A Flood of Fraud | This Week in Nonprofit Fraud

Reposted from the This Week in Nonprofit Fraud Blog – December 16, 2013

The High Cost of a Free Phone

800px-Mobile_phone_stall_-_Pristina

December 11, 2013: The Federal Communications Commission (FCC) proposed $44 million in fines against three companies that selected ineligible participants to receive free cell phones under “Lifeline,” a government program designed to provide discounted phones to low-income Americans.  According to the FCC, these companies requested that the government pay for customers who appeared on their subscriber lists multiple times. In the last three months alone, FCC has proposed $90 million in fines in total for fraud, waste, and abuse in the Lifeline Program.

See more on this case at FCC.gov

Lesson Learned

  • The cost of failing to critically evaluate beneficiaries can be extremely high to an organization. In this case, the FCC was able to levy huge fines against three companies because they “should” have known that they were requesting duplicate payments.
  • The companies involved in this case are facing fines well in excess of the profits they earned from their abusive behavior.

Raffa Forensic Practice Tips:

  • Don’t be negligent in your due diligence when administering a program on behalf of another organization! Negligence can cause just as much damage to your organization as outright fraud!
  • Make sure you’re taking advantage of the data that you collect to identify and eliminate potential fraud, waste, and abuse.

 

A Flood of Fraud

477px-BKP_Netball_Tourney

December 16, 2013: Deborah Morton, the former president of the Western Districts Netball Association (WDNA), was sentenced to a year in jail after pleading guilty to the theft of more than AU$100,000 from WDNA. WDNA had received AU$600,000 in flood-recovery grants from the city of Brisbane to repair its courts and clubhouse, which Morton diverted by forging checks and invoices, as well as using checks that had been pre-signed by the group’s Treasurer. Morton spent most of the money on casino electronic poker games.

See more on this case at Australia 9 News National

Lesson Learned

  • Treat your blank checks just as carefully as you treat your cash! Deborah Morton used over 60 small check transactions to walk away with a significant amount of money and greatly damage a nonprofit that had trusted her.
  • Also remember, trust is not an internal control. Do not design your system and procedures so that you have to rely on trust as a control!

Raffa Forensic Practice Tips:

  • Never pre-sign checks!
  • Require dual signatures, which can help deter this type of fraudster.
  • Carefully review bank statements for questionable payments!

 

DON’T BE THE NEXT VICTIM OF FRAUD!

The Raffa Forensic Accounting Services Practice offers a wide variety of fraud prevention and detection services including Fraud Risk Assessments, Background and Workplace Investigations, Fraud and Internal Investigations, Transactional Due Diligence Investigations, Anti-Fraud Consulting and Training, and Computer Forensic Analysis.

For more information on the Raffa Forensic Accounting Services Practice please visit us at www.raffa.com/ProfessionalServices/Forensic/ and the Nonprofit Fraud Prevention Institute at www.raffa.com/Fraud.

You can also contact the following Raffa professionals with any questions or if your organization needs assistance in fraud prevention:

Lawrence J. Hoffman, CPA/CFF, CVA, CFE, Senior Partner:  Lhoffman@raffa.com

Leslie C. Kirsch, CFE, Manager:  Lkirsch@raffa.com

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