Fraud News Update 09.18.14

Fraud News

Fraud News

Fraud News Update 09.18.14: This week’s Fraud Solutions news update features: SNAP: The Government’s Clueless (Surprise!), SSA: Even More Government Cluelessness (Bigger Surprise!), Religion: the new home of the flim flam con, fish fraud (Really!), killer whales and stock fraud, and organized criminal involvement in student loan fraud (so says the IG’s Office).

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

The Government’s Clueless

About SNAP fraud… or at least that’s what Wendy Dishman, the administrator of the Investigative Division of the Iowa Department of Inspections and Appeals seems to be suggesting in this interesting fraud news story about the continuing woes of the federal food stamp program.

Clueless is our interpretation to describe the situation. However, the article by Paul Brennan of seems to concur stating that the Feds have no idea what the true extent of SNAP fraud really is.

Anytime you don’t have solid information on the amount of fraud, it’s always worse than you thought it was.

This article, which is an interesting read, suggests the SNAP program has BIG time fraud issues. Our take: that seems to be substantiated via all the fraud news stories about waste and abuse in the program that we’ve seen lately like this one involving a program insider. Is reform needed? Indeed, it is!

Even More Government Cluelessness

To be a good fraud fighter requires a mix of old school techniques and cutting edge, new age technology. In this fraud news story about the Social Security Disability Income (SSDI) program, the Inspector General reports that the program is rife with bogus claims, over payments and fraud. Yet, the program can’t be investigated effectively due to the SSA’s outdated systems and technology.

One can have all the great “old school” investigative techniques in the world but the lack of a cool piece of fraud fighting technology to ferret out suspicious claims renders those skills useless.

The SSA claims that 1% of the claims are fraudulent, which speaking from personal experience in the disability insurance industry, is a significant understatement. The Inspector General concurs calling that statistic “misleading” as it only represents the number of cases referred for prosecution consideration.

More likely, the representative fraud population in SSDI claims (as recently seen with the NY Firefighters who abused the system) is 10% (or greater). Statistically, this was supported in some of the IG’s sampling on SSDI files. Using the historic 80-20 rule (20% known-80% unknown), the fraud problem is always significantly bigger (80%) than the information you’re currently aware of.

1% of the total claim base is fraud? Not hardly! Guess again.

One of the focus points for this fraud news article are the outdated systems that SSA has in place. The lack of current technology prevents proper due diligence, fraud detection, fraud analytics and investigation in a more seamless fashion. Suffice it to say, an investment in new technology would reap significant rewards.

While results aren’t always typical, as the commercials say, in a piece I wrote a couple of years ago, the Washington Department of Labor and Industry (L&I) instituted new technology for the same reasons.

In that instance, they achieved a return which was estimated to be 8:1. Sound like a good use of taxpayers dollars? You betcha!

Same question as above with the SNAP program. Is reform needed in the SSDI program as well? Indeed, it is!

Insurance Fraud and the Preacher Man

Contrary to popular thought, the religious occupation, as we’ve seen in previous fraud news updates, is not proving to be a deterrent to committing fraud crimes.

Nathaniel McNeil was founder and president of Life Transformation Ministries International (or “LTMI”), which according to the  Times Dispatch, he fraudulently represented as a non-profit religious organization.

McNeil was just sentenced to federal prison for running a life insurance scam on church congregations. McNeil, and his girlfriend assistant, defrauded over 1200 individual victims and a number insurance companies.

In an ironic twist, I guess co-mingling with other criminals in federal prison would be classified as a “life transforming” event.

Since we started writing the Fraud News Blog there hasn’t been a week go by without at least one case involving religious participants. All of the recent cases involving fraud and the religious profession makes one ponder the following question.

Has the business of religion become home to flim flam artists (Websters: dishonest behavior meant to take money or property from someone) who use the power of the robe to “fleece the proverbial flock?”

What A Fine Kettle of Fish This Is

I fish therefore I am. A philosophical statement which best describes many participants in the recreational sport. During a fishing trip yesterday in Wisconsin we got into a discussion surrounding commercial fish fraud and what appears to be the common practice of misrepresenting the type of fish being served to unsuspecting customer’s in restaurants around the globe.

Want to dive deeper into this issue? Oceana, an international ocean conservation group, provides a seafood fraud overview. Think you know what you’re eating in restaurants? From what we’re seeing, “what you see may not be what you get.”

As I said in an earlier fraud news blog, where there’s an opportunity to make money and profit there’s always someone willing to cut corners and take advantage of that. NO industry is immune from fraud, not even the seafood industry, as we’re now seeing.

Wonder If Shamu Was Involved?

From fish fraud to one of the biggest fish out there, killer whales. Having grown up in San Diego, Seaworld is a staple of the local economy and the tourist industry.

This fraud news story examines the correlation between the recent film expose Blackfish, which traces the history of killer whales in captivity, and the impact on Seaworld attendance and stock prices. Think the films had financial impact? At least one investor thinks so in their lawsuit.

Student Loan Shenanigans

The seafood industry isn’t immune from fraud nor is the business of academia. In previous fraud news updates we’ve seen numerous D1 college sports issues involving athletes and sham classes, test takers, paper writers and non participation in academic exercises which resulted in “A” grades for elite athletes.

Make no mistake about it, college sports are big business and where there’s money to be made there are always people looking to circumvent the rules for those involved.

But wait, there’s more… if you think that’s the extent of the fraud in academia, it isn’t. This story of an investigation into possible financial aid fraud at the College of Marin caught my eye. Wondering what the prevalence of the crime is? Here’s a little gem from that article which provides a clue:

In a semiannual report to Congress, the Office of the Inspector General reported that at the end of March it was conducting 132 investigations of online fraud rings and had, over the previous six months, secured more than 478 indictments of fraud ring participants and recovered more than $20 million.

Apparently, much like D1 college sports, there’s money to be made in the college funding process and student loan fraud is also big business. The operative phrase here being “fraud rings.”

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?