Washington Post exposes another reason why Katrina victims are still suffering

The hurricane disasters, and their commentary on social issues, continue to amaze me. To me, the rest of the world can learn a lot by studying the ongoing problems related to the disaster.

The amount of money wasted, or lost to fraud (over a billion and growing) is a sad commentary, when a lot of the victims are still living in the now (infamous) FEMA trailers.

Now a new allegation is being brought forth, which is that $854 million in aid promised by our allies, wasn't even accepted. I find this pretty interesting as people are suffering nearly two years, afterwards?

Even more shameful was that expert search and rescue personnel, were turned down, immediately after the hurricane, when they probably would have been extremely helpful:

And while television sets worldwide showed images of New Orleans residents begging to be rescued from rooftops as floodwaters rose, U.S. officials turned down countless offers of allied troops and search-and-rescue teams. The most common responses: "sent letter of thanks" and "will keep offer on hand," the new documents show.

This fact, given the problems in the initial response, amazes me.

Original Washington Post article, here.

I wonder how our allies, many of who have accepted similar aid from us in the past, felt when we turned their generous offers down?

More recently, the Post is reporting that Congress intends to look into this. The article regarding this can be read, here.

I'm not sure when the story on Katrina will be over. The bottom line is that there are still a lot of hurricane victims, who could use a helping hand. A good place to learn more about this is Margaret Saizan's site (Beyond Katrina), which can be seen, here.

Phishermen use call-forwarding scam to avoid detection when bank notes suspicious activity

Most of get a lot of phishy e-mails requesting personal and financial information from criminals pretending to be a trusted brand. Now they are adding a devious twist designed to beat fraud detection software, which is used by a lot of companies as a means to detect fraudulent transactions, early on.

Herb Weisbaum of KOMOTV.com (Seattle) reports:

The mass e-mail I saw claimed to be from Bank of America -- big banks are a prime target for these scams because they have so many customers.

The e-mail says, "During our regular update and verification we could not verify your current phone number. Either your information has been changed or it is incomplete.

"The message tells you to confirm your phone number right away “or your account will be suspended indefinitely.”

Not only are you supposed to give them you phone number, you're instructed to forward your calls to the Bank of America Security Department, and they give you that number.

Herb's full story, here.

When the institution notes suspicious activity and calls, the now forwarded call goes to the scammer, who assures them "all is well."

Call-forwarding being used to defraud people isn't exactly new, but this is a new twist. In the past, scammers have called the telephone company and told them that a business line was having problems, then instructed them to forward the call to another number (theirs). This is normally done to businesses, who accept payment information over the telephone.

Of course, the goods, or services are never received and the information is later used for criminal purposes, or to steal money.

This practice is enabled by telephone companies not verifying (authenticating) information when a call forwarding request is placed. Most telephone companies allow the owner of a line to protect it with a password, however unless the owner does so, they are open to this sort of attack.

It's probably a good idea (especially for businesses) to have a password placed on their account!

Consumer Affairs wrote about another variation of the call-forwarding scam -- which is designed to charge the victim for long distance calls (possibly used by fraudsters, or even inmates to commit crimes) -- where the victim is tricked into call-forwarding their number.

Note that the command for call forwarding at most telephone companies is "72#" or "*72," then the telephone number. The inmate or fraudster will normally pose as a telephone tech, who tells you there is a problem with the line. Call-forwarding can be disabled by entering "72#" or "*72."

Please note, at some businesses, the command is "90#".

This scam is frequently used by prisoners in correctional institutions to make free calls and targets both personal and business lines. Another good reason for businesses to password protect their telephone account and consider disabling call forwarding. Most telephone companies charge extra for this service, anyway.

Consumer Affairs story, here.

E Gold accused of being a money laundering vehicle for financial fraudsters and child pornographers

To anyone familiar with crime on the Internet, allegations of criminals using, or manipulating E Gold are nothing new. Like wire transfers, E-Gold gives their customers the ability to transfer the value of gold, electronically. To transfer the gold's value, all anyone needs is a e-mail address, account number and password.

Because of this, the accounts can be prone to phishing, and or crimeware (malware) attacks, using keylogging software. When this happens, the phishermen clean out the account and transfer it, elsewhere. E-Gold's terms of service stipulate that once a transfer is done, it cannot be reversed.

It should be noted that Internet criminals use wire transfer services (MoneyGram, Western Union) for the same reason -- they provide a lot of anonymity.

Apparently a task force from the Department of Justice has been looking into the money laundering angle, and is charging E Gold with several federal charges.

Here is a summary of the action against E Gold from the DOJ press release:

A federal grand jury in Washington, D.C. has indicted two companies operating a digital currency business and their owners on charges of money laundering, conspiracy, and operating an unlicensed money transmitting business, Assistant Attorney General Alice S. Fisher of the Criminal Division and U.S. Attorney for the District of Columbia Jeffrey A. Taylor announced today.

The basis of the DOJ charges are:

The indictment alleges that E Gold has been a highly favored method of payment by operators of investment scams, credit card and identity fraud, and sellers of online child pornography. The indictment alleges that the defendants conducted funds transfers on behalf of their customers, knowing that the funds involved were the proceeds of unlawful activity; namely child exploitation, credit card fraud, and wire (investment) fraud; and thereby violated federal money laundering statutes. The indictment further alleges that the defendants operated the E Gold operation without a license in the District of Columbia or any other state, or registering with the federal government, and thereby violated federal and state money transmitting laws. The indictment alleges that this conduct occurred at various times from 1999 through December 2005.

It appears a lot of different federal agencies worked on this investigation:

The case is being investigated by the U.S. Secret Service with the assistance of the IRS and the FBI. The case is being prosecuted by the U.S. Attorney’s Office for the District of Columbia and the Computer Crime and Intellectual Property Section of the Criminal Division. Assistance is also being provided by the Child Exploitation and Obscenity Section and the Asset Forfeiture and Money Laundering Section of the Criminal Division.

Full DOJ press release, here.

Besides allegedly being used to launder money, E Gold is often used in advance fee and auction scams, which trick people into sending their hard earned cash to fraudsters. I've written about the auction, secret shopper, romance, lottery and job variations of advance fee scams on this blog, frequently.

Like the problems with accounts being phished, or their value being drained because of crimeware, little can be done once the gold (converted to a monetary value) has been transferred.

When password details can be stolen, accounts can be taken over, also. This happens happens frequently on auction sites; when trusted accounts are compromised, then used for fraudulent purposes.

Wikipedia has an extensive article about Advance Fee (419), here.

It will be interesting to see how this plays out!

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.