Fraud News Update 10.30.14

Fraud News

Fraud News

Fraud News Update 10.30.14: This week’s Fraud Solutions news update features: Pondera Parking Prowl (Getting After Disabled Placard Abuse),Rock ‘n’ Roll Running Rip Off (Lawsuit Alleges “Spirit of Volunteerism” Abused), Prisoner Transportation Fraud (Seriously?!), IRS Refund Fraud Debacle (Ask Questions First – Pay Later), Operation Walking Dead (Dead men tell no tales…living ones collect SSA benefits)

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

Pondera Placard Prowl

Let’s face it. We’ve all been there… the dreaded (I should have done this months ago…), last-minute, holiday trip to the mall. The lot’s full of cars (people who plan farther in advance then you do) and you laboriously cruise the aisles (Sharking for Parking as it’s affectionately known in CA) looking for that one  coveted parking spot. In Willy Wonka, it would be the “Golden Ticket.”

You drive around for 15-20 minutes searching. You’re now in the “North 40,” you know, the parking lot that’s so far away that you’ll have to walk miles, eat your next meal and celebrate a birthday before getting to the mall entrance.

You FINALLY find a spot and ditch it. It’s much farther away than you’d like but it’s the best you can do. You start walking (errr…hiking). When you’re just about to the front of the mall you see a car whiz around the corner and effortlessly cruise right into a handicapped parking spot.

The lady gets out of the Mercedes in her Gucci jogging suit, $200 dollar jogging shoes, and to your complete disbelief, sprints up to the mall entrance disappearing into a sea of holiday shoppers. On first appearance, it doesn’t look like there’s anything wrong with her except for the fact that she’s abusing a disabled parking placard…designed for people with “real” handicaps.

This is when you’d like to see a police officer pull up and write her a billion dollar ticket. Alas, there isn’t one in sight and law-abiding citizens don’t go around keying deserving people’s cars (despite how much they’d like to in this situation).

Hence, the problem: disabled parking abuse: People, who aren’t disabled, misusing the privilege of the placard for their own personal gain. Someone really needs to do something about this.

We’re probably mistaken if we think this problem’s isolated to the lady in the expensive jogging suit. Parking placards are a hot commodity, for those that can’t get one legitimately, so there are going to be entities willing to provide them.

It’s a supply and demand economy (black market) and this scenario isn’t just a problem at local malls. Abusing handicapped parking spots in the city deprives municipalities of legitimate revenue opportunities.

So, I read with great interest this fraud news story about technology vendor, Pondera and their attempts to right the obvious wrong. So, Pondera’s on the placard prowl…hope it pays off for governments (and shoppers) everywhere.

Rock ‘n’ Roll Running Rip Off?

A class action lawsuit filed by Yvette Liebesman recently caught my eye.

The suit, against organizers of the St. Louis Rock ‘n’ Roll Marathon, alleges failure to pay volunteers for their services. Confused? So, was I initially. Volunteers donate their time, right? So, who would expect to be paid?

Apparently, the issue at hand is the perception by volunteers that the proceeds of their volunteer efforts benefit local charities. When, in fact, the organizer is a “for profit” entity. Turns out, the charities are paying to be featured there and volunteer work increases the profit margin for race organizers who would otherwise have to pay wages for the free work they get on race day.

So, someone filed a lawsuit against race organizers…not noteworthy, anyone can. Except in this fraud news story, Liebesman happens to be a Professor at Saint Louis University School of Law and her bio is quite impressive. It appears she has the legal expertise to understand the issues and this one alleges violation of state wage laws.

Competitive racing, of all types, is “big business.” As we’ve talked about in the past, with major D1 college sports, where there’s big business, and money involved, there’s an opportunity for fraud.

Is this fraud? While I don’t know who’s going to break the tape first when crossing the finish line, one thing’s certain, it’s a compelling issue for folks who volunteer their time and we’ll be watching with interest to find out how this one plays out in court.

Prisoner Transportation Fraud

Say whaaaaat? Just when you think you’ve heard everything…along comes a fraud news story that makes you realize you haven’t and this happens to be one of those fraud news stories. According to the FBI,

“William Cassidy, 50, of Florence, Indiana, pled guilty today to wire fraud in connection with a scheme to obtain money by operating a private prisoner transportation business under false pretenses. The indictment alleges that during his transportation of female prisoners, Cassidy left the prisoners unrestrained, gave them drugs and alcohol, and had sex with the prisoners in his vehicle and in hotel rooms.”

I have to admit that when I first saw this story pop up on the wire, I did a bit of a double take because I’d never even heard of prisoner transportation fraud. News to me.

So, I did a bit more research on the suspect and found out there’s even MORE to this story than initially reported. So here’s an interesting twist to the plot line that wasn’t reported in this news release.

In 2010, Cassidy, was running for Boone County (KY) Constable. Honorable. However, in March of that year, he was arrested and convicted for forging a check made out to his landlord and mailed to his address (not so honorable).

Then, in May of the same year while selling a motorcycle on EBay, Cassidy represented that the cycle was repossessed by his police agency. Detectives investigated and recorded Cassidy telling them he was an ICE Agent (NOT). Ba-Boom! Arrested for impersonating a police officer (Class D Felony).

Given the two convictions: leaving the state, associating with known felons, carrying a gun and running a prisoner transportation business was a definite probation “no no.” Cassidy won’t be transporting prisoners any time soon – he’s currently residing at FCI Tallahassee compliments of the feds.

IRS Refund Fraud Debacle

The IRS needs to do a complete 180 when it comes to their philosophy on verifying individual identities before mailing out tax refunds and there are a number of U.S. Senators pushing the IRS to do just that in this fraud news story.

Perhaps, taking a page from the insurance industry is in order. Under normal circumstances, the insurance industry doesn’t pay claims before asking questions, doing their due diligence and verifying eligibility for claims payment. The only time the insurance industry pays first and asks questions later is generally during times of mass catastrophe or disaster. But that’s the exception and not the rule.

Conversely, as a matter of principle, the IRS sends send refund checks first and ask questions later. This is clearly supported by the current refund fraud epidemic which indicates that the payment methodology the Agency’s using for this process isn’t working and dictates a complete policy shift.

It’s imperative that the IRS ask questions first and send checks only after they’re satisfied that the taxpayer is not only who they say they are but entitled to the refund BEFORE mailing the money. A number of former IRS employees I know have said that the current pay first – ask questions later problem’s partly caused by testimony previously offered to Congress by citizens who complained that the delays in getting their tax refunds prevented them from feeding their families. That was negative PR and since we certainly can’t have that, let’s pay first and ask questions later.

Now, however, it seems legislators are pushing back. Likely, this is due to the massive number of complaints coming in from constituents who’ve become victims of ID Theft as a direct result of the IRS’ policy to mail refunds to anyone who asks for one in your name.  Thanks for nothing Uncle Sam!

We’ve talked about fraud prevention extensively in the past and the need to implement cutting edge fraud technology into the equation. We’ve also documented a number of places where the return was 6:1 or 8:1 on the initial investment. Address mismatch is a big part of the tax refund problem as checks have to be sent somewhere other than where legitimate taxpayers live and have filed returns in the past.

It’s a given that some taxpayers move, year over year. However, using fraud prevention technology tools, which are commercially available on the market today, there are easy ways to (red) flag mismatch data for further investigation BEFORE sending out refund checks. Obviously, it’s a bit more complicated than that but interestingly it’s what the majority of folks in the fraud industry have been saying all along.

Operation Walking Dead

From the IRS sending refund checks to the wrong people to the Social Security Administration paying benefits to people that they aren’t entitled to. Seems to be a theme here.

We’ve all heard the phrase “writing checks your ass can’t cash.” Well, I was reminded of that saying this week while reading the fraud news story about “Operation Walking Dead,” an investigation conducted by SSA OIG’s Office into improper payment of approximately $1,000,000 in SSA benefits that recipients weren’t entitled to. There were at least 18 people charged but we culled out this little gem:

According to the government, during the investigation, Linda Byerly of Tampa, FL., reported to the SSA office that she hadn’t received her monthly payment. She then received a paper replacement check, (allegedly) placing the SSA’s account number on fraudulent checks she created. Thus, Byerly was (allegedly) able to write checks for personal expenses against the government’s bank account. The fraudulent checks totaled approximately $8,574.73.

Putting the SSA’s account and routing number on your checks…now that’s rich! If the Linda Byerly referenced in Operation Walking Dead’s the same woman found online in numerous Florida criminal theft cases, this “isn’t her first rodeo” folks.

On a side note, everyone’s wondering whether the SSA will have money for them when they retire. At this rate…probably not.

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?