If you are a frequent reader of “Fraud of the Day,” you know that we highlight articles on different types of fraud, so federal, state and local agencies can be armed with information about how the frauds are occurring and what can be done to prevent them.  In most cases, the perpetrators aren’t looking for a single “big score”; instead, they are patient – slowly and deliberately siphoning off taxpayer dollars by submitting individual claims.  That’s what happened in today’s fraud from CourthouseNews.com, which spotlights the sentence that one Illinois woman received for committing unemployment fraud.

The article reports that an Illinois woman who masterminded a seven year unemployment fraud scheme will spend eight years in prison for her actions.  The woman “ran a business filing fraudulent claims with the Illinois Department of Employment Security for undocumented immigrants,” in which she “charged $80 to prepare each claim and then more for subsequent benefits checks.”  She used the name of the undocumented immigrant in the application, along with a phony Social Security number – stolen from an unsuspecting citizen.  (Identity theft is too easy:  do what you can to protect your information.)  But that wasn’t enough; her scheme involved an inside man (seriously, I can’t make this up):  an agency employee filled in the blanks in any missing information and approved the applications.  What did he get in return?  She took him “out to lunch occasionally” and bought “bottles of gin” for him.  (What?  No cars?  No vacations?)

The scam ended in 2007 when the inside man was promoted.  Then things began to unravel.  In 2008, the inside man’s branch was investigated (way to be proactive!) and “uncovered the improprieties,” and the woman was arrested.  “She had submitted approximately 72 fraudulent applications, costing the state more than $700,000.”  She was “convicted of eight counts of mail fraud.”  In sentencing her, the court applied a sentencing enhancement “for acting as a leader in the criminal activity, identity theft and involvement in a criminal offense with greater than 50 victims.”

She appealed the sentence arguing against the sentencing enhancements applied by the court.  The 7th Circuit disagreed and upheld the sentence, finding that she “exercised near total control over the entire scheme” and noting that “she recruited others to help,” so she “shared a common interest with her clients in seeking unemployment benefits.”  (No second bite at the apple here!)

Like many other fraudsters, the defendant in this case sought to game the system, and she ultimately stole over $700,000 from the state before getting caught.  Here, an investigation uncovered the “improprieties.”  Could this type of scam be unfolding in your state?  Here’s the question for the day:  what measures does your state have in place to prevent this type of fraud from occurring?

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