Bringing Big Data to the Fight Against Benefits Fraud, NY Times, NATASHA SINGER, FEB. 20, 2015
A few years ago, the New York City Human Resources Administration decided to try a new way to root out fraud among people receiving government benefits. Data detectives began running benefit recipients through a computerized pattern-recognition system.
They discovered that the behavior of a small percentage of people stood out. The anomalies in themselves didn’t constitute fraud, but they pointed the agency’s data scientists in potentially fruitful directions.
One of those outliers, for instance, was Parvawattie Raghunandan, a Bronx resident, whose family had received more than $50,000 in health benefits over a decade. Her case was unusual because most families of similar size and income typically received multiple benefits — like health coverage, food stamps and cash assistance — but Ms. Raghunandan had applied only for Medicaid for herself and her three children, agency officials said.
So the data scientists followed up by searching state records on business ownership and car registration for more information about her family’s situation. They also tapped into a national database on property ownership from LexisNexis Risk Solutions, an information and analytics division of Reed Elsevier. Investigators subsequently concluded that the family had underreported its assets, among them: an electrical contracting business, owned by Ms. Raghunandan’s husband, where she had claimed to work for a low wage; three residential properties in New York and one out of state; and joint bank accounts with more than $100,000, according to agency officials.
The case culminated this month in criminal charges — grand larceny and making false statements to a public office — being brought against Ms. Raghunandan by the Bronx district attorney. She has pleaded not guilty.
Agency officials say that this kind of multisource data analysis has helped them uncover more benefit abuse with less effort. Last year, agency staff members completed nearly 30,000 investigations and identified about $46.5 million in fraud compared with nearly 48,000 investigations and about $29 million in fraud in 2009, before the agency began systematic data analysis of recipients.
“The data-mining process is extremely important,” Steven Banks, the agency’s commissioner, told me recently. “It allows us to zero in on likely fraud so we don’t divert resources to finding what otherwise might be a needle in a haystack.”
But Todd A. Spodek, a lawyer representing Ms. Raghunandan, who is originally from Guyana, said, “I think there is a fundamental flaw with relying on data analytics to determine criminal culpability. New immigrants are often seduced by enrollment agents to sign up for benefits without understanding fully the process.”
Business intelligence companies like IBM, SAS and LexisNexis have long provided predictive computer modeling techniques to financial services companies seeking to inhibit fraud. But now some state and local government agencies are turning to these services. Some agencies use the software to integrate and analyze their own files on benefit applicants; others are augmenting their records with commercial data — such as lists of luxury car purchases. They are all arming themselves with data-mining software in an effort to keep up with the increasingly complicated nature of benefits fraud.
Last month, for instance, state officials in North Carolina announced the discovery of a new kind of unemployment scheme there. With the help of SAS data integration and analytics software, the state’s Division of Employment Security identified more than 100 fictitious employers that had reported wages and paid taxes to the state for imaginary employees — and then filed 672 fraudulent unemployment claims.
“Fraud has been around for many years, but the nature of the threats that governments are facing is changing,” says Shaun Barry, the principal solutions architect of SAS’s security intelligence practice. “Fraudsters are getting more organized and sophisticated, using advanced analytical techniques and taking advantage of the lack of communication between government agencies.”
Mr. Barry says the company’s government business had been experiencing “explosive growth” — with 22 agencies in 14 states now using SAS software to mitigate fraud, waste and abuse.
Some agencies are turning to commercial data-mining services because they are frustrated by the lack of integration between state and local government records across the country.
States, for instance, typically maintain their own records on births, marriages and deaths among their residents. But it can be difficult for a local fraud investigator to determine whether a person has falsely applied for benefits under the name of a dead person in another state. So some agencies use services like LexisNexis, which integrates public data nationwide, to examine applications.
“Because of our identity information, we know more than the government entities,” says Monty Faidley, director of the government division of LexisNexis Risk Solutions. “We know where virtually every individual over 18 is.”
Other state agencies use software from IBM to help their investigators identify patterns that could indicate benefit abuse. Agencies that pay for child care services, for instance, may use analytics engines to identify implausibilities — like a mother who claims to have enrolled her children in different day care centers, even though the centers are too far apart from one another and her workplace for her to drive there round trip on a daily basis. The company also offers a program that can check for close relationships between government employees and the people to whom their agencies award contracts.
“Anytime you can correlate a person, location and time, you can identify schemes,” says Deepak Mohapatra, a senior consultant in government at IBM.
As agencies embrace commercial data-mining practices, however, they may also end up using disparate details about people in ways that citizens might not expect or trust. Civil liberties advocates say there is a real risk that erroneous information or discriminatory algorithms could unfairly keep people from getting needed benefits.
“Nobody supports benefit fraud. But lots of questions are raised when governments wade into the Wild West world of commercial data,” says Jay Stanley, senior policy analyst for the American Civil Liberties Union’s project on speech, privacy and technology. “Are the steps being taken to fight that fraud fair, accurate, and are they going to have side effects?”
At New York’s Human Resources Administration, data scientists say they take measures to ensure that computer correlations do not inadvertently lead to false accusations.
“LexisNexis will tell us if a client has registered a Mercedes or an Escalade, or if they have a condo in Dade County or Miami Beach,” says Morgan Neuwirth, an agency data scientist. But because data obtained from private vendors may be wrong or out-of-date, investigators check those details against primary sources like property deeds or state car registries. “We are careful,” Mr. Neuwirth says, “about verifying and validating.”
Three Pharmacies busted in Medicaid Scam, New York Post, November 25, 2014
Three Brooklyn pharmacies — operated by a man convicted of scamming Medicaid in 2008 — were busted for bilking the health care system out of $5 million by billing for prescriptions that were never dispensed, authorities said Monday.
The most egregious was Perfect Gift Pharmacy in Brownsville, which showed a more than $3.5 million shortfall of drugs that were allegedly never sold to patients but billed to Medicaid anyway, according to an audit by state Attorney General Schneiderman.
Joseph Cepeda, one of the seven scammers arrested, is accused of funneling patients from a local doctor’s office to Perfect Gift Pharmacy, where clerk Chaudury M. Yaqoob would pay cash for the prescriptions. The pharmacy would then bill Medicaid even though prescriptions were never filled.
The scheme also took place at Princess Pharmacies in Bed-Stuy, which allegedly swindled $955,000, and Bright RX in Crown Heights, which pocketed $861,000, audits showed.
The three drugstores were owned and operated by the family of Munir A. Khan, who was deported to Pakistan following his conviction on adulteration of prescription drugs and filing false tax returns charges, the investigation found. To hide his involvement, Khan’s daughter Beenish Daha was recorded in state documents as running Perfect Gift and Princess pharmacies, while her brother, Muhammed Z. Khan operated Bright Rx.
The investigation also revealed Medicaid paid out nearly $1.5 million to Perfect Gift and Bright RX despite using supervising pharmacists Louis A. Pisani and Kenneth Brown – who are barred from participating in the Medicaid program.
“Those who defraud Medicaid to line their own pockets are scamming taxpayers and depriving others of important health care services, and today’s indictment sends a clear message that there will be consequences,” said AG Eric Schneiderman.
Munir Khan, Muhammed Khan, Daha, Pisani, Brown, Yaqoob and Cepeda are facing various felony charges of grand larceny and offering a false instrument for filing.
Family Members involved in large scale Medicaid, Food Stamp and Mortgage Fraud, CBS news, November 13, 2014
Twelve members of a single family in White Plains, New York were charged Thursday with lying to lenders to obtain more than $20 million in mortgage loans over the past decade. Several of the defendants also were charged with fraudulently receiving hundreds of thousands in food stamps, Medicaid and home-heating help.
An indictment unsealed in federal court in White Plains charged Irving Rubin and his relatives with conspiring to defraud and conspiring to make false statements. It alleged that family members — from Brooklyn and Kiryas Joel, in Orange County — used the proceeds to pay their credit card debts and their own home mortgages and to fund other real estate projects.
The defendants include Rubin, his wife, two sons, three brothers and five in-laws. A lawyer and an appraiser also were charged.
The indictment said family members lied to lenders about their assets, income, employment and primary residence to obtain mortgages on at least 18 properties they claimed to own, most of them in Brooklyn.
The lies gave “the false appearance of creditworthiness, when in fact the assets and/or bank accounts were nonexistent” or were not fully owned by the applicant, the indictment said.
It said they “engaged in extensive efforts to perpetuate and conceal” the scheme. For example, some of the defendants allegedly made sham transfers among themselves, “thereby confounding attempts by lenders to recover on defaulted loans,” the indictment said.
Several defendants also were charged with fraudulently receiving hundreds of thousands in food stamps, Medicaid and home-heating help.
U.S. Attorney Preet Bharara said the accused were either princes or paupers, depending on what best suited their needs.
“Many of the defendants claimed poverty to defraud federal, state and local government, including Medicaid, the food stamp program,” Bharara told reporters, including WCBS 880′s Irene Cornell and 1010 WINS’ Al Jones.
“They paid little or no income taxes, all to divert money to their own pockets.”
At the same time, many defendants were allegedly claiming considerable wealth in order to qualify for high-dollar mortgages. They defrauded banks by not paying them back, Bharara said.
“Regardless of whether they were posing as rich men or poor men, they were always con men,” Bharara said.
There was no immediate information on defense attorneys or hometowns.
A family friend, however, said the family is pillars of the Orthodox community.
“Very generous people, very respected people,” the man told Jones.
Prescription Drug Fraud case: New York Post, By Antonio Antenucci and Rebecca Rosenberg, October 29, 2014
A Brooklyn doctor was busted Wednesday for selling over 200 oxycodone prescriptions worth about $700,000 on the black market, authorities said.
Dr. Schiller Desgrottes, 65, wrote the scripts in at least 19 different names and sold them to a co conspirator for about $200 each, court papers state.
He’s estimated to have made about $45,000 in cash over four years for writing 227 illegal scripts for the powerful painkiller also known as Oxycontin.
The pills are believed to have been distributed in New York City and the surrounding region, according to the Office of the Special Narcotics Prosecutor, who’s handling the case.
The majority of the 19 names used on the prescriptions belonged to runners who had agreed to fill the scripts at pharmacies in exchange for a fee. Three of the names were fictitious, court papers show.
Six weeks after one of the runners died, Desgrottes still wrote and sold a script in that person’s name, authorities said.
Desgrottes of Dix Hill Long Island pleaded not guilty Wednesday to 228 counts of criminal sale of a controlled substance and conspiracy.
Justice Melissa Jackson set bail at $500,000.Defense attorney Frank Rothman said his client, who has no criminal history, denies the allegations. ”He’s not in great spirits, being handcuffed , being in a 10×10 cell for the first time,” the lawyer said. “To be there as a 65-year old man is not what you expect out of life.”
USDA Awards Grants to Help States Cut Down on SNAP Benefit Trafficking
WASHINGTON, September 30, 2014 – Agriculture Undersecretary Kevin Concannon today announced the release of just over $5 million in
grant funds to identify, track, and prevent misuse of Supplemental Nutrition Assistance Program (SNAP) benefits by program recipients.
These grants will particularly help state agencies reduce SNAP trafficking, primarily the exchange of benefits for cash or other goods or
“USDA is committed to ensuring that SNAP benefits are used as intended, helping families put food on the table,” said Concannon. “SNAP
fraud is rare, but no level of abuse is acceptable. USDA continues to enhance our efforts to combat retailer fraud, and partner with states to
improve recipient-focused investigations.”
The SNAP Recipient Trafficking Prevention Grant Program was designed to improve outcomes in the prevention, detection, and prosecution
of recipient trafficking. Recipients found guilty of trafficking are subject to severe penalties, including permanent disqualification from the
program and criminal prosecution. USDA intends to review the results of these projects to determine the most effective strategies and then
share those best practices with state agencies, nationwide.