The Social Security Administration (SSA) is encouraging individuals to sign up for a new online account management system, which they believe will ease the distribution of benefits to recipients. (In a perfect world, yes.) One Missouri couple discovered they fell victim to the transition of online Social Security account management when they received a letter informing them they had opened a new SSA account, which they had not done. (“Maybe they forgot about opening it,” said the fraudster.) Luckily the couple caught the scam in time to save themselves from losing money.  According to investigations, this luck has not been the case for tens of thousands of people nationwide. (It’s like gambling – everyone can’t get lucky all the time.  The fraudsters are the card dealers – the ones in control of the luck.) An Assistant Inspector with the Office of the Inspector General stated the crime is not necessarily new, rather, it’s a twist on a scam that works to re-direct Social Security direct deposits. (New or old – the main point is that the fraudsters are still getting away with things.) The SSA indicated their system had not been hacked or compromised; however, they’ve ensured Social Security recipients they are working to make this crime more difficult to commit. (Am I missing something?  It appears someone has compromised the system some way.  Not to mention, they should be working to STOP this crime, not make it hard to commit.  Some people love a challenge.) The investigations stemmed from a previous report, where 20 to 40 individuals in the Fenton, Missouri area showed up to the Social Security office complaining of similar identity theft and Social Security fraud scams.  The criminals have not yet been caught; the SSA recommends people continue to use the system and report any suspicion of fraud to the Federal Trade Commission (FTC).

It appears fraudsters are finding the cracks in the system that let them fraud unrecognized.  I think I’ll stick to checking my social media and email, as opposed to entering my personal identification information in places that are subject to theft.

A recent conviction in connection with food stamp fraud may leave one Florida store clerk rethinking his grocery shopping method, as he may be heading to jail. (Sorry buddy, you don’t get to pick the food in the jail.) A jury found the food stamp fraudster guilty of conspiracy to defraud the government and commit wire fraud, five counts of wire fraud and five counts of food stamp fraud.  An investigation found the fraudster worked as a clerk in a small grocery store where he and others, including the store owner, defrauded the Supplemental Nutritional Assistance Program (SNAP), a.k.a. the food stamps program, run by the Department of Agriculture (USDA).  But how were they able to rake in $350,000 before getting caught? (As compared to many fraud scams, this is a relatively low dollar scam against the government.)

Between November 2008 and April 2010 the fraudsters conspired to cheat SNAP by purchasing benefits from customers for cash. (We seriously need a new method for preventing fraud in the food stamp program.  Bring in identification, present that ID with the benefits clearly marked under your name and you can use the benefits to purchase groceries.  Why is this so hard?)  The store clerks charged 50 percent of the cash paid to the benefit holders; these transactions are known as “discounting” or “cash-back.”  Florida is taking a stand to reduce the rise in fraud rates by teaming up federal, state and local government for investigations –  in this case the Secret Service, Department of Agriculture’s Office of the Inspector General, Florida Department of Law Enforcement and the St. Petersburg Police Department.  Our fraudster clerk faces up to five years in federal prison for his conspiracy charge, up to 20 years for his wire fraud charge, and one year on each of the food stamp charges. (So give him the max!  He clearly knew what he was doing the entire time.  Why are we letting these criminals off so easy?)  The fraudster clerk and store owner will be sentenced in July.

Regardless of what order you like to make your grocery list, it’s a best practice to leave any type of food stamp fraud off the list.  These fraudsters will learn their lesson as their 50/50 food stamp deals landed them 100% in jail.  Now back to my list of groceries – eggs, milk, chips, fraudsters in jail…

While most doctors may try scamming the system by ordering unnecessary tests or drugs for patients, one California doctor took advantage of a company specializing in durable medical equipment (DME), ordering motorized wheel chairs for individuals who did not need them. (Maybe he was trying to start the next Medicare Fraud 500.) The $1.5 million scam, assisted by two co-conspirators, billed Medicare for the cost of filling the wheelchair prescriptions, the wheelchairs themselves and delivery.  Court documents reveal the patients’ unwillingness to accept the unnecessary wheelchairs, though their attempts to reject delivery were unsuccessful. (Hello, did you order the power wheelchair? Well, we have delivery set for your home, and you are going to have sign for it and take it anyway.)

How could one doctor find enough patients to commit $1.5 million worth of Medicare fraud from power wheelchairs?  The investigation documented statements by patients who claimed the doctor lured them to medical clinics where he promised they would receive free items, such vitamins and juice. (Wheelchairs were probably in the fine print.  Come enjoy some free vitamins, juice and power wheelchairs that you will be forced to take home with you.) According the officials, the doctor received about $1 million of the stolen $1.5 million in kickbacks, for generating fresh patients for false billings.  He and his co-conspirators face up to 10 years in prison and $250,000 in fines for each count.  The doctor himself faces hefty fines as he was found guilty of one count of conspiracy to pay and receive kickbacks, one count of conspiracy to commit healthcare fraud and six substantive counts of healthcare fraud. (It’s ok – when he’s out of jail he can open his own wheelchair shop to help pay back what he stole.)

It looks like this fraudster hasn’t quite finished his fraud race yet – he will be taking a pit-stop in the court room to receive sentencing with his co-conspirators.  After his final pit-stop, I’m sure it’ll be off to finish line, crossing into orange jumpsuits and lockdown.  Better charge the wheelchair battery; you might not be riding the machine for a while.

There were a few important aspects about school:  (1) attendance – you had to be there, (2) homework – you had to complete it and (3) grades – they were proof of success or failure.  Neglecting one of those three could be detrimental to a number of things from passing your class to flunking out of school. (Of course, as we get into the “real world,” the consequences are far more serious.) For a couple in Illinois, the balance of the three aspects of school became very disrupted by a large influence – fraud.  The couple manipulated the federal government into providing them with nearly $47,000 in student loan money. (Fraud may make you feel like one of the “smart kids”; but eventually, your plan will be exposed, making you join the less cognitively talented team.)

The fraudulent couple recently pleaded guilty to conspiracy to commit student loan fraud, mail fraud and wire fraud.  In a not so unique scam, they used personal identification information of approximately 28 friends and family members (Friends? Not anymore!)  Of those 28 individuals, 16 of the identities were used to enroll in the undergraduate program at an online university, with a start date of September 2008.  As part of the application process, the couple noted each of those 16 individuals would need financial aid.  The couple received checks in the amount of $46,778 in the mail, at which point in time they’d conveniently drop the classes for which they had used the identities.  The federal government revealed that a total of $98,658 was paid out by the government for the financial aid, including $46,778 in refund overpayments to the fraudsters.  The couple faces full restitution of $98,658 plus jail time. (Well students, what are the lessons learned?  Oh yes, do not defraud the U.S. government.)

It looks like this couple skipped the class, “Getting Away with Fraud 101,” and went straight to “Going to Jail 400.”  I think the judge should ask them to write a paper about their experiences and the lessons they’ve learned through the process.  If they are going to defraud financial aid for schools, we might as well make them do some type of academic punishment!

When we think about inmates, we may not expect jail to be a place where crime is committed.  We put the criminals in jail for a reason, right?  Regardless of our wishful thinking, crime still continues behind bars—though there are efforts underway at federal, state and local levels to try and stop it. (You mean we can’t just put everyone on lock down all the time with no communication?) We can see those efforts now that 944 people, including inmates and their families in the Nashville, Tennessee area, are being investigated for cashing unemployment checks.  You might be asking:  “Is cashing a check a crime?”  Um…probably yes—if the person making the claim and cashing the check is not eligible for those benefits. According to a Tennessee state law, any person who is incarcerated for four days in a week’s time is ineligible for unemployment benefits.  So where is the exception?

The reality is there isn’t an exception.  Rules are the rules.  In efforts to continue enforcing those rules appropriately, a new type of tracking machine has landed the 944 possible fraudsters on the map to “Gotcha-Town.” (Just think, while you are out looking for a job, inmates are potentially cashing in on unemployment while you, the taxpayer, support their incarceration.) The state Department of Labor is looking into several factors, including whether the inmates inside the prisons had outside people use their personal information to register for unemployment benefits.  So, what’s the potential cost of this alleged scam? It’s a whopping $1.06 million dollars. The assistant administrator for the state Department of Labor said: “A million dollars is a lot of money, and if it’s going out the back door, we want to get it back.” (Ever tried getting blood from a stone?  Well, getting this money back will be even harder.) Investigations on the possible fraud continue.

It’s amazing how we feel like jail takes away all of the bad guys and leaves the rest of the world good and innocent.  Jail has crime just like the outside world, and sometimes it’s worse.  If the inmates in this case are found guilty of unemployment fraud, they may be extending their tenure in jail.

Identity fraud is sweeping through Paulding County, outside Atlanta, Georgia.  Officials are assisting a local accounting/tax preparation services company after a break in that brought their worst nightmares to life, leaving dozens of clients scrambling to save their financials.  The article report the thieves broke into the company facilities and stole computers that contained firms clients’ personal identity information. (This could happen to anyone.) As a follow up to the crime, dozens of clients already have reported that someone has filed requests for tax refunds their names. (What a surprise.  Credit reports will help monitor some of this, but they probably will never know if their identity is used for unemployment or food stamp fraud.   It doesn’t always stop at tax refunds.) The question from the clients remains: “Why did it take four months to let us know of the breach?”

A son of the company owners explained:  “All of the information was on the computers, so it took us a little bit of time to get things going.”  A client expressed anguish about being notified about the crime in March, when it had taken place in December:  “White collar crime is insidious.”  He went on to express his concerns about the Social Security numbers of his children, also on the account. (He should be concerned – criminals don’t take kids into consideration.  Ammo is ammo.) Officials with the local police report the number of victims continues to grow every day.  While tracking the victims’ growth is easy, officials are baffled at the difficulty in bringing order to the crime, as there are no real suspects or signs indicating how this happened at this time.  As investigations continue, the owners’ concern of how many clients will be affected grows. (I can tell you how many are affected – ALL OF THEM.)

It’s scary to think that just the swiping of one computer could wreak havoc to your financial stability and your identity.  You can take every precaution in the book to protect yourself and your family and still fall victim to white collar crime.

Do you know anyone who has had their identity stolen? The chances are that you or someone you know has fallen victim to this rapidly growing crime. In fact, the Federal Trade Commission (FTC) reported that identity theft was the number one consumer complaint for 2012. Of those complaints, government document/benefits fraud (46 percent) was the most common form of reported identity theft. And, it is costing federal, state and local government agencies billions of dollars every year. Why?

Identities are the “people” that government agencies serve – often to enroll in a government program or to receive a government benefit. Federal, state and local government agencies correspond with identities, revenue departments send tax refunds to identities, health care agencies reimburse identities for medical payments and labor departments pay unemployment compensation to identities…just to name a few examples.

But, what is an identity? An identity is often defined as a set of attributes related to an entity. More simply put, it is a combination of data – like a name, a date of birth, an address or a Social Security number (SSN). So, how do agencies know the identity they are corresponding with is truly the person that he or she claims to be?

Here’s the challenge: most organizations begin with self-reported information supplied remotely, either over the phone or via the Internet. There was a time when an individual requesting to enroll in a service would have to visit an agency office in person and present a set of identification documents (including a driver’s license or passport). That time has passed; organizations more commonly rely on non-documentary evidence and never have a face-to-face encounter with their customer. Now, fraudsters hide behind the Internet and create synthetic identities, comprised of personal identification information that is often stolen or fabricated. But, agencies don’t have to rely on self-reported data. Instead, they can leverage identity proofing solutions to quickly and easily verify and authenticate the identity of the user.

So, what should agencies look for in an identity proofing solution?

1. Identity Resolution Capabilities – Identity resolution is the first step in identity proofing, providing real-time to a data source(s) to confirm whether an identity exists and can be matched only to one person. It should also provide simultaneous, multiple search functionality and powerful data linking technology to filter and connect data into actionable intelligence. It also should alert you to possible errors or red flags, such as a transposed SSN, while attempting to resolve the identity with minimum data inputs and maximum accuracy.
2. Identity Verification Capabilities – Identity verification is the process of cross-referencing an asserted identity against the identity profile data. Identity verification solutions should leverage millions of data points to return detailed search results to the user in milliseconds. The technology should be able to identify and link disparate pieces of data around a single identity—confirming the data is valid, that the attributes belong together and whether they are associated with multiple identities. It also should provide scoring and risk indicators that return results based on your agency’s business rules.
3. Identity Authentication Capabilities – Identity authentication is the final step that links a person to the asserted identity, associating ownership of the identity being asserted. Any holistic identity proofing solution needs the capability for strong risk-based authentication, which is integral to striking a balance between protecting your agency from fraudsters. Look for real-time solutions that leverage multiple data sources to dynamically challenge biographical information such as former residences and vehicle history or can incorporate data elements provided by your organization such as prior transaction amounts and the date of last visit. It also offers options for authentication to fit your risk scenario – perhaps sending a unique passcode to a verified phone number or capturing and comparing a biometric print is the best approach for your workflow.

At the end of the day, identity proofing allows agencies to skip asking the question: “Who are you?” – reducing the risks associated with self-reported data – and move directly to asking: “How can I assist you?” Ultimately, allowing organizations to get down to their core business will result in a satisfied agency with more satisfied customers.

Resource: Identity Proofing: Government’s first line of defense against fraud and improper payments

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Let’s think of “time-out” more as jail time in this situation.  For one Kentucky daycare owner, the thought of time-out is now more unpleasant than ever, as she finds herself on the receiving end it.  The fraudster sobbed to the court explaining:  “I’m so very sorry for what I did.”  The judge wasn’t buying it and responded:  “I don’t think you are remorseful… I think you deserve to go to the penitentiary for 10 years, and that’s where I’m going to send you.” (Ouch – it’s almost like a parent sending you to your room for the whole night, but much worse.) But, what did the daycare owner do to deserve such a heavy sentence?  She was just in the business to help look after kids, right? (Aren’t they all sorry when they are facing the repercussions of their actions?)

Wrong, so very wrong.  Investigators discovered the fraudster billed the state for more than 100 children at one of her facilities with a maximum capacity of 29 and inflated the amount of days some of those children were at the facility.  In a separate incident, the owner was responsible for shutting down three of her centers after an employee crashed a company van while speeding, injuring 12 people and causing her own death. (You think your kids are monitored, but it’s situations like these that make you do a double take.) The fraudster made a plea agreement for 10 years in prison and $200,000 in restitution – even though the actual amount of money she stole was estimated to be $205,154.13.  Although she provided tearful remarks, the judge found her disregard for the law caused the community to suffer.  She will be eligible for probation in nearly a months’ time; if that is denied, she will have to serve two years before being eligible for parole. (Clearly she didn’t think of any of this before submitting false reports to the government for money.)

This is one babysitter that you would probably remove from your go-to list.  Maybe just stick with the neighbor’s kid down the street for now.

While our economy is nowhere near a great depression, it has impacted people differently.  For example, some retirees find that their pension benefits are not sufficient to meet their needs and are forced to return to searching for a job. (They better bring a good resume, a clean suit and every other unthinkable skill with them – it’s a tough market for job hunting.) For one Maine resident, this led to his decision to steal more than $83,000 in federal pension funds by continuing to receive retirement payments after he had returned to work. (With numerous baby boomers retiring and then reentering the workforce, this comes as no surprise.) Was this just a simple error or a fraudulent scheme aimed to cash in on benefits intended to help individuals actually in need?

An investigation dug deep to recover what was confirmed as a fraudulent scam.  The authorities say that the fraudster began retirement in 2004, after leaving a local railway company.  In 2007, he returned to work for a different railway company, where he used another individual’s personal identification information for his time cards. (Ah, the old switcheroo. I see what he did here.) Between 2007 and 2010, the man continued working for the railway company, while collecting nearly $83,000 in pension benefits. (Just a thought – was the person whose identity he used at his new job deceased or alive?  That could really make things interesting.) The judge warned that he faces up to 10 years in prison and $250,000 in fines.

As a fraudster, you think it’s just another day on the job until the federal government comes knocking on your door to arrest you.  Most hardworking citizens don’t worry too much about it. Beware fraudsters – you may think retirement is golf clubs and cigars, but in jail they don’t readily hand out the finer things in life.