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Government Scams

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  1. Government Scams Ross McDonald AGA/ACFE Fraud and Technology Conference October 11, 2006

  2. Types of Government Scams • MONEY, Money, money… • Benefits/Services • Reduce or Eliminate Tax Liabilities • Hide Assets • Many, many others…

  3. What’s Not Covered • Government Conspiracies • Yes, we did walk on the moon… • Government Coverups • Nothing strange happened in Area 51

  4. What We Will Talk About • Fraudulent Transactions Using Government Banking Information • Falsifying Information to obtain Benefits and/or Services • IRS’s “Dirty Dozen” for 2006 • Overpayment and Excess Funds Scams

  5. Fraudulent Banking Transactions • Using Bank Routing and Account Numbers from issued checks • Check-by-Phone • Electronic Funds Transfers

  6. Bank Routing and Account Numbers • Checks Written & Sent • Some are Intercepted/Stolen • Most are Cashed/Deposited • MICR information contained on checks • Cheap Software and Print Stock • Info is sometimes available on the ‘Net

  7. Check with Changed Amount

  8. Fraudulent Checks with CoV Routing and Account Numbers

  9. More Checks

  10. Check by Phone

  11. EFTs – the New Frontier Account – to – Account Transfers Quick Transfers of Funds 3rd Party Groups – Paypal, Bidpay, Billpay, etc.

  12. Benefits and Services • Usually Need-Based • Determinants can be manipulated • Household Income • Household Size • They’re getting some, I want some!

  13. IRS’s 2006 Dirty Dozen Zero Wages - Substitute W-2 or Corrected 1099 Form 843 Tax Abatement - To cover previously unfiled returns Phishing

  14. Dirty Dozen, con’t. Trust Misuse Frivolous Arguments • the Sixteenth Amendment concerning congressional power to lay and collect income taxes was never ratified; • wages are not income; • filing a return and paying taxes are merely voluntary; and • being required to file Form 1040 violates the Fifth Amendment right against self-incrimination or the Fourth Amendment right to privacy

  15. Dirty Dozen, con’t. Return Preparer Fraud Abuse of Charitable Organizations and Deductions Offshore Transactions

  16. Dirty Dozen, con’t. Employment Tax Evasion “No Gain” Deduction - Filers attempt to eliminate their entire adjusted gross income (AGI) by deducting it on Schedule A. The filer lists his or her AGI under the Schedule A section labeled “Other Miscellaneous Deductions” and attaches a statement to the return that refers to court documents and includes the words “No Gain Realized.”

  17. Overpayment/Excess Funds Scams Individual sends payment over what is due - Could be that entire account is fraudulent Requests refund Fake/False Instrument Used in 1st Transaction

  18. Other Scams • Excess Inventory • Send more than what’s ordered • Phishing • Usually email-related, but could use snail-mail • Vishing • Voicemail or phone-related Phishing

  19. Resources Available In Investigations • People/Address Look-ups • Free and Fee-based Services • Social Security Death Index • US Attorney’s Criminal Resource Manual • Fraud Against the Government • http://www.usdoj.gov/usao/eousa/foia_reading_room/usam/title9/42mcrm.htm

  20. Questions? • How do I do it? • How can I get some of that money? • Can I get caught?