May 11, 2010

Nigerian Scammers and White-Collar Crime

Fraud is a cottage industry in Nigeria. Stealing money or property to the Nigerian is the equivalent to counting coup. Political, social, and economic conditions have prompted Nigerian scammers to expand globally.

Nigerian criminal enterprises developed pretty rapidly over the past 30 years due mainly to the globalization of world economies and the leapfrog advances in the Internet and other communications technologies. Simplified international travel, growth in world trade, and borderless financial transactions enable fraud-minded Nigerians to reach out and touch the more prosperous world cultures. Take for instance the now infamous Nigerian Letter to which people continue to fall prey.

Nigerian gangs operate in more than 80 other countries and are among the most aggressive and expansionist international criminal groups. Nigerian criminal enterprises have been identified in several major U.S. metropolitan areas, but are most prevalent in Atlanta, Baltimore, Chicago, Dallas, Houston, Milwaukee, Newark, New York, and Washington, D.C.

White-collar crime isn’t their only cup of tea. The most profitable activity engaged in by the Nigerians is drug trafficking. The large populations of Nigerians living in India, Pakistan, and Thailand are estimated to move about 90 percent of the world’s heroin from those areas into the U.S. and Europe. The associated money laundering has helped establish Nigerian criminal enterprises on every populated continent of the world.

Nigerian groups are well known for their financial frauds, costing the U.S. an estimated $1 - $2-billion annually. Schemes are diverse and target individuals, businesses, and government programs. Their frauds include staged auto accidents, healthcare billing scams, life insurance schemes, bank, check, and credit card fraud, advance-fee schemes (the afore mentioned Nigerian Letter), and use of false identities.

The Nigerian gangs are well experienced in running drugs, illegal gambling, and prostitution rings, but they are learning that it is far safer and potentially more profitable to file fraudulent claims with the federal Medicare program and state-run Medicaid plans.

In a 2009 interview, Timothy Menke, head of investigations for the Office of Inspector General at the Department of Health and Human Services said, "They're hitting us and hitting us hard. Organized crime involvement in health care fraud is widespread."

Healthcare fraud often requires identity theft as well; sometimes those of doctors, who bill for services, and variously the identity of the patients, whose beneficiary numbers entitle them to access medical care and necessary equipment. Nigerian criminals have become expert at collecting both.

One scheme involves stealing the identity of the doctor, who may work at one clinic but doesn’t know about the other clinics that the criminal sets up using the physician’s license and identifiers. In 2008 a Federal jury found Leonard Uchenna Nwafor guilty of using a Los Angeles physician’s identification to bill Medicare for $800,000 worth of unneeded power wheelchairs.

Patient beneficiary numbers are easy to buy or steal, and the poor often go along with suggestions from “marketers” sent to impoverished neighborhoods offering cigarettes or food in exchange for the use of Medicare numbers. In other cases, patients are paid to visit fake medical clinics. Once the patient provides the required Medicare or Medicaid information, the clinic operators bill vast sums to the programs. In some instances the clinics shut down, but the billing never ceases.

As was identified even before the turn of the millennium, ambulance transportation fraud is becoming a favorite of these Nigerian scammers. In 2000 the FBI launched a national initiative on Ambulance and Medical Transportation Fraud. Over a 3-year period 37 FBI field offices investigated 101 cases pertaining to ambulance or medical transportation fraud and identified dozens of Nigerian scammers. The cases built from those investigations resulted in 55 convictions, 34 plea agreements or settlements, and total restitution ordered of $65 million.

More recently, two Nigerian immigrants, Mazen and Wesam Abdallah of Houston, were sentenced to 30 months in Federal confinement for a multi-million dollar ambulance fraud case. A Dallas area case was recently tried, with the Nigerian ambulance firm owner found guilty of 13 counts of conspiracy to commit Medicare fraud, and one count of money laundering.

The Dallas case was rooted in the 2006 “Operation Easy Rider” initiative, in which over a dozen ambulance companies were raided by a joint task force consisting of both state and federal law enforcement. 

Operations such as Easy Rider are too few and too far between. The Inspector General's office of the Department of Health and Human Services estimates it is on track to recover about $4-billion this year by breaking up health care fraud schemes perpetrated by all types of criminals, from organized rings to corrupt doctors. However, this is a drop in the bucket, as the estimated loss to fraud will exceed $80-billion.

[Edited to correct embarrassing typos]


Anonymous said...

Fine post, MB!