Fraud News Update 10.10.14

Fraud News

Fraud News

Fraud News Update 10.10.14: GoDaddy’s SQL Database server “C-R-A-S-H-E-D”  yesterday knocking the Fraud Solutions website down all day. When we called numerous times to find out what happened and what they were going to do to bring us back online…they blamed it on us and did nothing! NOT!

Whatever happened to corporate responsibility and communicating problems to your customer’s? Not the kind of “world-class” service we deliver or expect from our vendors.

When the customer has to point out to a technology company that the issue is theirs, and not yours, something they should have already known, given the business they’re in, that’s a problem!

A huge shout out to technically savvy Mike O’Connor, who understands what we do, and battled with Go Daddy several times yesterday explaining the ridiculousness of their position and why the issue had to be on their end. Finally, late last night they admitted they had a server problem and it was clear to me that they’d known about it all day! Grrrrr…

This week’s Fraud Solutions news update features: Investors Get Gassed in Ethanol Project (Fuel for Fraud), How Do You Know When Politician’s Are Lying? (Political Candidate Accused of Welfare Fraud), North vs. South (Civil War Era Law Fights Fraud in 2014), Old McDonald Had A Farm. (FMF – This Little Piggy Got Taken For A Ride), Digital Advertising (Deny, Deny, Deny), Crime Potpourri (This Case Has It All) and Quote of the Week (Colleges – The Ethics Issue Involving the Name Over the Door).

Read on for more topical information and our insights, observations and unique commentary on the weekly fraud news.

Fuel for Fraud

A few weeks ago, we reported on the used cooking oil thefts going on around the country, largely due to the increased prices being paid for it. Last week, it was $10,000,000 of black market fuel being sold by an Army Sergeant in Afghanistan.

Make no mistake about it, fuel is hot! So, are Ponzi schemes. The almost century old crime still has victims falling for it. Fueled by promises of greed and high returns, there are usually victims lined up around the block waiting to get in on a “sure thing.”

What do you get when you combine a hot commodity with a Ponzi scheme? A high-octane, supercharged fraud.

That’s exactly what happened in this fraud news story when a businessman in Spokane (WA) “gassed” investors under the premise of an ethanol (fuel) project and incredible 700% returns. The reality, the entire deal was just a giant Ponzi scheme and the investors money used for personal expenses. Same old story.

How Do You Know When Politician’s Are Lying?

Their Lips are Moving! (Old Joke)

We’ll see what wealthy North Carolina Republican Wesley Meredith has to say if (and when) he addresses allegations that he and his wife committed welfare fraud in the 90’s.

In this fraud news story, the ex-wife’s saying they applied for the benefits at the time but her husband handled all the finances. The North Carolina Republican Senate Caucus called his political opponent’s revelation”desperate and despicable” from what appears to be a losing election campaign thus far.

Department of Social Services (DSS) is believed to be investigating.

Bogus campaign trick or truthful tip which could result in career ending political damage? Stay tuned to see how this one plays out. We’ll be watching as well and covering more of the story as it unfolds.

UPDATE: The word out of North Carolina this week from Meredith, and the press, is that the DSS investigation is closed. While the DA’s Office is saying that a criminal case wasn’t referred to their office, they have said “Social Services will seek civil or administrative action in cases involving fraud, not criminal prosecution.” Things that make you go hmmm…end of story?

Progress NC Action, a nonpartisan public policy group based in Raleigh, still wants answers. I sense a public records request is forthcoming.

Civil War Fraud – How An Old Law Fights Fraud Today

There are a lot of dumb laws which are still on the books in states around the country and have never been repealed. Most leave you scratching your head wondering how they ever got passed in the first place.

Originally known as the “Lincoln Law” this Civil War era law, however, was enacted for a real purpose. Facing the delivery of shoddy products to the Union army, lawmakers passed legislation designed to uncover evidence about the companies behind it. At the time lawmakers didn’t have the investigative resources necessary to gather the evidence about the faulty products, so they came up with a clever way to get employee’s working at the company’s themselves to come forward with tips so that it could more easily be investigated and enforced.

Luckily, the Lincoln Law was never repealed and today it’s known as the False Claims Act (FCA). The FCA is a key weapon in the government’s battle against fraud committed by individuals or businesses that contract with the government. This fraud news story takes a brief look at the history of the FCA.

Looks like innovative Civil War era legislators from the North were ahead of their time. Go figure!

Old McDonald Had A Farm. E-I-E-I-O

In this fraud news story emanating from California, this little piggy went to the Farmer’s Market…and all he found there was F-R-A-U-D. Dagnabbit! So, this little piggy cried wee, wee, wee, all the way home.

Then, California Governor Jerry Brown (Gov for the 2nd time…as if once wasn’t enough) felt sorry for the little piggy that got ripped off and signed a bill authorizing $1,000,000 for inspectors to try to ferret out Farmers Market Fraud (FMF). In a related move, Brown also deputized Bugs Bunny and he’s hot on the trail of the fraudulent veggies.

Because God knows we needed another three-letter acronym and FMF police. Imagine what the “Valley Girls” in CA are saying about it, “Like, I’m so sure… we can’t drive our yuppy car to the Farmers Market in L.A. to get some fresh, locally grown produce, and get fleeced by unscrupulous farmers. Oh my gawd!”

Note: The author of this blog is born and raised in California and birthright dictates that he’s compelled to comment on FMF and the fact that CA government MUST (They absolutely MUST) have something better to do with a million dollars of taxpayers dollars than drop it on inspectors for farmers markets. Really?

I’m not saying that some farmer’s in some places in CA aren’t taking unsuspecting customer’s at Farmers Markets to the cleaners with their false representations about the products and their origin…and that’s totally not cool, dude!

But how pervasive of a problem can this really be that it warrants $1,000,000 of the state’s intervention? This is the ridiculousness of state government at work. Surely, there are far more pressing things for the State of California to be spending money on than FMF. What about, oh I don’t know, something just a bit more important like EDUCATION?!

If you don’t like that cause how about Infrastructure? Law Enforcement? Fire Departments? Roads? Job Programs? Pick one, there absolutely has to be a better use of taxpayer dollars than this. Word! (I busted out some Vanilla Ice lingo in last week’s Fraud News Update and I’m at it again).

For those of you that are interested in this apparently hot new fruit and vegetable trend, here’s some added resource material.

Digital Advertising – There’s NO Fraud Here

Ad Fraud. Something we’ve covered in past Fraud News Updates and the need for the industry to do something more holistic about the problem. Interesting commentary about that in this week’s Ad Age blog.

According to Bob Liodice, President-CEO of the Association of National Advertisers (ANA), the industry has been slow on the uptake. Case in point, when the ANA Board was first told about the magnitude and scope of the ad fraud problem they were in “denial” about it. Denial is a common theme for many companies facing overwhelming fraud problems. So, this isn’t actually a  surprising revelation.

The reality, the first step in any problem resolution scenario is “admitting you have a problem.” i.e. “you can’t fix something until you can admit it’s broken.”

While the ANA Board may have been slow on the “ginormous fraud problem” uptake…they know it’s broken NOW.

Crime Potpourri

This fraud news story about a Toledo (OH) father and son combines so many of the issues we’ve talked about in various Fraud News Updates (Family crimes, SNAP fraud, multiple frauds and insurance fraud) that I hardly know where to start. Here goes:

1) Father-son indicted on drug dealing charges: Father 2 counts for allegedly selling synthetic marijuana and son 2 counts for complicity to trafficking in a controlled substance.

2) Father charged with an arson that lead to the death of two firefighters – possible insurance fraud motive? Facing death penalty.

3) Son charged with SNAP fraud: 4 counts for accepting food stamps for nonfood items at his convenience store then using the food stamps to make purchases at grocery stores.

4) Father convicted in 2011 for attempted illegal use of food stamps.

5) Father owned buildings caught fire twice within 6 months of each other in the last 10 years. Coincidence?

There are so many legalities going on in these cases that I’m not even going to provide a link. For more on these breaking stories, Google: Ray Abou-Arab or Omar Abou-Arab.

Quote of the Week

It’s extremely important that the name that goes above the door be a name that people can be proud of, that students can look up to and be inspired by that name.” (Stephen Mangum, University of Tennessee Business School Dean, on the naming of the building the James A. “Jim” Haslam II College of Business).

Irony: Since the Haslam’s Pilot Flying J truck stop business recently settled with the federal government for 92 million, in what was described by authorities as a 56 million dollar fraud, it leads one to wonder how UT thinks student’s are supposed to look up at the name and be inspired?

I guess a $50,000,000 donation to the school is enough for them to try to convince us. Perhaps, they don’t think UT student’s watch the news?

Wonder if they have ethics, fraud and white-collar crime courses in the business school curriculum?

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?