Stimulus Fraud

As the government lays out plans to remedy the mortgage crisis, the economic stimulus fraud will hit us in more than one ways. I say this with certainty because a) we never learn from our mistakes, b) we’re talking about a lot of money, c) we’ve already witnessed money disappear and be unaccounted for in previous experiences, d) a lot of people are anxious to get their hands on even a small piece of the package, and e) there are already signs of stimulus fraud.

In general terms, we got into this economic mess, especially the disastrous housing and mortgage situation, because at some point, accountability and oversight vanished. As a society, we gave up our rights and values which will hunt us for the rest of our lives and our future generations if we ever recover and return to the country as we knew prior to 9/11. What we continue to witness and will witness in the future is the continuation of what happened on that dark day.

Oversight and its importance can never be underestimated and when people get comfortable enough to dismiss and violate the rules, ignore monitoring and compliance with the rules, or when we blindly trust a third party like our government or banks with our money, best practices and controls start to naturally and intentionally deteriorate because greed is always ready to take over when we start ignoring rules and values. Wasn’t it fraud that got us into the mortgage crisis? When cash was abundantly available forcing investors to look for risky investment options (with our money), and people were hungry for the all American dream at any cost, we became a greedy nation among the nations of the world and participated in the all out fraud. After all, it’s our human nature to want more for nothing. Having been an auditor for most of my professional life with passion for controls and oversight, the mortgage fraud was so obvious and widespread that I had to pinch myself a few times to make sure I wasn’t dreaming. Many people with no education or experience easily became involved, opened offices and websites, and started selling mortgages for licensed mortgage brokers. College students who knew nothing about completing a mortgage application nor had any mortgage expertise, started making side money from selling mortgages which was way more than what people were earning for hard labor. Everyone was involved and collaborated; banks closed their eyes on undocumented incomes as they took on high risk investments and even supported brokers asking for more high risk applications, mortgage brokers pushed through thousands of piled up mortgage applications without any verifications of income for more commission while they kept applicants ignorant about the details of the financing, and people happily applied to buy homes with unreasonable incomes, home prices, and interest rates. What happened to the days when bankers went to the applicant’s place of work to verify the information provided in the application? We either never seem to learn from our past experiences or our knowledge is short lived. Now, we are once again ready for another fraud, the economic stimulus fraud. The government keeps printing, borrowing and distributing money in trillions of dollars. Our economy is fast changing and with the help of the government, "selected" banks who received free money, acquired banks which did not receive any money to survive. This is not a natural selection within a free economic market. The government decided who gets to survive and who doesn’t and it will cost consumers dearly at the end. After dealing with the banks and the credit crunch which by the way is not yet over, we are now ready to tackle the mortgage crisis. And as we prepare to deal with the problem, the stimulus fraud is well underway. Not only predators are eying the billions set aside for the mortgage crisis, people are getting emails from fraudsters asking for personal information to be included in the stimulus program. In some cases, fraudsters even ask for bank information to wire the money directly into the accounts. Once more, greed takes over and some people fall into the stimulus fraud scheme and witness even more money disappear from their bank accounts as if deflated housing values and reduced 401K account balances were not enough to learn from and avoid getting additional financial hits. When do we say enough is enough, start educating ourselves, and stop playing the game of easy money for nothing? Don’t reply to emails that promise free money, period. Actually, in one case, the fraudster asked for a stimulus application fee before emptying the bank account. So I guess in this case, it wasn’t a promise of money for nothing.

The government should start monitoring the distribution of taxpayer money and incorporate accountability and oversight. Also, consumers as well as government employees must be educated about various stimulus fraud risks to prevent fraud and identity theft. In this kind of social and economic climate when decisions are quickly made, fraud is inevitable and some people will fall victim to fraudsters while others will fraudulently benefit from the government’s giveaway, but we have to collectively be vigilant and reduce the risks.

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