Duped by Love

By Graham Kates

Romance scams and other online frauds swindled Americans out of nearly $500 million in 2011.

Billion Ponzi Conviction Completes a Long Fall for Miami's Stanford

Allen Stanford, the flamboyant billionaire banker who concocted one of the country’s most spectacular frauds from an Antiguan bank and a posh Miami office, was found guilty Tuesday by a federal jury in Houston of bilking thousands of investors of more than $7 billion, reports the Miami Herald. The once powerful businessman whose extravagant lifestyle included a $10 mansion near Coral Gables and a $6 million yacht on Biscayne Bay, was convicted on nearly every charge in what prosecutors called one of the nation’s largest Ponzi schemes.

One of the wealthiest people in the U.S. before his arrest three years ago, Stanford looked down as the verdict was read, while his mother and daughters hugged each other in the courtroom. The verdict marks the final chapter of a rags-to-riches story that began with Stanford’s humble roots in Texas, and later his foray into the Caribbean where he founded a fledgling bank in Antigua that became the center of one of the largest banking empires in the hemisphere. Prosecutors charged that Stanford reaped most of his money from the sale of bogus certificates of deposit in his bank. The funds for the CDs were never properly invested but poured into a string of failed businesses, luxury homes, private jets and sports sponsorships including a $20 million cricket tournament.

$375 Million Medicare Fraud Case--Dallas Doctor--Largest in U.S. History

Federal officials filed charges in the largest health care fraud scam in the nation's history, indicting a Dallas-area physician for purportedly bilking...

Whistleblowers Bring In Most of Federal Health Care Fraud Bounty

About 36 percent of the almost $16 billion recovered by the Justice Department in health care whistle-blower fraud cases has come since 2009, reports USA...

Justice Department Cites Record $4.1 Billion Health Care Fraud Recoveries

The Justice Department says it has logged a record year in health care fraud recoveries, with investigations yielding $4.1 billion in returned money...

WA Cop Accused of Stealing $150K from Fund for 4 Slain Officers

The Seattle Times reports that a Lakewood, Wash., police officer allegedly embezzled about $150,000 intended for the families of the four officers killed in a coffeehouse shootout in 2009, spending some of the money on a Las Vegas trip and shopping spree. Skeeter Timothy Manos is charged in a federal complaint with 10 counts of felony wire fraud for allegedly stealing from the fund set up in the days after the officers were gunned down.

The complaint alleges Manos, 34, used some of the money to take his wife to Las Vegas, where he withdrew $1,000 from ATMs and spent about $1,200 on rooms at the Bellagio hotel and tickets to a Cirque du Soleil performance. He spent more than $7,000 at Home Depot and later dropped about $1,700 on snowboarding and other outdoor gear at REI, the complaint alleges. Between Feb. 12, 2010, and Feb. 20, 2011, he also withdrew about $50,000 from ATMs, according to the complaint.

WSJ Profiles Con Man Behind the Sting That Cost Google $500 Million

The Wall Street Journal tells the story of David Whitaker, a federal prisoner and convicted con artist, who during four months in 2009 was the lead actor in a government sting targeting Google Inc. that yielded one of the largest business forfeitures in U.S. history. Whitaker posed as an agent for online drug dealers in dozens of recorded phone calls and email exchanges with Google sales executives, spending $200,000 in government money for ads selling narcotics, steroids and other controlled substances.

"There was a part of me that felt bad," Mr. Whitaker wrote in his account of the undercover operation viewed by The Wall Street Journal. "I had grown to like these people." But, he said, "I took ease in knowing they…knew it was wrong." The government built its criminal case against Google using money, aliases and fake companies—tactics often used against drug cartels and other crime syndicates. Google agreed to pay a $500 million forfeiture last summer in a settlement to avoid prosecution for aiding illegal online pharmaceutical sales. Google acknowledged in the settlement that it had improperly and knowingly assisted online pharmacy advertisers allegedly based in Canada.

Look Inside "One of the Most Brazen" Federal Contract Frauds Ever

Report: Federal Financial Fraud Prosecutions Drop to 20-Year Low

Financial criminals are facing the lowest number of federal prosecutions in at least 20 years, reports the Los Angeles Times. The government has filed 1,251 new prosecutions against financial institution fraud so far this fiscal year, according to the Transactional Records Access Clearinghouse at Syracuse University. If the same pace holds, federal attorneys will file 1,365 such cases by the end of the year –- the lowest number since at least 1991.

The report, compiled from Justice Department data gleaned through the Freedom of Information Act, considers crimes involving crooked mortgage brokers, bank executives with something to hide and accounts hiding illegal activity. The expected volume of prosecutions by the end of 2011 would be 2.4% smaller than that of last year, 28.6% thinner than that of five years ago and less than half the amount from a decade ago. The number of federal bank fraud cases has slipped every year since 1999.

How Some Health Care Providers Help Poor People, Defraud U.S.

As the Obama administration cranked up efforts this week to find and eliminate billions of dollars in faulty Medicare and Medicaid payments, a review of court cases shows that Tennessee has been home to several fraud schemes , The Tennessean reports. Some cases involve clearly egregious behavior. A typical example is a person who jumps from location to location, steals doctors’ provider identification numbers and bills the federal health programs for services that are never provided. Other times, prosecutions involve seemingly well-intentioned people who make bad, and illegal, decisions.

Glenesha Bowling-Moye and Tabitha Jones were sentenced to 18 and 12 months imprisonment, respectively, on federal health-care fraud and money-laundering charges. They had pleaded guilty to conspiring to defraud Medicare and TennCare of $1.1 million. The two started a business called EBC Healthcare in 2006. The business provided much-needed services to the elderly in some of Nashville’s poorest neighborhoods, from cleaning houses to driving people to medical appointments and Walmart. The problem: They billed Medicare and TennCare for psychotherapy sessions and nurse practitioner home visits but were not providing those professional services. “The key is Medicare doesn’t pay for (cleaning and running errands), period,” said one investigator.

MA State Auditor Finds Fault With Special Ed Collaboratives

More than two decades of failed oversight have allowed the state’s special education collaboratives to misspend millions of taxpayer dollars, according to the state auditor’s office, which has found a pattern of excessive salaries, conflicts of interest, and possible pension law violations at six of the 30 publicly funded agencies, reports the Boston Globe. Auditor Suzanne M. Bump said the laws and policies for state oversight of the special education agencies are badly outdated, clouding the state’s authority over them.

The state Department of Elementary and Secondary Education has not revised its policy governing the collaboratives since 1988, while the state law allowing cities and towns to create them is more than 30 years old. The latest audits focus on two southern Massachusetts collaboratives, the READS Collaborative and the Southeastern Massachusetts Educational Collaborative, where Bump found multiple instances of financial mismanagement. Earlier this month, Bump released an audit of the Merrimack Special Education Collaborative, finding that the former executive director and other officials may have misspent more than $30 million on salaries, inflated rents alcohol, and luxuries such as country club outings.

TRAC Reports Spike in Federal Health Care Fraud Prosecutions

Federal health care fraud prosecutions in the first eight months of 2011 are on pace to rise 85% over last year due in large part to ramped-up enforcement efforts under the Obama administration, reports USA Today. The statistics, released by the non-partisan Transactional Records Access Clearinghouse, show 903 prosecutions so far this year. That's a 24% increase over the total for all of fiscal year 2010, when 731 people were prosecuted for health fraud through federal agencies across the country.

Prosecutions have gone up 71% from five years ago, according to TRAC, a research organization at Syracuse University. Justice Department officials said the increase runs parallel with what they're seeing when looking at health care fraud broadly, in part because of a couple of big busts this year, as well as several cases involving fraud in the private sector. For example, a February case brought in 111 people — the largest take-down to date for the Medicare Fraud Task Force. In that case, doctors, nurses and executives were accused of falsely billing Medicare more than $225 million.

LA County Jail Inmates Find Victims With Phone Fraud Scheme

Even while jailed, Los Angeles County inmates are increasingly victimizing unsuspecting people in a phone fraud scheme, reports the Los Angeles Times. Sheriff's investigators are warning people of a new trend in which inmates are cold-calling numbers and yelling "Emergency!" while the recorded warning plays stating that the call is from an inmate.

Once the unsuspecting person accepts the collect call, the inmate will usually say he is a deputy and that he has information about a loved one who is injured. The inmate will then tell the victim to call a sergeant or supervisor for information. They tell the person to dial *72 followed by a phone number the inmate provides, usually for a girlfriend or gang associate. According to deputies, *72 is a code that transfers calls to the number entered. After the victim unknowingly sets their phone to transfer calls, the inmates begin making calls. All charges are passed on to the victim, according to investigators. Detectives say the charges add up very quickly and can run up to several thousands of dollars before the victim finds out.

Accused Medicare Scammers Flee to Latin America, Can't Be Brought Back

As Medicare crime spreads across South Florida, accused scammers are escaping in droves to Cuba and other Latin American countries to avoid prosecution with more than 150 fugitives wanted for stealing hundreds of millions of dollars from the health care program, says the Miami Herald, citing the FBI and court records. The tally of fugitives charged with health fraud in Miami has tripled since 2008.

During the past three years, the FBI has captured only 16 fugitives, reflecting the difficulty in catching Spanish-speaking suspects who head south to hide out. Most of the fugitives were born in Cuba, immigrated to South Florida after 1990 and can easily live under the radar in Latin America with hundreds of thousands or millions in taxpayer dollars fleeced from Medicare. Even if fugitives can be located in Cuba, there’s no way to get them back because of political realities. “They go to Cuba so they can’t be caught,’’ said Rolando Betancourt, a longtime Miami bail bondsman who has tracked one Medicare fugitive to Havana. “You can find anybody in Cuba; you just can’t arrest them.’’

After Shootings, LA Considers Arming Insurance Investigators

After two unarmed Louisiana insurance fraud investigators were gunned down while looking into a case, the state insurance commissioner said his department may ask their agents to carry weapons, reports the Associated Press. Kim Sledge and Rhett Jeansonne had been on what appeared to be a routine assignment to collect records from suspended insurance agent John Melvin Lavergne at his office half a block off Ville Platte's main street. State police say Lavergne shot the investigators, holed up in his business and shot himself to death.

Investigators don't carry weapons but can request that they be accompanied by state police on such visits, state Insurance Commissioner Jim Donelon said. The department would review safety and security procedures before investigators would be armed, Donelon said. In Ville Platte, a city of about 8,000 people in the heart of Cajun country, the shootings were stunning. Lavergne grew up in the town and had been an insurance agent for almost 35 years. The police chief described him as a friendly man who never caused trouble.