Working Behind Bars

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When an individual is sentenced to prison, they are to expect a life of daily activity planned from the time they wake up until ”lights-out.’? While most prisons are strict about schedules, somehow some enterprising fraudsters still are able to squeeze in time to run fraud schemes while serving time. Today’s Fraud of the Day from Wicked Local raises questions about whether one man committed fraud from behind bars.

The article reports that two defendants were sentenced in connection with a behind-bars fraud scheme that authorities say bilked nearly $50,000 from the Commonwealth of Massachusetts (a.k.a. Massachusetts taxpayers). One of the fraudsters (defendant #1) pled guilty to the fraud charges, receiving a sentencing of two years in prison and three years of probation, while the other (defendant #2) – a third defendant’s ex-wife – ”admitted to sufficient facts to charges of Unemployment Fraud (6 counts), Larceny Over $250 by False Pretenses, Conspiracy to Commit Unemployment Fraud, and Conspiracy to Commit Larceny (2 counts)” and was ordered to pay $4,374 in restitution. (Well, it looks like one sold the other up the creek without a paddle.)But how exactly were the two individuals tagged to a fraud scheme allegedly orchestrated from behind bars?

Let’s take a quick step back to the beginning – an Everett resident (defendant #3) filed for unemployment benefits that he began to receive in 2009, and the funds were deposited into the bank account of his ex-wife (defendant #2). In March 2010, defendant #3 was arrested for separate charges and taken to jail, where he allegedly conspired with defendant #2 about how to keep the unemployment benefits coming in. (And, here we stop to pause and think about a key requirement to collect unemployment benefits – the ”ability and availability to work.’? That’s hard to do from prison.)In June 2010, an inmate friend (defendant #1) of defendant #3 was released from the prison, and allegedly was directed by defendant #3 to open a new bank account online to deposit his continued unemployment benefits. Investigators say defendant #1 communicated with defendant #3 over the phone and at prison visitations at which time they allegedly discussed personal/security information needed to answer certification questions posed by the Executive Office of Labor and Workforce Development’s Department of Unemployment Assistance (EOLWD/DUA) to verify his identity. The alleged scam supposedly went on for nearly 56 weeks, until the Department of Corrections became suspicious and referred the matter to EOLWD/DUA.

Defendant #3’s case is ongoing. He is accused of ”71 counts of unemployment fraud, among other charges.’? He is innocent until proven guilty. He is only accused of the charges; he has not been convicted. No one has proven that he has done anything from behind bars, beyond serving his time.

With that said, it is easy to see that the scam alleged by prosecutors might be possible for a fraudster to perpetrate. A fraudster could try to game the system by having the benefit money deposited into a third-party’s bank account or providing information to someone so he/she could answer security questions. You know what is tough for someone behind bars to lie about? Their address. That’s the kind of thing that comes up in a comprehensive search of public records databases. So, why aren’t more states using that technology?

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Somerville Man Pleads Guilty in Prison Unemployment Fraud Scheme,” and published by Wicked Local on December 6, 2012.

Somerville — A Somerville man and Everett woman have been sentenced in connection with a scheme to assist a prison inmate with fraudulently collecting nearly $50,000 in unemployment benefits, according to a press release from the Attorney General’s office.

Derek McCarthy, 34, of Somerville, pleaded guilty to charges of Unemployment Fraud (56 counts), Larceny Over $250 by False Pretenses, Conspiracy to Commit Unemployment Fraud, and Conspiracy to Commit Larceny. After the plea was entered Judge Carol Ball sentenced McCarthy one to two years in state prison and three years probation following his incarceration.

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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.