6 February The Case of Tom Brady’s Stolen Jersey February 6, 2017By Jon Coss - Blog Manager General Superbowl 0 Shortly after Tom Brady led the New England Patriots to the greatest comeback in Super Bowl history, he noticed that his game jersey had been stolen from his bag. Asked if it was still missing hours later, he responded "Yeah, it's going to be on eBay at some point."This got me thinking about the market for high profile stolen items like sports memorabilia and famous artwork (yes, Pondera people think a little differently than the average sports fan). How, after all, could someone hope to profit from selling such a famous jersey—certainly not by selling it on eBay.As it turns out, the markets for stolen items like sports memorabilia and artwork are quite mature and well-defined. Stolen art obviously has a longer history and much can be learned from it. For example, pricing for stolen art is typically around 10% of the estimated value. Interestingly, this means that many of the most famous paintings are less likely to be stolen because even 10% of $100 million is a lot to pay for an item that you can’t even show to friends!While there are notable exceptions, including the 1911 theft of Da Vinci’s Mona Lisa (recovered two years later), the large majority of art thefts are of less than $10,000 items from private homes. The items are often sold after a period of time to legitimate galleries by “owners” who claim to have inherited them. Most estimates state that only about 5% of art thefts are ever truly solved. A recent seizure of famous Dutch art on the Ukrainian black market, for example, focused on recovery versus deciphering the 10 year “chain of custody” since being stolen.Back to Tom Brady’s jersey. While not as expensive as a famous painting, many experts estimate its value at around $500,000. This would translate to a $50,000 value on the black market. And because it is such a famous item, it certainly wouldn’t be wise to display it openly.While $50,000 is a great deal of money, I’m not sure many of us would take the risk of avoiding the Texas Rangers for that payday.For those who need more impetus to stay on the straight and narrow, remember that O.J. Simpson’s 33-year prison sentence stemmed from a Las Vegas robbery over sports memorabilia that he claimed was stolen from him. And while Tom Brady’s 5th Super Bowl win is sure to ease the pain of his stolen jersey, I’ll still be rooting for the Texas Rangers and Houston P.D. in their efforts to recover this important piece of sports history. Related Posts Two Interesting Cases of SNAP Fraud It has been an interesting few weeks for the Supplemental Nutrition Assistance Program (SNAP), formerly known as the Food Stamp program, with two high profile busts. Both cases illustrate common schemes used to defraud the SNAP program, which distributed over $70 billion in food-purchasing assistance last year to 44 million Americans.In Georgia, two convenience store owners used stolen identities to apply for SNAP benefits which were then loaded onto EBT cards (similar to credit cards) and mailed to addresses they controlled. Once received, they swiped the cards at their own convenience stores and pocketed over $800,000 before being caught. The U.S. Attorney assigned to the case said, “They used the SNAP system as an ATM for their personal gain, diverting critical benefits that help those who need assistance in our communities.”Then, in Delaware, seven case workers at the Department of Health and Social Services were indicted for creating 100 fake accounts and cashing $959,000 in benefits. After creating the accounts, the case workers had the EBT cards mailed to state service centers where they simply intercepted them and used the cards themselves. Their scheme was detected when a supervisor noticed incomplete application data for one of the cards.The Georgia case illustrates just how easy it can be (at least for a time) to use stolen identities to defraud government programs. Even if the suspects hadn't owned the convenience stores, it would not have been difficult for them to find one that would pay them a discounted price in cash for their cards.The Delaware case is one we commonly see across states and programs where unscrupulous employees use their knowledge of the system to defraud their own government agency. Large amounts of money, combined with loose supervision, often prove too tempting for those with questionable morals.A quick check of the government’s fraud reporting website, paymentaccuracy.gov, reveals that improper payment rates for SNAP are still not posted because of reporting problems. I look forward to updated numbers when they are available because even a small number like the 3.2% reported rate for 2014 translates to over $2.2 billion per year in improper payments. Ugly Case of Health Care Fraud A few weeks ago, I published a blog post titled “Money Obtained Fraudulently is Rarely Used for Good Purposes”. In it, I made the argument that government fraud is a serious, and at times very ugly problem. Now I no longer have to make that argument because the United States Justice Department is making the argument for me.Last week, the Justice Department announced the largest health care fraud case it’s ever prosecuted; one that defrauded over $1 billion over the past 14 years. The alleged perpetrators of the fraud are said to have leased private jets and chauffeured limousines. One even bought a $600,000 watch! Remember, this is your tax money we’re talking about. The system ran on a complex network of bribes and kickbacks.And if that’s not enough, here is one of the schemes they allegedly ran. They “treated” seemingly healthy, elderly people with medications they did not need in order to create addictions which would lead to further treatments. Pure evil. Unfortunately, fraudsters are most active where large amounts of money meet vulnerable populations. This is yet another example of that and more reason for us to do what we do. Identity Theft: Steal Once, Use Often A recent arrest in New York City illustrates a common fraud method that Pondera has been talking about for years: falsifying an identity (of an individual or business) and using it across multiple states, or in this particular case, across multiple subsidy programs within a state.In February of this year, the New York State Attorney announced the arrest of several individuals allegedly involved with a fraudulent medical supply company. The company’s owner operated under a false social security number and billed the State Medicaid system for an expensive nutritional formula required by patients with feeding tubes. In actuality, when they delivered the service at all, they dispensed lower-priced Pediasure to dramatically increase their profits—apparently ignoring the health consequences to the patient.But, as is often the case with bad actors, they didn’t stop there. In addition to their fraudulently obtained Medicaid profits, the fraudsters also used their fake socials and claimed income of less than $800 per month in order to qualify for Welfare payments. This despite the fact their medical “business” incomes were over $180,000 per year. It would not surprise me to learn that these same people were operating in other subsidy programs or in neighboring states.This is a disturbing, but somewhat logical, pattern that we see again and again. When someone goes to the trouble of creating a fake identity or business, they use it to generate as much income as possible. They “fly below the radar” of each individual program (or state) to avoid detection, but the fraud can be very lucrative in aggregate.The obvious solution to this is increased cooperation and data sharing across programs within a state and across states. The federal government has made significant efforts to support data sharing including the List of Excluded Individuals and Entities (LEIE), the Death Master File, and the Prisoner Update Processing System (PUPS) which can help identify claims that are fraudulently made by ineligible, deceased, or incarcerated identities.Our hope is that these efforts expand, including at the state level, where multiple agencies cooperate to identify cross-program fraud schemes. It is not enough to detect and then stop individual incidents of fraud. Many of these incidents are too small, when viewed as discrete occurrences, to warrant prosecution. Knowing this, enterprising fraudsters “sprinkle” their claims across multiple jurisdictions to avoid attention.Unfortunately, as was the case in New York, even these smaller, distributed fraud efforts can have an impact on patient health. The good news is that New York detected and put an end to this incident. But we all know there are thousands of similar cases each year. Student Loan Fraud Anyone who has recently attended college or has a family member in college likely has some familiarity with student loans. In fact, 40 million Americans currently have student loans totaling an astounding $1.2 trillion dollars. Many of those who have applied for loans have been victimized by methods such as “advanced fee scams” that promise the best rate for an upfront service fee, or the ever-present loan elimination scams.With easy access to stolen identities, fraudsters are now targeting the more lucrative loans themselves. Using stolen IDs, they enroll in classes which they, of course, never attend. Loans are made by the government, payments are not, and the unsuspecting “owner” of the loan goes into default when the fraudsters don’t make their payments.In Grand Rapids, Michigan, a man was indicted last month for this exact scheme. He faces up to 20 years in prison for allegedly using stolen IDs to steal $150,000 in loans and grant aid. A quick check of the government’s paymentaccuracy.org website shows that he is not alone. Between the William D. Ford Federal Direct Loan Program and the Federal Pell Grant Program, $6.1 billion was improperly paid in 2016 alone. While many of the improper payments are made to people who simply do not qualify based on income, an increasing number of loans are being made to outright fraudsters. Some estimates place the number of known fraud ring participants as high as 85,000 people. This victimizes the taxpayer, of course, but even more directly the person whose identity is stolen. It can take months or even years to clean up your credit. That’s one lesson I hope I never need to learn. Hurricane Harvey Brings Out the Best and the Worst in People As the residents of Houston and surrounding areas continue to struggle with the devastation caused by Hurricane Harvey, history shows us that problems will continue long after the homes and businesses have been repaired. Every large natural disaster in this country follows the same pattern: destruction brought on by the disaster, followed by looting and price gouging, followed by huge amounts of fraud committed in the chase for assistance money.In Texas, all three seem to be occurring at once. We’ve all seen the heartbreaking images and videos of families who have lost everything, unfortunately including those who lost their lives. We’ve also seen the inspiring stories of ordinary people that risk their lives to help a neighbor, a stranger, or a lost family pet.Now, of course, the looting stories are beginning to circulate. In this case, it appears that law enforcement is doing all that it can to protect life and property, including announcing mandatory jail time for all thieves and burglars. However, the scammers are wasting no time setting up Facebook pages and sending out tweets with links to “relief organizations” that are actually designed to steal money from those who want to help.I have no doubt that this fraud activity will only increase. Consider these examples following previous disasters:- Dozens of people were convicted of using fraudulent psychiatric claims following 9/11 to steal up to $50,000 per year in Social Security disability payments.- A New Jersey man was one of hundreds to receive relief funding (in his case $171,099) after falsely claiming his primary residence was a home damaged by Hurricane Sandy.- An Alabama woman filed 28 claims for disaster assistance in 5 states following Hurricane Katrina.Unfortunately, fraud thrives at the intersection of vulnerable populations and large amounts of money. And Hurricane Harvey creates this intersection by displacing so many families, by invoking a government response, and by tapping into the giving spirit of caring Americans.Even more unfortunate is the fact that most of the fraud will go undetected and unprosecuted. Consider that the vast majority of the 22,000 cases of potential fraud passed to the government's Katrina task force were never prosecuted. And it is likely that FEMA collected less than 5% of the estimated billion dollars of fraud following the Hurricane. Only by increased enforcement and stricter sentencing will we be able to break this heinous pattern. And, to me at least, this is a pattern worth breaking. Disturbing Reports of Nursing Home Abuse Last month CNN published a horrifying report on sexual abuse in America’s nursing homes and assisted living facilities. The report provided details on dozens of assaults, rapes, and other incidents that, quite frankly, were extremely difficult to read. In my opinion, however, this level of detail is probably necessary to shock people into taking action against what CNN rightly labelled “an unchecked epidemic”.The numbers themselves are devastating. Approximately one million senior citizens are currently residing in 15,000 government-regulated long term care facilities. Since 2000, it appears that over 16,000 cases of sexual abuse have been reported, but the number is probably higher because of complex reporting systems and processes. And it’s impossible to determine the number of unreported cases.Between 2013 – 2016, CNN found that 1,000 government-regulated facilities had been cited for mishandling or failing to prevent sexual assaults. 100 of the facilities had been cited numerous times. And despite this, only 226 facilities were fined just $9 million. Only 16 of the facilities were cut off from Medicaid and Medicare!What is equally disturbing to the actual cases of abuse is the blatant disregard of safeguards and even the intentional impeding of investigations. Consider a case here in California where the employer allowed a nurse to continue working for weeks after reports of him kissing and fondling a female resident. This crime, by the way, resulted in only a $27,000 fine.At Pondera, we often say that fraud and abuse is most prevalent at the intersection of large amounts of money and vulnerable populations. This makes nursing homes “ground zero” for abuse because it is here that the escalating costs of long term care combine with dementia and other health issues that can make senior citizens problematic witnesses.Among several recommendations made by CNN was a call for improved reporting systems. We agree that this is an important piece of the solution. It will provide greater transparency and help regulators identify trends and clusters of abuse. But clearly, stricter oversite and enforcement are needed. So too is the type of no-nonsense reporting that CNN did for this report. Comment (0) Comments are closed.