, this time Japanese spark plug maker NGK steps up to the plate and gets whacked by the DOJ. Supposedly, NGK’s going to cough up 52.1 mil for their role in the game.

For those of you keeping the box score at home, as of this week that makes it:

28 companies + 26 executives on the hook for automotive price-fixing and bid rigging. Total fines to date: $2.4 billion.

It’s really not that hard to prove a conspiracy when you get together and have meetings to discuss the crime with the agenda being what the prices are going to be set at! Pretty brazen to be sure and in hindsight probably not the best approach.

Information Attacks Are State Sponsored?

In this piece about data theft at financial institutions, there’s a link to an individual believed to be connected to state sponsored hacking activities says an individual with knowledge of the players identified in the attack.

This wouldn’t be the first time anyone’s thought that fraud or information crimes are state sponsored. Case in point, it’s long been suspected that many of the organized fraud crimes committed out of Nigeria and other foreign countries are state sponsored.

Otherwise, how would these crimes have gone on for so long and with complete impunity? Most in the industry commonly believe it’s people in political places who are getting a back-end piece of the financial action.

Make no mistake about it, information’s a weapon and we’ll continue to see more of that in the fraud news. Not only are we seeing countries deploy these tools against other countries and their critical infrastructure businesses in retaliation for political policies and sanctions but we’re also seeing organized crime rings use information tools to perpetrate fraud. Fraud is big business!

Fraud (X2)

One of the things that’s happening more often are fraud schemes committed in conjunction with other fraud schemes. This is often the case as it takes one fraud to conceal the proceeds and illegal activity from another fraud.

Committing one fraud might be enough for those who are inclined to do so. However, these folks have totally embraced the “Go Big or Go Home” fraud mindset. Stealing from one company is a nice little scheme but stealing from another company is twice as nice. Here are a couple interesting fraud combinations we saw in the fraud news lately:

Embezzlement + Embezzlement

An accountant is stealing from her employer, a hospital. To get more bang for her stolen buck, she’s also stealing from one of her private client’s in her accounting business, a beer company. The money she’s stealing from the beer company is supposed to be used to pay IRS tax obligations for the beer business. Amongst other unauthorized “personal uses” of the stolen hospital booty was this little gem:

To cover beer company misappropriations, she simply diverted money from a hospital account she was already pilfering from.

ID Theft + Embezzlement

A woman formed an events company and then posted job opportunities on her site. She requested dates of birth and social security numbers from applicant’s and then filed applications for fraudulent unemployment insurance benefits in the individuals names who expressed interest in working for her company.

That fraud netted her more than 80k and because we suspect that wasn’t enough to “quit your day job,” she also stole 50k from her employer.

Job applicants should be leery of providing PII to potential employers over the Internet as this is a common scam intended to gather the information necessary to commit bank fraud or identity theft as was the case here.

Fraud News – The Bottom Line

Fraud – empowering people to break the law. It’s a way of life for some and every fraud has a story. At Fraud Solutions, fraud is our world and we’re passionate about prevention. Being proactive is key, so, follow us each week as we cover the fraud beat with added insights, information and unique commentary on stories making the fraud news.

Those are our insights. What are yours?