Fraud, Fraud and More Fraud

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The news of an oil spill is never pleasant. The damage inflicted by the spill on the livelihoods of people in the community and on the environment has the potential to be life changing. And, while we may dislike the inevitable increase in the price of gas that follows, Americans will line up to donate to help wildlife and support sending federal aid to victims of the disaster. Unfortunately, as today’s Fraud of the Day from The Miami Herald demonstrates, some fraudsters see a disaster as an opportunity to bilk the system – and a jumping off point for committing even more fraud.

One Miami couple made a cushy living off disaster relief funds set up to help Gulf Coast communities following the 2012 oil spill. The couple stole the identities of nearly 600 people and filed bogus claims totaling nearly $3 million. Investigators found that they collected around $725,000 from federal agencies in an extensive disaster relief and identity fraud scam.

How were they able to manipulate the government with so many false claims? For starters, they ”filed claims totaling $1.26 million under the assumed identities of people residing in Florida. They used those actual names and their Social Security numbers, but submitted addresses for them in Louisiana, Mississippi, Alabama and the Florida Panhandle.’? Then they set up bank accounts in Texas, where the federal agencies paid the fraudsters, who used debit cards and fake names to cash in on their loot. (Ahh, public records and identity verification systems would have halted this quickly.)

As it turns out, this couple had a history of committing disaster fraud. They were convicted of filing 47 fraudulent claims for disaster relief funds following Hurricanes Gustav and Ike in 2008.

Of course, with a track record like that, do you think they limited themselves to disaster relief fraud? No. They made 76 fraudulent claims for unemployment in North Dakota and New York. The couple also dabbled in tax refund fraud, stealing $284,000 from the federal Treasury by using ”stolen identities and fabricated returns.’? One of the defendants even admitted to the court that he even stole the identity of his own brother. (That will make for an awkward family dinner conversation.)

Now, the couple will be trading in their Bentley and McMansion for prison stripes and 13 years each behind bars. The defendant’s attorney argued for leniency in sentencing because the two are parents to a seven-year old child. The judge, however, disagreed and stuck to his hefty jail time sentence. (Bravo judge, bravo!)

So, what have we learned? First, that some people are willing to take advantage of others when the chips are down. And, second…that these are often identity-based crimes. It takes very little time to verify and authenticate the identities of individuals claiming a government benefit. By leveraging identity-based solutions, government agencies can identity red flags for potential fraudsters – and make sure that those who qualify for the funds receive them.

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Broward Couple Convicted of BP Oil-Spill Fraud Sent to Prison for 13 Years,” written by Jay Weaver and published by The Miami Herald on September 26, 2012.

Their last address was a waterfront McMansion in Lighthouse Point.

Their ride was a Bentley when the feds busted them last fall.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.