See something, say something

The facts discussed in this article are based on the information provided in the indictment. All persons and entities are innocent until proven guilty. — ed.

In October 2016, a federal grand jury returned a 32-count indictment against four men alleging a massive fraud and kickback scheme with illegal profits that exceeded $16 million. The indictment listed two executives at American Senior Communities (ASC), a senior care and nursing home management company, who allegedly perpetuated the fraud from early 2009 through 2015. Their alleged crimes included a series of billings and agreements that involved inflated costs and invoices claiming markups from 25 percent to 200 percent and kickbacks that allowed the accused conspirators to buy vacation property, Rolex watches, gold bars and diamond jewelry. They also allegedly funneled money through 20 shell companies to pay for gambling junkets, the use of a private plane and unspecified political contributions. Some of the victims of the fraud include the federal Medicare system and Indiana Medicaid. (See U.S. attorney: $16 million fraud scheme was product of ‘unbridled greed’ by Russ McQuaid and Kendall Downing, CBS4, Oct. 12, 2016.)

According to the article, a member of the public stepped forward after being approached about some of the arrangements and said, “You know, this doesn’t sound right.” According to the ACFE’s 2016 Report to the Nations on Occupational Fraud and Abuse, tips remain the most common method of detection. So, I wondered: Did anyone else have the same opportunity to come forward to say, “This doesn’t seem right” earlier on? If so, the potential impact for taxpayers could’ve been lessened. I used the criminal indictment (tinyurl.com/l5566rp), to analyze the fraud scheme with this question in mind. Let’s set the stage.