Fraudsters get stimulus too
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The government's plan to spend $750 billion on economic stimulus is well publicized, and has been widely discussed. What is less discussed (in the traditional media, anyway), is that experts are now warning that as much as $50 billion, yes that's right $50 billion, could be lost to fraud. Robert Mueller, the director of the FBI recently said, "These funds are inherently vulnerable to bribery, fraud, conflicts of interest and collusion. There is an old adage, that where there is money to be made, fraud is not far behind, like bees to honey.
Tell me something I don't know. Fraudsters are indeed committing fraud at unprecedented levels, and the stimulus package is just another opportunity in an already target rich environment. David Williams, who runs the Deloitte Financial Advisory Services, believes that the fraud concern is warranted due to the fact that almost all movement of money is now done electronically. For this reason, Williams is recommending clients improve the monitoring of their transaction systems. This concern is real. Here's a link to a recent example of fraudsters exploiting the ACH network used to pay state contractors.
High profile public cases such as Madoff, Satyam and the whole mortgage mess have already turned the dial on the attention being paid to fraud. The FBI currently has 65 taskforces working on mortgage fraud with 965 cases opened in the first four months of 2009 compared to 136 in all of 2004. In addition, the DOJ and other industry watchdogs are on high alert for fraud. U.S. companies should take a cue from the low tolerance policy toward fraud right now and take the initiative to improve their own systems before their hand is forced by government/regulatory pressure.