You Know Where You Work, Right?

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Every job has its quirks. Some companies have good benefits; others don’t. Some organizations have a clear chain of command while others rely on a decentralized structure. But, as a general rule, employees know the physical location where they work and the name of their supervisor. If they don’t, there may be something fishy (fraud) going on. That’s what’s alleged in today’s Fraud of the Day from the AppealDemocrat.com.

The article reports that six individuals were arrested in connection with a case involving $5 million of unemployment and disability fraud. Authorities allege that ”all six people are accused of forming a series of companies with the Employment Development Department beginning in 1989,” with the last one being formed in 2011. According to the article, the companies claimed to be ”farm labor contractors that provided labor to harvest various agricultural crops” in California counties. Instead, investigators claim that the individuals sold wages to hundreds of people in Northern California. It noted: ”the defendants would charge an individual between $250 and $1,000 in wages. The buyer, who never performed any work for the suspect companies, would then claim to be laid off and file for unemployment or disability benefits, or, in some cases both.”

A spokeswoman for the U.S. Attorney’s Office said the individuals who purported to work for these companies often couldn’t name their supervisor or the location where they worked. She added: ”In order to further the fraud, the defendants used the name ‘Mohammed Khan,’ used each other’s business addresses, repeatedly hired and laid off each other, and continually changed the names of the businesses.” (No, there’s nothing at all suspicious about that.)

As part of the investigation, authorities searched several of the defendants’ homes and businesses and ”linked nine automobiles to the suspected scam.” (How much you wanna bet they weren’t from the used car lot down the street?)

The defendants allegedly used the same name to perpetrate the fraud, as well as the names of each others’ businesses and addresses. Of course, the defendants are innocent until proven guilty, but the case is illustrative: these common denominators are red flags – potential anomalies that are critical to uncovering fraud, when it occurs. So, the question for the day is: could your fraud detection system see these anomalies?

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Feds Descend on Yuba-Sutter; Nab 5 in Alleged $5 Million Scam,” written by Rob Parsons and published by the AppealDemocrat.com on May 1, 2012.

Six Sutter County residents face federal charges in connection with a $5 million unemployment and disability fraud scheme officials said had been running since 1989.

Five people were arrested Tuesday in Yuba and Sutter counties and arraigned in U.S. District Court in Sacramento, said Lauren Horwood, a spokeswoman for the U.S. Attorney’s Office in Sacramento.

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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.