Anybody Want a Paystub?

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I see a lot of different types of fraud – tax refund fraud, food stamp fraud, homestead exemption fraud and much more. Every once in a while, I see a new twist on a traditional approach to fraud and I need to call that one out. Today’s Fraud of the Day from the Central Valley Business Times focusing on allegations of unemployment and disability fraud includes such as twist.

Most cases of unemployment fraud that I hear about are perpetrated by individuals who at one point were legitimately entitled to receive unemployment compensation. Things go awry (meaning they defraud their state unemployment system) when they keep requesting the benefit once they are employed. That’s not the case in today’s article, which focuses on allegations of a larger scheme.

The article reports that six individuals are being arrested based on a 24-count indictment in connection with an unemployment and disability fraud scheme against the state of California. The story goes on to note that four others were previously indicted. These four allegedly ran multiple companies ”that were reported to the Employment Development Department as farm labor contractors.’? Authorities say the four ”sold fake paystubs to other people in the community and used the companies they controlled to report false wages for the individuals who purchased the paystubs.’? (If true, this is certainly an original approach to fraud.? The four even allegedly instructed the purchasers how to use the fake paystubs to falsely claim benefits. (If this were tax refund fraud, someone would be offering classes on it.)

So, if true, how big was the scheme? Prosecutors allege that during the conspiracy, ”the defendants reported wages for over 400 separate individuals that resulted in more than 2,000 fraudulent claims for unemployment and disability benefits.’? The potential loss is estimated at $5 million. (So far) The investigation is ongoing.

Source: Today’s ”Fraud of the Day” is based on the article titled ”Six Accused in Sutter County Benefits Fraud Case,” published by the Central Valley Business Times on August 27, 2012.

Arrests are being made on new charges in a continuing investigation into a fraudulent unemployment and disability benefits scheme based out of Sutter County, says U.S. Attorney Benjamin Wagner.

In a 24-count indictment that was unsealed Monday, a federal grand jury charged Ryan Herbert Smith, 46, of Turlock; Chindo Gharu, 49, of Yuba City; Seema Rajput, 45, of Modesto; Rajinder Kaur Dhillon, 70, of Sacramento; Rajinder Kaur Dhillon 47, of Yuba City; and Balwinder Singh Khangura, 64, of Yuba City and Sacramento, with participating in a scheme to defraud the state of California of unemployment and disability benefits.

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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.