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Government ScamsGovernment Scams
Ross McDonaldRoss McDonaldAGA/ACFE Fraud and Technology AGA/ACFE Fraud and Technology
ConferenceConferenceOctober 11, 2006October 11, 2006
Types of Government ScamsTypes of Government Scams
• MONEY, Money, money…
• Benefits/Services
• Reduce or Eliminate Tax Liabilities
• Hide Assets
• Many, many others…
What’s Not CoveredWhat’s Not Covered
• Government Conspiracies– Yes, we did walk on the moon…
• Government Coverups– Nothing strange happened in Area 51
What We Will Talk AboutWhat 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
Fraudulent Banking TransactionsFraudulent Banking Transactions
• Using Bank Routing and Account Numbers from issued checks
• Check-by-Phone
• Electronic Funds Transfers
Bank Routing and Account Bank Routing and Account NumbersNumbers
• 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
Fraudulent Checks with CoV Fraudulent Checks with CoV Routing and Account NumbersRouting and Account Numbers
EFTs – the New FrontierEFTs – the New Frontier
Account – to – Account Transfers
Quick Transfers of Funds
3rd Party Groups – Paypal, Bidpay, Billpay, etc.
Benefits and ServicesBenefits and Services
• Usually Need-Based
• Determinants can be manipulated– Household Income– Household Size
• They’re getting some, I want some!
IRS’s 2006 Dirty DozenIRS’s 2006 Dirty Dozen
Zero Wages
- Substitute W-2 or Corrected 1099
Form 843 Tax Abatement
- To cover previously unfiled returns
Phishing
Dirty Dozen, con’t.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
Dirty Dozen, con’t.Dirty Dozen, con’t.
Return Preparer Fraud
Abuse of Charitable Organizations and Deductions
Offshore Transactions
Dirty Dozen, con’t.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.”
Overpayment/Excess Funds Overpayment/Excess Funds ScamsScams
Individual sends payment over what is due
- Could be that entire account is fraudulent
Requests refund
Fake/False Instrument Used in 1st Transaction
Other ScamsOther Scams
• Excess Inventory– Send more than what’s ordered
• Phishing– Usually email-related, but could use snail-mail
• Vishing– Voicemail or phone-related Phishing
Resources Available In Resources Available In InvestigationsInvestigations
• 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