ISIS Android App – Seriously

That scourge of civilization – the Islamic State in Iraq and Syria — otherwise known as ISIS (sometimes ISIL as in “the Islamic State in Iraq and the Levant” and there are reasons why they are called that because it notes the terror groups larger geographical intentions) is very good at propaganda messaging. So good that there’s an app for that. Seriously.

While ISIS has shown to be very adapt at using Twitter and Facebook, this is another layer in the war with ISIS. Any organization needs to recruit members and grow its “business.” ISIS is no different and is using secure encrypted technologies – an Android app — to be able to propagate their recruitment and operational efforts.

See the full story at International Business Times here: http://www.ibtimes.com/isis-android-app-islamic-state-develops-smartphone-app-propaganda-messaging-2211847

Healthcare Fraud is a significant front in the “war” on fraud. The costs of healthcare fraud and the diversion of resources for legitimate healthcare are a drain on all healthcare systems. Healthcare Fraud is complex, fascinating, frustrating, and a valuable area to fight fraud; I know from personal experience as a Healthcare Fraud Investigator.

Read More at Counter Fraud Academy

Medicare Fraud…again

Healthcare Fraud is a significant front in the “war” on fraud. The costs of healthcare fraud and the diversion of resources for legitimate healthcare are a drain on all healthcare systems. Healthcare Fraud is complex, fascinating, frustrating, and a valuable area to fight fraud; I know from personal experience as a Healthcare Fraud Investigator.

Charles Ornstein writes for NPR and notes the struggles of HHS-OIG – some of whom I have worked with and very highly value — Special Agents to combat Medicare Part D prescription fraud. Ornstein reports:

Fraud and abuse continue to dog Medicare’s popular prescription drug program, despite a bevy of initiatives launched to prevent them, according to two new reports by the inspector general of Health and Human Services.

Their release follows the arrests of 44 pharmacy owners, doctors and others, who last week were accused of bilking the program, known as Part D.

The two reports issued Tuesday provide more insight into the extent of the fraud, as well as steps federal regulators should take to stop it. The first report, which covers data from last year, found:

  • More than 1,400 pharmacies had questionable billing practices last year in the drug program. Some billed for extremely high numbers of prescriptions per patient and others billed for a high proportion of narcotic controlled substances. Collectively, they billed Part D $2.3 billion in 2014.
  • Prescriptions for commonly abused opioids continue to rise, despite warnings about inappropriate use. Between 2006 and 2014, Medicare’s spending on them grew to $3.9 billion from $1.5 billion, a 156 percent increase. By comparison, spending for all drugs in the program, including expensive specialty medications, grew by 136 percent during the same period. More than 40 percent of Medicare beneficiaries in Alabama, Tennessee, Oklahoma and Alaska filled at least one prescription for a narcotic in 2014, compared to 32 percent for the nation as a whole.
  • New York and Los Angeles remain hot spots for questionable prescribing, with far higher use of expensive drugs associated with fraud than other parts of the country. The New York metropolitan area, for instance, accounted for half of all prescriptions for the expensive topical ointment Solaraze last year, a disproportional rate. The drug is used for lesions formed as a result of overexposure to the sun. New York and Los Angeles also stood out for prescribing of two omega-3 fatty acids, used to help reduce very high triglyceride levels. The two regions accounted for nearly half of all prescriptions for Vascepa and about a third of those for Lovaza.

The inspector general’s findings come two years after ProPublica reported on how weak oversight by the Centers for Medicare and Medicaid Services (CMS) allowedabusive prescribing and outright fraud to proliferate in Part D. Medicare promised a more aggressive approach to analyzing its own data.

People can use Prescriber Checkup, a tool created by ProPublica, to look up doctors and see how their prescribing patterns compare to peers in the same specialty and state.

Medicare Part D provides drug coverage for 39 million seniors and disabled people, at a cost of $121 billion in 2014. It is the fastest-growing component of the Medicare program. Part D is administered by health insurers under contract with the federal government, but CMS is responsible for overseeing it.

For years, the inspector general, an internal watchdog that evaluates HHS programs and investigates wrongdoing, has dinged Medicare for its failure to keep a close enough eye on doctors, pharmacies, beneficiaries and even its fraud contractors. That’s beginning to change, officials say.

At the same time, she said, “There are still concerns. More needs to be done. We can’t stop here.”

A second report from the inspector general says that Medicare needs to adopt a number of reforms that it has so far resisted. They include:

  • Requiring health plans to report all potential fraud and abuse to CMS and its fraud monitoring contractors. Right now, the agency encourages plans to voluntarily report suspicions of fraud but it doesn’t mandate it. Last year, the inspector general found that less than half of Part D insurers voluntarily reported data on potential fraud and abuse.
  • Expanding reviews for questionable drug prescribing beyond controlled substances to other commonly abused drugs, including antipsychotic medications, respiratory drugs and those for HIV.
  • Restricting patients suspected of doctor shopping—visiting multiple doctors in search of controlled substance prescriptions—to a limited number of doctors and pharmacies. CMS said it doesn’t have legal authority to do this, but the inspector general said it should seek the authority, which is commonly used by private insurance companies and state Medicaid programs for the poor.

During last week’s Medicare fraud takedown, 243 people total were charged, including 46 doctors, nurses and other licensed health professionals. Forty-four of the people arrested were charged with fraud related to Part D.

In Miami, for example, a number of pharmacy owners were charged with health care fraud and conspiracy to commit fraud. In one case, the government charged several people with paying Medicare beneficiaries for their personal identification numbers, which they used to file fraudulent claims for drugs that were never dispensed. They worked with a clinic owner, who forged and altered prescriptions and sold them to the pharmacies. This scheme alone defrauded Medicare of $21.2 million, the government alleges.

The changes were supposed to take effect on June 1, but have since been delayed twice, most recently until January 1.

CMS spokesman Aaron Albright said Monday in a written statement that Medicare “works diligently with our law enforcement partners to prevent fraud in the first place and to recover payments for wasteful, abusive or fraudulent services.”

In addition to requiring 400,000 prescribers to enroll in Medicare by next year to order to retain the ability to prescribe in Part D, Albright said, officials are helping health plans decrease overuse of dangerous drugs and taking action against providers and pharmacies with potentially fraudulent billing practices.

In April, CMS launched a web-based tool to allow CMS, law enforcemen, and health plans to share information and coordinate actions against pharmacies deemed high risk. CMS also said it is monitoring potentially fraudulent activity in geographic hot spots like the ones identified by the inspector general.

 

Google’s Fraud Squad

The biggest search engine provider and overall impact on the technological life of billions – Google — has a fraud squad working advertisement fraud. Lara O’Reilly reports for Business Insider below:

Google has an extremely secretive unit working to combat advertising fraud — many people within Google don’t even know the team exists, but AdAge was given the first look at what the team of about 100 people is working on.

Advertising fraud is a serious problem. The Internet Advertising Bureau predicts ad fraud could cost brands as much as £6.5 billion ($10.1 billion) in wasted spending each year.

For Google — the world’s biggest seller of online advertising — that’s a huge problem. Google requires trust that ads being bought through it are actually reaching a human audience, not an army of botnets created by criminal enterprises that exploit unsuspecting consumers’ personal computers.

Criminals take serious amounts of money out of the advertising ecosystem by generating millions of false clicks on ads (among other techniques).

And it’s because ad fraud is essentially a form of organized crime that many people AdAge encountered while at Google’s offices in central London asked to be referred to by only their first names. One Russian engineer, Sasha, said: “Because it is part of organized crime, I’m guessing it would not be a friendly environment for the people that speak out against it.”

The unit itself is situated behind a “hulking door with a circular vault-like handle,” AdAge describes, which just adds to the air of mystery around it. The operation is “one of the most important and best-protected secret units of the web,” AdAge writes.

The man leading Google’s botnet-fighting unit can be named: Douglas de Jager. He founded Spider.io, which was sold to Google for an undisclosed amount last year. All seven Spider.io staff members moved over to Google. AdAge says it is the mixture of Spider.io’s expertise plus Google’s computing power that has sped up the fraud-fighting process “dramatically.”

But it has added some restrictions: The bot-fighting unit has to steer clear of Google’s sales team to avoid conflicts of interest. AdAge explains:

The sales team, as you might imagine, doesn’t stand to gain immediately when inventory is removed from Google’s systems. The more ads it sells, the more money it takes in.

The engineers work in what they describe as their “dungeon,” scanning malware binary during sessions lasting up to two hours looking for patterns and raking the forums used by fraudsters for clues as to where the bad actors originate. But they do regularly emerge from their dungeon, for coffee. After each session, the team “flocked” to Google’s famous microkitchens, where everything is free, to caffeinate “and forget,” AdAge writes.

Ultimately, Google’s team examines clues for “signals” — a type of behavior inadvertently created by fraudsters when they program a bot that can help the engineers identify the traffic.

Google’s secret weapon to do this is called “Powerdrill”:

Powerdrill is a freak computing system. It’s capable of processing a half trillion cells of data in a less than five seconds (translation: It’s damn fast). And it can spit that data out as charts and other graphical representations that make it possible to spot the irregularities of nonhuman traffic.

AdAge goes into further detail — including a fascinating anecdote about an unnamed ad-verification service that was responsible for a swath of nonhuman traffic on the Google network — about what Google’s team is up to and the way it goes about tracking down fraudsters in its article, which you can read in full here.

Charity Fraud

Sadly, we must be on guard for fraud in every sector – including charities. People answer the call to help and give their money so when a charity steals money it is especially disturbing. CNN reports below:

Washington (CNN)In a rare joint action with attorneys general for each of the 50 states, the Federal Trade Commission says four cancer charities run by extended members of the same family conned donors out of $187 million from 2008 through 2012 and spent almost nothing to help actual cancer patients.

Each of the charities charged were the subject of extensive reporting by CNN in 2013. And in each instance, none of the four charities would comment. We were ordered out of the building at the Cancer Fund of America in Knoxville, Tennessee, and were the object of an obscene gesture by the CEO of The Breast Cancer Society in Mesa, Arizona.

The Cancer Fund of America is run by James Reynolds Sr. His son James Reynolds Jr. is the CEO of the Breast Cancer Society. Another charity, the Children’s Cancer Fund of America, is run by Rose Perkins, the ex-wife of the elder James Reynolds. He’s also the CEO of the fourth charity, Cancer Support Services.

The government says the charities claimed to provide direct support for cancer patients, breast cancer patients and children with cancer.

“These were lies,” the government’s complaint says.

Jessica Rich, chief of the FTC’s Bureau of Consumer Protection, says that in all, the charities spent about 97% of donations they received either on private fundraisers or on themselves. Only 3%, she says, went to help actual cancer patients.

According to the complaint, funds donated to help cancer patients instead went for personal use, in often lavish ways.

“[D]onated funds were used to pay for vehicles, personal consumer goods, college tuition, gym memberships, Jet Ski outings, dating website subscriptions, luxury cruises, and tickets to concerts and professional sporting events,” the complaint says.

“Most of what we are doing is bringing actions against fraud,” says Rich. “And this is as about as bad as it can get: taking money away from cancer victims.”

There was also what the FTC calls “rampant nepotism” at play in all of the charities. For instance, at the Breast Cancer Society, James Reynolds Jr. hired his wife, Kristina Hixson, to be his public relations manager. The complaint states that he also hired Hixson’s two sisters, her son by a previous marriage, her mother and her step-nephew. According to the complaint, Hixson’s mother had been a caterer. At the Breast Cancer Society, she was hired to write grant applications.

Moreover,on their tax returns, each charity claimed millions of dollars in donated goods shipped to overseas locations on behalf of cancer patients. The complaint says the charities never owned any of the goods in question and simply paid a fee to a private firm in South Carolina to ship the goods, called gifts-in-kind. CNN went to Guatemala in early 2014 to investigate anyone who may have received those gifts and could find no evidence that they even existed.

As a result of the complaint, two of the charities say they will close their doors. Both the Breast Cancer Society and the Children’s Cancer Fund of America are being dissolved, according to the complaint. James Reynolds Jr. faces a judgment of more than $60 million in fines and Rose Perkins, who runs the Children’s Cancer Fund of America, faces a judgment of around $30 million.

Under a proposed final order, the judgment against Reynolds Jr. will be suspended when he pays $75,000. The judgments against Children’s Cancer Fund of America will be partly met upon liquidation of its assets, and the judgment against Perkins will be suspended due to her inability to pay.

The FTC’s Jessica Rich, however, said there are few assets left. Government regulators will be lucky to recover $1 million, she told CNN.

As for James Reynolds Sr., he will contest the charges in the complaint, the government says. CNN hasn’t yet been able to reach attorneys for Reynolds Sr., his son or Perkins for comment, but in a message posted on the Breast Cancer Society website, Reynolds Jr. said:

“While the organization, its officers and directors have not been found guilty of any allegations of wrong doing, and the government has not proven otherwise, our Board of Directors has decided that it does not help those who we seek to serve, and those who remain in need, for us to engage in a highly publicized, expensive, and distracting legal battle around our fundraising practices.”

Ethical Confessions

Interview and interrogation is a significant part of the fraud investigation process. Cases can be made or case can be stalled on how the interrogation is conducted. “Interrogation” of course has taken a big black eye globally with the “enhanced interrogation” techniques applied in Iraq and Afghanistan during the still on-going “War on Terror.” However, there is a whole deep and burgeoning area of study on how interrogations can be conducted successfully with success evaluated by the the inclusion of ethical considerations. Any investigator that has partaken in quality investigative interviewing training knows the importance of conducting an ethical interview and interrogation so some of this may be old news for experienced interviewers. However, it is still worth reviewing and considering as Roni Jacobson reports:

Last December a Senate Intelligence Committee report revealed how two psychologists were involved in shaping the CIA’s “enhanced interrogation” methods, using psychologist Martin Seligman’s theory of learned helplessness to justify controversial practices such as waterboarding and sleep deprivation—something Seligman himself has repudiated.* The problem is that in addition to being morally reprehensible, interrogation methods based on force and intimidation don’t work.“Coercive, confrontational methods actually lead to the detainee shutting down,” says psychologist Christian Meissner of Iowa State University, who studies interrogation techniques. “More effective tactics rely on cooperation, which can be facilitated using principles of social influence that we know work very well.”

According to the American Psychological Association, if a psychologist meets certain conditions, chief among them “do no harm,” it is permissible for him or her to aid in interrogations. So is there an ethical way to extract a confession from someone?

To find out, in 2009 President Barack Obama convened the High Value Detainee Interrogation Group (HIG), made up of cognitive and social psychologists and other experts. This winter the HIG, led by Meissner, released its findings in a special issue of Applied Cognitive Psychology. Ethical interrogations are not only possible; their effectiveness is also robustly supported by research.

At the right are some of the HIG’s most interesting findings. Though developed for law enforcement, there is no reason to think these strategies will not also work on the mendacious teens, spouses and co-workers in your life if you need to get to the bottom of something.

1. Build rapport. Think of it as just “good cop.” Researchers have found that coming across as empathetic causes interrogation targets to open up more than when the interrogator is cold and accusatory. Many of the other techniques described in the journal depend on having a cooperative target, making this step all the more important. “The first thing you have to do is develop cooperation, rapport,” Meissner says. “Once you have a cooperative person, the question is, How do I get all the info from them that I can?”

2. Fill in the blank. To get that info, instead of asking direct questions, tell your target a story about what he or she did, leading the person to believe you already know what happened. As you provide the narrative, the guilty party will then supply details and corrections. This is called the Scharff technique, named for its developer, Hanns Scharff, a German interrogator during World War II. The technique was shown to elicit more information than direct questioning in a 2014 study. People interrogated using this method also tend to underestimate how much they are sharing.

3. Surprise them. People who are interrogated often know they are under suspicion, so they practice their answers ahead of time. In addition, liars are under high cognitive strain as they try to keep their story straight and at the same time act calm and collected. If you ask them something unexpected, they often stumble when put on the spot—enabling you to catch them in a lie.

4. Ask for the story backward. In contrast to what most people believe, truth tellers are more likely to add details and revise their stories over time, whereas liars tend to keep their stories the same. “Inconsistency is really just a fundamental aspect of the way memory works,” Meissner says. A technique that interrogators use to capitalize on that quirk is called reverse telling—asking people to recall events backward rather than forward in time. This strategy has a double effect: For truth tellers, it makes recall easier—in another HIG study, reverse telling produced twice as many details as did recounting chronologically. For liars, the task becomes harder when put in reverse; they become more likely to simplify the story or contradict themselves.

5. Withhold evidence until the crucial moment. In a study last March, when people were confronted with potential evidence of their wrongdoing early in the interview, they either clammed up and adopted an extremely hostile posture or immediately spilled their guts, depending on the individual. Rather than risking the former, the researchers advised truth seekers to take a middle path, alluding to evidence without making any direct accusations—at least not right away.

Here Comes The Bride Fraud

Marriage is tough. Being married to 10 men, allegedly, at the same time is even tougher. It is also fraud, albeit a strange kind, but still fraud. Andy Newman, writing for the NY Times reports:

The year 2002 was very busy for a young woman named Liana Kristina Barrientos.

For one thing, she got married — on Long Island, on Valentine’s Day.

For another, she married again, 15 days later, in Rockland County, to a different man.

Thirteen days after that, while still married to at least two men, she wed yet another, back on Long Island.

And then a few weeks later, when the average bride might still be recovering from her honeymoon, Ms. Barrientos was named in a divorce proceeding initiated by a man she married three years before.

By the time 2002 was done, she would marry three more men, each in a different town in New York State.

All told, according to state records, she has married 10 men since 1999.

Friday is also going to be busy for Ms. Barrientos, who is now 39. She will be arraigned on felony fraud charges in State Supreme Court in the Bronx.

The fraud, Bronx prosecutors say, is that in 2010, for her most recent union, she wrote on her marriage license that she had never been married before. Furthermore, prosecutors say, each marriage after her first was obtained “without benefit of divorce.”

Little more about Ms. Barrientos and her matrimonial spree can be said for sure, though much can be speculated.

The Bronx district attorney’s office on Thursday said that the federal Department of Homeland Security, which handles some immigration affairs, was “involved” in the case. Agency officials did not respond to emailed questions.

Information on the immigration statuses of her husbands was not immediately available. Marriage applications must include the birth countries of the couple, but the State Health Department, the repository for those forms, said it was prohibited from giving out the information.

Ms. Barrientos’s husbands’ last names, in order, are Gerbril, Allam, Rahman, Koridze, Goktepe, Paharelau, Dzneladze, Rajput, Khorbaladze and Keita. Neither Bronx prosecutors nor officials with the Department of Homeland Security would say whether any of the men face charges.

Ms. Barrientos has past convictions for drugs and theft of services. She has divorced at least four times, from husbands Nos. 1, 2, 5 and 7, but long after marrying husbands 3 through 9.

A woman claiming to be the current wife of husband No. 5 sounded intrigued when a reporter called and explained that he was looking to speak to some of Ms. Barrientos’s husbands or ex-husbands.

“You better talk to my husband,” she said. He did not immediately call back. The wife did not give her name.

Another man, answering a phone that seemed to belong to husband No. 2, would not confirm that he knew Ms. Barrientos. But he patiently listened to a reporter’s description of her situation before saying, “I really have no idea what you’re talking about.” He then hung up.

At an apartment building where Ms. Barrientos recently lived, at 1555 Grand Concourse in the Bronx, the site manager said she had left owing several months’ rent.

The manager, Luz Garcia, said Ms. Barrientos and her husband moved into a first-floor apartment in the building, known as Rockwood Hall, last summer.

Ms. Garcia said the couple paid rent for July, but that was it. “She still owes us a lot of money,” she said.

During the next few months, Ms. Garcia said, Ms. Barrientos gave birth in the building, but Ms. Garcia did not see her much. She said Ms. Barrientos would leave the building through a side exit.

A man now living in Ms. Barrientos’s old apartment said she moved to a shelter four months ago.

On Facebook in March, Ms. Barrientos posted a cartoon of a large eyeball staring from a bathroom mirror at a woman wrapped in a towel.

“Kristina is feeling watched,” the caption read.

Fraud Offender Registry

Utah has conceived of an innovative way to fight fraud by creating a Fraud Offender Registry, similar to a sex offender registry. Perhaps we can call it fraud-shaming, but having that list available can be a valuable tool to keep track of convicted fraud offenders. Most organized anti-fraud programs keep track of “hot” addresses, emails, phone numbers, and offenders anyway so for the public sector to do the same should be a surprise or a problem. The Salt Lake Tribune reports:

Utahns can easily check to see if there are convicted sex offenders living in their neighborhoods by checking online at the state’s sex offender registry. But if they’re looking to invest, there’s no similar site to warn them about convicted fraudsters.

Legislators, however, approved a bill on Wednesday that would establish a state-run registry for convicted white collar criminals to combat Utah’s high level of affinity fraud, which occurs predominantly among members of the LDS faith.

The Utah Senate on Wednesday suspended its rules to give final passage to the bill on the second to last day of the 2015 general session of the Legislature. The Utah House already has given thumbs up to the measure. Gov. Gary Herbert indicated after the Senate vote that he will sign it in order to protect “the consumer and the public from fraud and predatory practices,” the governor’s spokesman, Marty Carpenter, said in a statement.

In making the bill a priority for his office, Utah Attorney General Sean Reyes said the state is “sadly known for its high level of financial vulnerability to affinity fraud,” which occurs when someone exploits a relationship of trust to defraud another person.

“Utah’s unique personal interweavings and close relationships offer a rich environment for predatory behavior and financial crimes in our state,” Reyes said in a press release last week.

The bill’s chief sponsor, Rep. Mike McKell, R-Spanish Fork, said in an email the bill would “help stem the tide of white collar crime corrupting in our community” by providing residents with readily accessible information.

Under the measure, the attorney general’s office would operate the registry as a website that contains offenders’ names, aliases, a photograph, physical description and crimes for which they were convicted. Those placed in the registry would have to be convicted of second-degree felony counts of securities fraud, theft by deception, unlawful dealing of property by a fiduciary, insurance fraud, mortgage fraud, communications fraud or money laundering.

About 100 people annually are convicted in Utah of those crimes, said Missy Larsen, the attorney general’s spokeswoman.

The information would be maintained online for 10 years or for a lifetime for a third conviction. Those convicted after Dec. 31, 2005, would be required to register with the attorney general’s office for inclusion on the registry unless they have complied with all court orders, paid all court-ordered restitution to victims and not been convicted of a further crime. There also are provisions for removing someone’s name from the registry after five years.

Brett Tolman, the former top federal prosecutor in Utah who now defends those accused of white collar crimes, said he worried that the crimes included in the registry were overly broad, particularly for communications fraud charges that can be interpreted to cover a wide range of business to business interactions.

The listing could be a stigma for a CEO convicted of a relatively minor offense, he said.

Mark Pugsley, also a white collar defense attorney, said much of the information that would be found in the registry already has been placed online by agencies such as the Utah Division of Securities and federal regulators.

“I think it’s unnecessary because all of this information is already out there, easily accessible through an Internet search,” Pugsley said in an email.

But white collar defense attorney Brent Baker, who has organized events to educate Utahns about avoiding fraud, praised the effort to establish the registry as “another tool to deter white collar fraud,” which often involves elderly victims who need special protection. He pointed to a bill passed in 2011 that enhanced penalties for affinity fraud convictions.

Sen. Curt Bramble, R-Provo, sponsored the bill in the Senate, which won easy passage on the floor.

Email tharvey@sltrib.com for more information.

Funeral Fraud

Yes, once you think you have seen the depths of fraud and predatory thievery you come across this which takes it to a whole new level of depravity.

Misty Carter, writing for the Association of Certified Fraud Examiners, reports on funeral fraud below:

Scamming the elderly or taking advantage of the mentally disabled are considered among the most repugnant of fraud schemes. But what about when fraudsters scam the deceased?
Believe it or not, many criminals take advantage of those who have died using funeral fraud schemes. These types of frauds come in many forms and mainly target and affect the families of the deceased. One of the most common funeral fraud schemes involves prepaid funeral expenses. According to the Federal Trade Commission, millions of Americans prearrange their funerals by entering into contracts and prepaying all or some of the related expenses. Some states have laws in place to regulate these contracts,. Other states, however, are more lenient, which leaves a window of opportunity for unscrupulous individuals.Consider the case of James “Doug” Cassity, a disbarred attorney and resident of St. Louis, Missouri. His company, National Prearranged Services Inc. (NPS), engineered a fraud scheme that caused fraud losses of more than $600 million. Cassity devised a scheme to defraud purchasers of prearranged funeral contracts or insurance policies obtained through NPS.How did the scam work? NPS promised customers that, for a fee, the company would cover all their funeral expenses when they died. Depending on the type of funeral arrangements requested, customer’s fees could run upwards of $10,000. After finding out what customers wanted, NPS determined an agreed-upon price and accepted payment. NPS then made arrangements with the funeral home designated by the customer. NPS supposedly placed the funds in a trust — to be used for safe investments or to purchase a life insurance policy — with a third party in the customer’s name.

What customers didn’t know was that NPS, instead of putting their funds in a trust or life insurance policy, often altered documents by changing deposit amounts and listing the company as a beneficiary. NPS then converted these policies and used the money for risky investments, to pay existing funeral claims, and to purchase personal items. According to court documents, Cassity sold approximately 100,000 prepaid funeral contracts. The scheme was discovered when several agencies reported suspicious practices by NPS to the FBI. Cassity was sentenced to nine years in prison.

Questions to Consider

In many funeral fraud cases, the schemes are discovered when someone dies and a family member tries to collect on the insurance policy or money supposedly held in a trust. Many families rely on these funds to pay for funeral services and are left in a bind when they realize they have been victimized. These families then have to come up with extra funds, usually out of their own pockets, to pay for the funeral.

So how can you protect yourself and your loved ones from becoming a victim of funeral fraud? When entering a contract to pre-pay funeral expenses, consider the following questions:

  • What am I paying for? Am I buying merchandise, such as a casket, in addition to purchasing funeral services?
  • What happens to the money I have prepaid? (Check state requirements regarding the handling of funds used for prearranged funeral services.)
  • Am I protected if the company with which I have the contract goes out of business?
  • Can I cancel the contract and get a full or partial refund if I change my mind?

If I move to a different area or state or die while away from home, can my prearranged funeral plans be changed?

Conclusion: There are many other funeral fraud schemes that individuals should also be on guard against. For example, some scammers might try to capitalize on a family member’s unfamiliarity with funeral services and add unnecessary charges to their bill. Some might even insist that a burial casket is necessary even though a body will be cremated and a less expensive cardboard casket could be used.

The following tips or suggestions can help individuals minimize the risk of becoming a victim of a funeral fraud scheme:

  • Be informed. Shop around before making a purchase. Take a friend along who might be able to offer a different perspective before you make a final decision.
  • Educate yourself about the goods and services, such as caskets or cremations, provided by funeral homes.
  • Understand the difference between fees, such as funeral home basic fees and fees for any additional services.
  • Carefully read all contracts and any other paperwork before signing.
  • Before signing, make sure that you understand the contract language and that all your requirements have been included in the contract.
  • If you are considering prepaying, be sure to include specific details about what funeral arrangements have been made in the prepaid contract.

While funeral fraud might at first seem hard to believe, the reality is that wherever there is a cheap buck to be made, fraudsters will find an opportunity. By being informed and aware, people can help protect themselves – and their friends and family – from becoming victims of this insidious type of fraud.

Medicaid Fraud: Who and How

Kate Rogers, writing for Fox Business, has an article on Medicaid Fraud. The article describes who is committing Medicaid Fraud and how it happens. The article links here but is descriptive of the fraud situation.

A single mom with five kids living in Brooklyn with no income on record and struggling to make ends meet sounds like an eligible candidate for government subsidy programs. She signs up for the SNAP (Supplemental Nutrition Assistance Program) and Medicaid for herself and her children and gets government assistance to help cover her rent.

But in reality, she’s married, her husband has an all-cash business, which allows her to rake in thousands of dollars a month via welfare programs and remain undetected by the government.

Todd Spodek says this scenario is common, and that people try to milk entitlement programs all the time.

Spodek, an attorney at New York City-based Spodek Law Firm, represents fraudsters like the client he described above, when they finally get busted for Medicaid fraud. The defense attorney says he sees the “crème-de-la-crème” of Medicaid fraudsters, and that New York City is one of the biggest hubs for both Medicaid and Medicare schemes in the nation.

“There are savvy individuals out there—I see clients get married under religious law and not under New York state law, and they wind up scamming the government time and time again,” he says.  “In New York, we are knee-deep in fraud.”

A National Concern

The federal government is projected to lose $19.6 billion in “improper payments” under the Medicaid program. Accurate fraud figures can be hard to calculate since  improper payments aren’t necessarily fraudulent–they could be due to an error either by the government or recipient. Fraud estimates for fiscal year 2014 are up from last year’s $17.4 billion, but down from 2010’s $22.5 billion estimation of improper payments.

Federal Medicaid Spending is projected to be $298 billion in 2014, and Medicare is projected to be $603 billion. The SNAP program cost $79.9 billion in 2013.

The federal government estimates it loses nearly $60 billion a year to both fraud and waste within its Medicare program. The White House requested $389 million to fund the Department of Health and Human Services’ Office of the Inspector General in an attempt to better curb waste in the 2104 budget.

Earlier this week, the Departments of Justice and Health and Human Services touted its beefed up efforts to combat health-care fraud nationwide. The team recovered $4.3 billion in taxpayer dollars in 2013, and $19.2 billion over the last five years. Both the FBI and DOJ were not available for interview at press time.

And just last week, the Washington D.C. U.S. attorney’s office announced the largest health-care fraud takedown in the history of the District. The multi-year effort led to more than 20 arrests and schemes involving millions of dollars in fraud, kickbacks and false billings in the home health-care services field throughout the nation’s capital.

Ron Machen, U.S. attorney for Washington, D.C., says there were more than 200 enforcement agents spread out across the region, and were tipped off to the scheme when certain agencies requesting 300% more than other Medicaid beneficiaries over the past several years.

“We were wondering what the reason was for such a skyrocket in growth,” Machen says. “We used wires, cover agents and beneficiaries to uncover them.”

And what they found was eye-opening, he says. The investigation busted personal care assistants misrepresenting the amount of time they spent with beneficiaries.

“The reason it was ripe for fraud is that the beneficiaries would fill out bogus time sheets and submit them to home care agencies,” he says. “They would say they were being seen by assistance for up to eight hours a day, when the personal care assistants were never seeing them.”

The beneficiaries were elderly, disabled and low-income, he says, and recruiters would offer them kickbacks of $200 a week and coach the patients on what to say if someone asked about their work.

Eligibility and Expansion under the Affordable Care Act

The Affordable Care Act expanded Medicaid eligibility requirement to those making up to 133% of the federal poverty level, or about $15,850 a year. The law leaves it up to states as to whether or not to expand their Medicaid programs—25 states and the District of Columbia have done so.  By opting in, the government pays 100% of the expansion, and funding then drops to 90% by 2020.

The Congressional Budget Office estimates the number of Americans on Medicaid will hit 8 million this year, thanks to the expansion, including those who were previously eligible for care.

Timothy Jost, professor at Washington and Lee University School of Law, says the ACA expansion streamlines eligibility for parents, children and pregnant women, because it calculates based on modified adjusted gross income (MAGI). There are no asset requirements for people in this category, meaning you can own cars, homes and still apply and qualify for Medicaid.

This “aligns eligibility requirements under new Medicaid programs with traditional requirements for Medicaid coverage for long-term care,” Jost explained in an email message. “Assets are irrelevant under MAGI categories, I believe, because the administrative costs of investigating the assets of individuals who apply for Medicaid because they have very low incomes would be unreasonable, given the few very-low income individuals with significant assets.”

He says on the flip side, critics say this is why the program enables fraudsters.

“Although the problem is probably overblown, there is a long-standing concern that middle-class individuals might divest themselves of assets to become eligible for nursing home coverage,” he says. “There may be a few people who take advantage of these programs, but the real problems with Medicare and Medicaid fraud are elsewhere with providers and insurers,” he points out, like the bust seen in D.C.

Spodek says the fact that there are no asset caps on eligibility is concerning, and one of the reasons the program is so rife with scammers.

“I have seen people live in million dollar apartments, on the books, while on Medicaid,” Spodek says. “The burden is on you to provide information [in New York] and recertify every year. The whole thing is not scrutinized. If it turns out you weren’t eligible, you just owe a tremendous amount of money.”

When asked how the ACA will factor into the big-picture of putting a cap on fraud in the Medicaid system, Machen declined to comment. But he did say national agencies are realistic about what is going on and are continuing coordinated efforts to reel it in.

“The program is big—but it’s all about controls,” he says of the national Medicaid system. “We are interested in weeding out fraud, and sure there are questions about what you can do to sure up internal controls, but we do have people who need these services and are vulnerable.”