Another former IRS employee pleads guilty to fraud

For the second time in the recent past, a former IRS employee (this time a deputy director) is guilty of committing fraud. Specifically, he helped a dishonest tax preparation service convince tax payers to claim illegal deductions, by claiming they were legal.

From the DOJ press release:

A former Internal Revenue Service (IRS) district director, pleaded guilty today to conspiring to defraud the United States through his involvement in a tax fraud scheme promoted by the Topeka, Kansas-based “Renaissance, The Tax People, Inc.,” the Justice Department and the Internal Revenue Service announced. During a hearing before U.S. District Judge Carlos Murguia in Kansas City, Kan., Jesse Ayala Cota admitted defrauding the U.S. Treasury of more than $1.3 million and to earning more than $300,000 from his participation in the scheme.

Cota, 65, of Vista, Calif., admitted in his plea agreement that from 1997 though April 2002, the conspirators, through Renaissance, operated a scheme to defraud the government and individuals by marketing a program designed to sell illegal tax deductions through false and misleading representations. His co-conspirators, Todd Eugene Strand and Daniel Joel Gleason, previously pleaded guilty to the same fraudulent scheme. Additionally, Cota admitted that during his participation in the conspiracy, those involved prepared or had others prepare false federal income tax returns resulting in a tax loss of approximately $1.3 million.

Full DOJ release, here.

I wonder what will happen to all the people that were convinced to use the illegal deductions?

Here is the post, I recently did about another former IRS type committing a different type of refund fraud:

Former IRS employee charged with a different type of refund fraud

So far as dishonest tax preparers, I covered this recently, also. A major Jackson Hewitt franchisee is under investigation for allegedly committing $70 million in tax fraud.

Of course, they should be considered innocent until proven guilty.

Civil Servants under scrutiny for credit card abuses

Senator Grassley (Iowa) is introducing legislation to counter what he calls massive abuse with government credit cards.

He is quoted on his site as saying:

Every time we open these GAO reports we find more outrageous spending. Internet gambling and a Yankees baseball game don’t seem to be appropriate uses of tax payer money. The federal agencies don’t seem to be stepping up, so our legislation helps put some common sense controls on these credit cards.

The press release covers this in more detail:

Grassley said the legislation would also stipulate that cases of fraud be referred to the U.S. Attorney for prosecution and employees that egregiously misuse or commit fraud with a government charge card be fired. The bill would also increase oversight by providing that each agency Inspector General periodically conduct risk assessments and audits to identify fraud and improper use of credit cards.

Following the devastation of Hurricane Katrina, Grassley was concerned that provision raising the limit for emergency "micro-purchases" on government credit cards from $15,000 to $250,000 was ripe for waste, fraud and abuse and successfully fought to bring the limit back down. At the time, Grassley said that wasting taxpayer money does not help the victims of Hurricane Katrina.

Does this mean that government employees can commit fraud and waste taxpayer money without being fired, or prosecuted? If this happened in the private sector, the culprits would likely be fired and (possibly) prosecuted.

The sad thing is that Senator Grassley has attempted to introduce this legislation in the last two Congresses and it was never acted upon.

So far wasted taxpayer money not helping the Katrina victims, the GAO confirmed Senator Grassley's prediction. Here is a previous post on that matter:

More Allegations of Money Wasted in Katrina

Senator Grassley's press release on this matter, here.

Of note, Senators Norm Coleman of Minn., Joe Lieberman of Connecticut, and Susan Collins of Maine are supporting Senator Grassley in this legislation. Congressman Joe Wilson has filed similar legislation in the House of Representatives on government credit card abuse.

Civil servants should be held to at least the same standard as the people they are serving!

Will a hot-line being staffed 24 hours solve the fraud problem in Los Angeles?

A story recently hit the press about Los Angeles County (potentially) losing $2 billion a year to fraud. That's a lot of taxpayer money!

This dollar figure was "estimated" (using Association of Certified Fraud Examiner statistics), which say that 5 percent of all revenues (generic) are lost to "employee fraud, waste and abuse." Nonetheless, there have been a lot of recent allegations of "too much fraud" occurring in Los Angeles County.

The problem with any fraud statistic is that the intention of the people - who commit financial misdeeds (fraud) - normally like to keep it rather anonymous. I keep seeing different figures (the $2 billion was from an article a couple of weeks ago), but the truth is - all anyone knows - is that it appears to be a substantial problem.

Now the County officials are announcing a fraud hot-line to report instances of government fraud and abuse will be manned 24/7.

The LA Times is reporting:

Ratcheting up efforts to crack down on bureaucratic waste, fraud and abuse, Los Angeles officials unveiled a 24-hour whistle-blower hot line Thursday to take tips from workers and the public.

The latest move to clean up City Hall comes two years after the City Controller's Office created a special task force to investigate fraud.

LA Times story written by Rick Orlov, here.

If you are a resident of Los Angeles County and have something to report, the number is (866) 428-1514.

In the recent article, I read quoting the $2 billion loss figure, there were also allegations that very few people are ever prosecuted, or even lose their jobs when caught committing fraud in the County.

In fact, a recent DailyBulletin.com story stated:

Despite the large number of prosecutions, critics said only a small proportion of county employees found to have engaged in fraud and misconduct are disciplined or charged criminally.

While investigators substantiated 120 fraud hot-line cases last year, only 38 employees, or 32 percent, were fired, suspended, transferred or allowed to resign.

Does this mean that the County is losing $2 billion a year to fraud, the hot line only netted 120 "substantiated cases," and of the personnel implicated - 68 percent of them are still employed?

I'm just an "average person," but to me, increasing the fraud hot-line hours isn't going to make this problem go away.

And not going after the problem "aggressively enough" isn't fair to the honest citizens of Los Angeles, who are "footing the bill" for all of this.

I wonder how many private companies would put 2 out of 3 people bilking their bottom lines back to work?

I feel sorry for the investigators trying to put a dent in this problem!

Here is another post, I did on fraud in Los Angeles:

Los Angeles Grand Jury Calls Child Care Program an ATM for Thieves

FBI Site to Report Corrupt Civil Servants

The FBI is tired of corruption in government. It's hard to blame them with the amount of it recently reported in the news.

In their own words from the FBI site:

Public corruption is one of the FBI’s top investigative priorities—behind only terrorism, espionage, and cyber crimes. Why? Because our democracy and national security depend on a healthy, efficient, and ethical government. Public corruption can impact everything from how well our borders are secured and our neighborhoods protected…to verdicts handed down in courts of law…to the quality of our roads and schools. Here you can find more information on how we investigate cases of corruption across all levels of government and details on our strong national program to address these crimes.

To go directly to where you can report public corruption, link here.

You can also report dishonest "public sector" activity with a simple telephone call. A list of telephone numbers can be obtained, here.

On their main site, there a a list of stories referencing the prosecution of corrupt civil servants. These can be viewed by clicking on the title of this post.

Remember that when someone in the government steals, it's our tax money that is being abused and with looming deficits, we need every dollar going where it is supposed to.

After all, tax money is for the good of the people and that is all of us!

A Case of the Fox Watching the Henhouse

The head of a Medicaid fraud unit has been stripped of her responsibilities stemming from testimony she gave two years ago about committing fraud. Since she was testifying against her boss, the Governor, prosecutors made a deal with her that allowed her to continue working for the people of Connecticut.

Apparently, Kristine Ragaglia, head of Connecticut's Medicaid fraud unit, is being assigned to administrative duties after the new governor (M. Jodi Rell) reopened the case.

Even now, she can't be fired immediately.

When the investigation came to a head against former Governor (John Rowland), she left her post as head of the child protection agency, did a brief stint in the attorney general's office and then was hired to run the Medicaid fraud unit.

This all happened after she admitted to a grand jury of committing fraud.

For the full story from the Associated Press, link here.

This illustrates what's wrong with a lot of our social programs and the legal system. In my opinion, further investigation should also occur into everyone, who allowed this to happen.