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Disasters, whether a naturally occurring storm or a large-scale, man-made oil spill, create human suffering and economic and property damage. Government agencies, insurance carriers and humanitarian aid societies will respond with all the resources, energy and finances they can muster to relieve those afflicted. Under such circumstances, a speedy and compassionate response to each plea for assistance is what the injured and the nation desires.
But disasters unfortunately generate opportunities for fraud as surely as they cause destruction. Those opportunities primarily arise in two guises: claim fraud and charities fraud. Claim fraud runs the gamut from a genuine loss that is grossly exaggerated to an outright fictitious claim. False claims range from individual acts to sophisticated schemes involving scores, even hundreds, of fraudulent filings. Guidepost Solutions investigated nearly 18,000 such claims seeking oil spill compensation from the Gulf Coast Claims Facility. Identity theft, fictitious personal and business names and falsified documents were among the most common varieties of claim fraud. Pattern analysis of key elements in claims disclosed commonalities that formed the basis of many investigations. Simple desktop research of business filings and other public records, including the occasional obituary, identified other claims that merited thorough field investigation. The U.S. Department of Justice received many of our reports and successfully prosecuted many fraudsters based on our work, which a department official described as the finest body of investigative work he had ever seen.
This work was facilitated by the fact that there was a single non-governmental payer for all of the Gulf oil spill claims. Indeed, this highly successful model for fraud detection and investigation can apply to any mass claimant, single payer incident. Natural disasters, however, more commonly result in contractual settlements from numerous insurance companies, thus dissipating the total population of claims among competitors who must process claims separately according to their own proprietary procedures. A single investigative body, however, provided with claim information, not settlement details or procedures, can perform a far more complete pattern analysis and fraud detection than any one insurer, revealing fraud schemes that might otherwise go undetected.
Fraudulent charities often pop up on the Internet shortly after a disaster strikes. Concern for the afflicted leads many well-meaning people to search for organizations that are rendering aid to those injured by the disaster. Scam artists can set up websites very quickly, securing domain names and composing websites that appear to be genuine charities but are really just vehicles for stealing credit card payments and personal information. The public should always be aware of this risk and be sure donations are only being made to reputable organizations.
Kenneth Citarella is managing director for the Investigations and Cyber Forensics practice at Guidepost Solutions LLC. He has more than 30 years of experience investigating and prosecuting white collar crime and computer crime. Kenneth can be reached at firstname.lastname@example.org.