Here’s a hypothetical question:  if an individual works with others in a plot to steal money and one of his or her partners in the hypothetical crime is already in jail – do you really think it will end well?  According to authorities three women in Arizona thought so, as they allegedly teamed up with a current inmate to steal identities and apply for student loans in today’s Fraud of the Day from the Associated Press.

The article reports that three women from Glendale, Arizona and one inmate at an Arizona prison allegedly decided to join together and commit little student loan and identity fraud.  Federal prosecutors say the women used names of inmates to apply for fraudulent federal student financial aid.  (I wonder if the current inmate used names of people she didn’t like.)  Authorities say the ringleader of the group then intended to apply for online courses at a local college.  According to the indictment, the group of women received approval for $150,000 in loans and grants.  Of that total, $71,000 was sent to either the women or the school.  (Nearly a 50% take – that’s not bad.)

The three Glendale women were arrested on May 2, 2012.  Two of the defendants were charged with several counts of conspiracy, identity theft, theft of public funds and wire fraud.  No further information has been released at this time.  Of course, all defendants are innocent until proven guilty.

If true, this case illustrates how easy it is to use a fake name to apply for a federal loan.  It all boils down to using a fake identity.  And, I’m guessing that this approach isn’t limited to student loans – it probably works with other government loans or benefits.  What’s clear is that agencies providing these loans or benefits are vulnerable to fraud unless they authenticate and verify the identities of their program beneficiaries.   So, the question for the day is:  what safeguards does your agency have in place to prevent identity-based fraud?

 

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