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Critique

Petronila Peralta

Weakness

  • Consideration of managements responsibility.
  • What controls was management using to detect/deter this fraud.

Critique

Cherisse Watson-Jackson

  • HUD Fraud
  • Bypassed controls with paper forms
  • Requested Supplemental PMI to unqualified participants
  • Coordinated with participants to kickback a portion of the payments

Strengths

  • Fraud and investigation thoroughly documented.
  • Evidence collected is relevant and persuasive.
  • Methods used appear sound and reliable.

Critique

  • SNAP Fraud
  • Gained control of EBT cards
  • Issued expedited SNAP benefit payments to EBT cards she controlled
  • Converted benefits to cash

  • HUD Fraud
  • Registered fictitious landlords and tenants
  • Approved rental assistance payments for these landlords
  • Recruited teller to cash checks

Weakness

  • Limitation on scope does not appear proper
  • Investigation was limited to cases with "unusually high SNAP payments"

Fraud Diamond

  • Capacity- 6 traits
  • Positioning: Watson-Jackson was in a management position which allowed her access

  • Intelligence/creativity: had ability to bypass internal controls to make fake electronic benefit cards

  • Ego: had confidence which aided to being undetected for years

  • Coercion: was able to convince people to act as fake landlords to steal housing vouchers and involve others in the fraud

  • Deceit: was able to conceal lies and remain undetected for years

  • Stress: able to handle pressure well

Fraud Diamond

  • Opportunity
  • Becomes easier for one to commit fraud when the individual has access to information and assets

  • Watson-Jackson had authority and control over the benefit program
  • Used paper forms to bypass the computerized record-keeping
  • Had supervisors approve benefit payments to unqualified participants

Investigation - Watson-Jackson

Investigation - Peralta

  • SNAP participant complaint lead to investigation

  • DOI reviewed cases with unusually high SNAP payments are reviewed

  • Investigation was expanded to other programs administered by Ms. Watson-Jackson

  • Fictitious landlords were identified by checking for duplicate mailing addresses

  • Following the deposit trail of sham payments
  • Peralta's attempt to submit fraudulent rental assistance payments lead to investigation

  • DOI reviewed rental assistance payments requested through paper forms

  • Computer evidence was collected and examined to link Peralta to the fraud

Conclusion

Discovering the Fraud

Control Changes

  • Train Supervisors at the HRA

  • Fraud identification program for warehouse-type retail stores

  • Automate processes susceptible to abuse

  • Deploy data analytics software
  • Cherisse Watson-Jackson
  • 11 Co-conspirators
  • $1.5M
  • 2012-2014
  • SNAP fraud, HUD fraud

  • Petronila Peralta
  • $600,000
  • 2008-2011
  • HUD fraud
  • Criminal cases pending

  • Paper forms already eliminated

  • Managers who improperly approved benefit payments were reprimanded

Fraud Diamond

  • Motivation
  • The pressure or need felt by the individual to commit the fraud

  • Fraud driven by greed, self-interest, and personal gain

  • Ms. Watson-Jackson
  • Average supervisor salary $50,000-$65,000

  • Petronila Peralta
  • Average employee salary $40k-$50k

  • New York cost of living
  • Averages of $38,000-$50,000

  • They wanted more money than what they were making

  • Rationalization
  • Act of formulating excuses to justify reasons for committing fraud
  • Hardest aspect to notice because it occurs in the individuals' head and deals with their thought process

  • Presence in the case
  • Giving money in exchange for the stamps would not harm the citizens
  • Money could buy them the same things that the stamps could
  • Convince themselves they aren't being rewarded in a fair manner

  • Prevention
  • Management setting ethical environment
  • Properly stating/communicating company’s ethics
  • Performing the dilemma game as a training exercise to give employees skills to handle situations

Employee Fraud at the NYC HRA

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