DataVisor Global Fraud Watch Feb 2021
Public assistance fraud and identity theft are not unique to the current landscape, but the global pandemic could be to blame for an increase in fraud. Many states have been hard hit by fraudsters filing false unemployment claims or other assistance benefits. And even though there is now a vaccine, it’s still anyone’s guess as to when “normal” life might resume. This means that keeping your finger on the pulse of fraud continues to be a top priority.
Awareness plays a big role in fraud prevention. Here’s a closer look at the face of fraud in February 2021 to help you stay vigilant:
$1.2 Million in PPP Loan Fraud
The Paycheck Protection Program (PPP) was originally designed to help small business owners continue paying their employees and take care of ongoing expenses during the early days of the pandemic. Businesses could borrow up to 2.5 times their salary expenses over the course of two months, and loans were eligible for forgiveness.
However, the program was hastily assembled, and very little to no vetting processes were established. This led to many lenders giving money to businesses that did not qualify, including businesses that weren’t “businesses” at all.
One major example of this is a recent case in California, in which 40-year old Santa Clarita resident Raymond Magana pleaded guilty to fraudulently obtaining $940,416 in PPP funding. On his application, Magana’s business, The Building Circle LLC, claimed he had 40 workers and $376,167 in monthly payroll. To support his claim, Magana provided false tax documents that highlighted $4,402,000 in annual wages for 2019. Magana transferred the loan money to his shell company, then applied for another $360,415 in PPP funding for another company.
Trading SNAP Benefits for Cash
SNAP benefits can be used to purchase a variety of non-prepared foods. Benefits are added to a card and spent on qualifying items just like cash. But one rule that’s clear is that the money isn’t intended to be turned into cash.
The owner of a seafood market and restaurant recently admitted to his role in an 8-year scheme that traded SNAP benefits for cash.
A court document stated that the SNAP redemptions at his store exceeded the state of Virginia’s average for all other seafood specialty stores by more than $2.4 million. This difference captured the attention of officials, which spurred an investigation.
Social Security Fraud Can Be an Inside Job
Social security fraud doesn’t always come from false claims and beneficiaries. One recent inside job directed more than $236,000 in benefits to an employee’s own bank account. The employee used multiple fictitious identities mixed with identities of real people.
He had access to documents (e.g., passports, ID cards, marriage licenses) for claimants who lived abroad and used bits and pieces of their data to formulate his own identities. Claims for survivor’s benefits against deceased individuals were his specialty, using his home address and an address in Canada before being discovered.
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