What do you call it when three people commit two unrelated acts of fraud using nearly identical scams? I call it a pattern. At a minimum, it is a problem.
Today’s “Fraud of the Day” from AccountingToday.com reports that three former employees of a large New York bank pleaded guilty to using the identities of Puerto Rican residents to obtain $2 million in fraudulent tax refunds. Though the schemes operated separately, they were run in about the same way: they simply took names, dates of birth, and Social Security numbers (SSN) of Puerto Rican residents and filed tax returns with them claiming refunds. (Sounds familiar) They even bribed U.S. Postal workers to pull the checks from the mail. (Whatever happened to: “Through rain, sleet, snow and ice…”).
The U.S. Attorney’s Office offered some pretty good insight into the cases and the overall problem: “As bank employees on the take, these three defendants facilitated fraudulent tax schemes using the stolen identities of Puerto Rican citizens. Their conduct contributed to a national crime wave that is costing the IRS billions of dollars in lost revenue. Today’s guilty pleas should serve as warnings to others who might contemplate aiding tax cheats that we will prosecute you to the full extent of the law.”
So, we have a problem: tax refund fraudsters are using stolen Puerto Rican identities to file bogus tax refund claims. Here’s the good news. We know what the problem is, so we can stop it.
These fraudsters have found a loophole: Puerto Rican residents don’t pay federal income tax. As you’ve seen me write before, this is an identity problem requiring an identity solution. Here, it was the federal tax system. In reality, a fraudster could use the identity of a Puerto Rican resident in any state and for a host of public assistance benefits. But identity management solutions can quash public assistance fraud schemes that begin with identity fraud. They are designed to check batches of data against public records databases to search for anomalies in the data. These solutions are created to discover that phony IDs.
So, here’s the question for the day: is your agency using an identity management solution to catch fraudsters? Why or why not?