Fraud News Update 11.06.14: This week’s Fraud Solutions news update features: SNAP Fraud is Rare (Really?), Word to Ya Motha (Rappers Charged), NCAA Conundrum (Student-Athletes or Just Athletes?), The Fraud’s In The Program (Loyalty Losses), Snap, Crackle (You Got Popped!), Dead Banker Sentenced (Nothing Fake About This), Paying Off One Fraud With Another? (Probably Happens More Than We Realize) and Word To Ya Motha (Rappers Busted!)
Read on for more topical information and our insights, observations and unique commentary on the weekly fraud news. Like our content? Feel free to share Fraud News Updates with your network or colleagues.
SNAP Fraud is Rare?
So says U.S. Agriculture Under Secretary Kevin Concannon who recently made this ridiculous comment in a fraud news story. “SNAP fraud is rare, but no level of abuse is acceptable.” Well, he was right about one thing…”no level of abuse is acceptable.”
As for “SNAP fraud being rare,” I don’t know what folks in D.C. are smoking but according to Carl Spackler (famous groundskeeper), it might be a “cross between Kentucky Bluegrass and Northern California Sensemilia. The amazing stuff about this is, that you can play 36 holes on it in the afternoon, take it home and just get stoned to the bejeezus!”
Whatever the case, Concannon’s comments about SNAP fraud rarity are nothing more than spin doctoring…which is what we’ve come to expect from politicians in our nation’s capital.
Certainly, if you’ve been following the Fraud News Updates, you know that we’ve covered the SNAP fraud problem extensively which, by no means, is the total extent of the problem. The stories about program abuses are e-v-e-r-y-w-h-e-r-e. So much so that we can’t even go to press on this blog without there being even more news stories about SNAP fraud that we haven’t even touched.
Even the I.G.’s Office disputes the official fraud statistics being used by the U.S. government in support of how little SNAP fraud there really is in the program. The reality: SNAP fraud’s a significantly bigger problem than what government statistics are showing which is true for many types of fraud.
What we know about the totality of a fraud problem is supported by the “80-20” fraud rule which we’ve talked about extensively in the past. It’s the known vs unknown…and in that equation, there’s always 80% more to a fraud problem than the 20% we know about (like an iceberg!).
Concannon thinks “SNAP fraud is rare.” Given the plethora of cases we’re seeing, I’m not sure he knows what he’s talking about but if Spackler were in the house…he’d be saying “I have to laugh!”
We’ve been following the D1 academic fraud probes going on in a number of places around the country. Last week, we covered the magnitude of the UNC fraud scandal when the report broke and Syracuse is STILL on the hot seat facing possible NCAA sanctions for academic fraud issues.
It’s our opinion that this is a systemic problem in D1 college sports. This week, a story’s now breaking about an academic fraud scandal at a JC (Westchester Community College) where players transferring to D1 schools are alleged to have had their transcripts forged before transferring.
That, story, on the immediate heels of the UNC and Notre Dame academic scandals, suggests college academic frauds are a “powder keg” getting ready to blow.
This fraud news story accurately poses the question I’ve been asking (apparently others are asking the same questions) all along about major NCAA athletics: Are these student-athletes or just athletes?
If there’s no “student” in the phrase “student-athlete” then we should just call these programs what they are…a “money making profit center” for colleges and universities. Because as is stands right now, the phrase “student-athlete’s” a complete sham.
One of the things we like doing in the Fraud News Update is feature fraud stories, or unique types of fraud, that might be a bit unusual or off the beaten fraud path. Being able to do this highlights the massive nature of the global fraud problem.
I read with interest the article about loyalty programs and the challenges they face in getting authorities interested in what’s perceived to be non-revenue losses. While there may not be “money changing hands,” clearly points have value which translate to real losses when the program’s are misused.
And don’t think for a minute that where there’s opportunity for value to be gained, there isn’t organized criminal activity. As we’ve seen in numerous Fraud News Updates, there’s a black market for just about everything. Coincidentally, while researching this piece, our hunch about cybercriminals interest in travel industry Loyalty programs was “rewarded” when CNBC broke this fraud news story.
Let’s face it, getting law enforcement investigators and prosecutors interested in prosecuting fraud can be difficult enough under “normal circumstances.” Add in, a program where money doesn’t change hands and getting official attention, and resources, can be an uphill battle.
Snap, Crackle, You Got Popped!
What would a Fraud News Update be without a Rice Krispies story?!
Cereal Frauds…not to be confused with serial frauds. Collusion’s often a key component in one’s ability to commit large-scale, fraud and that’s definitely true in this fraud news story.
John David Farmer, founder of the Farmer’s Food Grocery Store chain conspired with John Morrell Palmer III, a former Team Sales Manager at Kellogg’s, to defraud grocery wholesaler SuperValu and Kellogg’s in a retail incentive program.
Morrell and Farmer have both plead guilty. Kellogg’s reported to have been POPPED for 1.9 mil. That’s a lot of cereal. Just proves there’s money in groceries!
Nothing “Fake” About This Sentence
Headlines from the Atlanta Journal Constitution “Dead’ banker Aubrey Lee Price sentenced to 70 years.” Price, a former preacher and investment adviser, who faked his own death, was sentenced for operating a massive Ponzi scheme.
As we’ve talked about in previous Fraud News Updates, in most states it’s not illegal to stage your own death so rarely do you see those charges. Instead, charges usually relate to the original crime plus the crimes surrounding the staged death, or disappearance, like ID Theft, credit card fraud, etc.
Paying Off One Fraud With Another?
That’s exactly what the feds are saying about Martin Bachert who “pled guilty to fraud charges involving his scheme to sell equipment to an out-of-state buyer, receive payment but never deliver the equipment sold.” (FBI). The rub here:
Bachert used the money he obtained from several victims in the new fraud “to pay restitution to the Court at his sentencing in another case involving prior fraudulent and illegal conduct.” (FBI).
If you’re like us and pondering how often this happens, the answer is “probably more than most care to admit!” Once a fraudster always a fraudster…
Word To Ya Motha
Finally, I guess it was bound to happen sooner or later…bustin’ a round in your rival’s out while drive by bank frauds are in.
In this fraud news story, several members of the rap group “RACK Boyz” have been arrested by the feds and charged in a card cracking case along with a number of other suspects.
U.S. Attorney (COMPLAINT): “Four members of the RACK Boyz are accused of posting a video titled “For the Money” to brag about the money the scheme generated and enlist others to participate.”
Suspects Attorney: “Bravado’s often a marketing ploy by rappers…they aren’t going to post videos of helping little old ladies across the street” (So true).
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?
For more information on how we can help your businesses prevent risk, reduce major fraud losses and improve operational ROI, contact us to schedule an initial consultation. No obligations…just unique insights from an industry leader.