(PR NEWSWIRE) DJ: (CNW) Year 2000 Problems Hit Financial Institutions - In
DJ: (CNW) Year 2000 Problems Hit Financial Institutions - Insurance, Medicaid
And Worker's Comp Fraud - Computers Cannot Handle It - Study Finds
The Hidden Cost of the Y2K Problem Appears
AUSTIN, Texas, Aug. 21 /CNW/ -- InfoGlide Corporation of Austin, Texas
recently finished a fraud review of major financial institutions, Medicaid
providers and police agencies. The startling results are that criminal
fraud rings are beginning to take advantage of the Year 2000 computer bug as
they scam billions of dollars using increasingly complex fraud techniques.
Using modified names, addresses, social security numbers and scores of other
bogus identifiers, staged auto accident fraud rings have stolen up to $100
million from one major property/casualty insurance company alone. The
perpetrators were sophisticated, computer-literate criminals and had several
computer programmers working as part of the ring. They used the technology
paralysis of the insurance industry, because of the Y2K computer bug, to
shield them from being detected.
These fraud pros knew that neural net technology and relational databases,
used almost universally today by the insurance and Medicaid/Medicare
providers, relied on exact match searching to find fraud. Thus, if
criminals modified their identifiers, they could take out multiple policies,
stage multiple accidents and continue collecting illegally.
John Valentine, CEO of InfoGlide remarked: "Everyone knows that when you
open your mail, if even one letter of your name is changed, it will cause
you to receive multiple copies of the same junk mail. These computer
criminals figured out the obvious. If they changed their names, addresses,
etc., they could take out multiple policies. And they knew that the Y2K
problems had the insurers too tied up to ever catch it."
In one fraud review, InfoGlide found 11 innocent ways to spell Los Angeles
within an insurance firm's database. Noted Valentine: "If your own people
can't enter the data correctly, what's to prevent a criminal ring from
modifying their names and taking out multiple policies. Y2K problems are
freezing all the technical resources for the insurance and Medicaid
industry. Y2K makes fraud a criminal's dream."
When InfoGlide notified this insurance company, the insurer said they were
too tied up with Y2K problems to even think about their database
irregularities.
InfoGlide noted that in one large metropolitan area, a ring of attorneys and
doctors were hiring illegal aliens or recently arrived legal aliens to
participate in staged auto accidents. These aliens had names which "looked
like an eye chart" with very difficult West African, Asian or Balkan
spellings. These proved most difficult for local insurance investigators
because they could not tell if the names were modified or not from case to
case.
Remarked Valentine, "It's one thing when you have a policy for John James
and Jimmie Jon, who an investigator might consider as the same person. It's
much different with Nyuguen Hui Lao and Li Nyugen. The latter two are the
same person, but you would never know."
InfoGlide spoke with attorneys, investigators, police organizations,
government investigators and prosecutors in 21 states. Over 61% found
similar patterns of criminal fraud rings using the profile of modifying
names and other identifiers. Many were beginning to experience new kinds of
financial fraud, much of which is caused by the Y2K paralysis.
According to Valentine "We have interviewed insurance firms in Canada, Great
Britain and Australia and they have begun to find the same phenomenon.
Criminal fraud rings are hitting them as never before because the Y2K
problem has tied the hands of their technology people."
There is growing evidence that this trend is beginning to mutate into
several more sophisticated scenarios.
Now, people are going beyond name modifications and changing every
identifier, sometimes 30 at a time. They are also victimizing insurers,
financial institutions and Medicaid providers across databases, knowing that
the Y2K problem, and its strangle hold on technical resources, has
eliminated any chance of being caught.
InfoGlide had to develop new technology with the help of two former Royal
Canadian Mounted Police (RCMP) programmers to keep up with the Y2K induced
fraud. It now detects "fraud profiles in constantly changing data,"
according to Valentine.
In another case, InfoGlide found a workers comp fraud ring consisting of
many homes in a specific neighborhood. These people all had different
names, addresses and other identifiers. The case was cracked because the
perpetrators had all taken out different P.O. boxes, but at the same post
office.
Probably the most unusual, according to Valentine, was a family that
traveled throughout the United States victimizing a single worker's
compensation insurance company. These people were particularly brazen, not
even bothering to significantly change their names and other identifiers.
They simply hit the single insurance company in different regions knowing
that their internal computer systems did not "talk to" each other. Thus
they victimized each of their 9 regions individually. It was only after
InfoGlide did searches across all 9 databases simultaneously that the fraud
was discovered. Unfortunately, by that time, the insurer had paid over
$165,000 in claims.
Valentine noted: "This criminal fraud family had a son who was very
computer-literate. He knew that this particular company was so tied up on
Y2K issues that it couldn't get its systems to work together. And he used
this knowledge to his advantage."
A midwestern state government performed a Medicaid Fraud Audit with
InfoGlide. In the 30 day audit, they found a doctor who had not finished
medical school operating as a Medicaid provider. This was discovered when
InfoGlide merged databases from both the state and a third party outside
source. The "doctor" used several names at different clinics. The clinics
were only tied together because his treatment patterns were often the same,
across databases. The "doctor" later admitted that he had been committing
fraud for over three years and was accelerating his fraudulent billings
because he knew the Y2K problems prohibited serious investigation.
In another case, stemming from the same Medicaid Fraud Audit, the state
found an organized doctor's fraud ring submitting Medicaid claims illegally.
They were detected because the InfoGlide system found that the dates they
wrote prescriptions were often days before they met with the patient. The
state, interviewed by InfoGlide, noted that this profile was becoming more
common because the computer-literate criminals knew the Y2K problems had
paralyzed many government systems. There were simply no resources available
for this kind of fraud detection.
When asked to rank the fraud types, Valentine commented: "We find that the
automobile fraud rings, while everywhere, are dwarfed by worker's comp
fraud. But the big one is Medicaid. Many states could buy an NFL football
team with what they could save in Medicaid fraud -- each year."
InfoGlide is located in Austin, Texas and is involved in fighting insurance,
Medicaid, Medicare and Worker's Comp fraud.
/For further information: John Valentine, CEO of InfoGlide Corporation,
512-305-0266, or jayinfoglide.com/
13:13 ET
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