← The Watch Floor with Sarah Adams
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Welcome to the watch floor. I'm Sarah Adams. Today we're going to pull back the curtain and talk through something that the media never really takes the time to explain to you. Luckily, this bubbled to the surface with Nick Shirley's reporting his Somali fraud case with the child luring or learning centers, whatever one you're going to. But there's still a lot of Americans kind of trying to wrap their mind around how did this fraud occur? How can millions and millions of dollars out the door and vanish in thin air and nobody even noticed a thing? So we're going to kind of walk through nine different programs. We'll stay away from the child learning centers because there is a lot of other Somali fraud. And I do want to explain each of them and the mechanics just so you can get a better understanding of how easy this is and how prevalent it is. So today, you know, we're going to be a little dry. Probably this isn't opinion based. We're going to base it on documentation, some federal court filings, how the Department of Justice has reported this out, know different auditor reports and not just tell you that there is this fraud. But we want to explain to you simply how it works. Thanks for being here today. Millions of Americans pay our taxes and then those tax dollars are supposed to go to kind of these social and humanitarian programs, you know, both here at home. And they also go overseas, of course. And we really want them to be funding the things they're supposed to be funding. And now we're learning, and we have known this for a long time anyway, that lots of times the money doesn't go to any of the intended persons, even if it is like to help feed children. Right. It's not happening. It's getting misused. The money's being diverted and in some cases, as we now know, the money is just being shipped overseas. It's not even helping an American at all. You don't have to be a rocket science to carry out fraud. I mean, clearly, right, we see that, but you need to be a part of systems that pay first and check later. The problem we're seeing though, with our government is some, sometimes they don't check at all, or it's so long into the future to where audits actually occur that millions go out the door before anybody catches onto this fraud. The first fraud I want to get into is in the child nutrition space. And this is feeding our future. A lot of people now are aware of this fraud because when Nick Shirley reported on childcare centers, the Department of Justice really really quickly came out and said, hey, we, we're already handling Somali fraud. We have all these cases going against these Somali fraudsters. When they said that, though they weren't the fraudsters within the child learning centers, it was the fraudsters in this program. So I want to explain at least this program to you and I want you to be aware there's lots of pockets of fraud and we have to tackle each of them, right? Just tackling like one of the nine or ten isn't going to stop the rest from occurring. So we have to be aware of kind of the full spectrum and that's what we're doing today. So this was again, feeding our future. Okay? This was a nonprofit program. It was sponsored by, you know, the usda, its child nutrition programs. And the point of it was to help feed low income children. Okay? And so what happened in this fraud is, is prosecutors believe at least $240 million that was supposed to feed these children. Just poof, you know, vanished into thin air. Never fed a child. I mean, this is like a horrible thing if you think through it, because it really was supposed to help someone. And as Americans, we think this money is going to help children and it's not. Right. It's going to the scammers and fraudsters, et cetera. So I want to explain at least how this program is and was supposed to work. Okay? So the USDA allocated a certain number of funds to the state. The federal government's even kind of curbing some of these funds to the state, saying, hey, you have to show us that you're doing something about this fraud and we're not giving you this money. Right, because it doesn't seem to be going to its intended recipients. So then what the state does is they approve different nonprofit sponsors. Okay? So these nonprofit sponsors, they commit to being the ones who feed the children. So the state approves these different organizations and then they get allocated this money and of course then they are to feed children at their sites. Okay? So the sponsor then approves where this location is going to occur, where they feed the children, and then they self report how many meals they served at this location. Right. And how many participants are in the program. And then the USDA reimburses these nonprofits based kind of on their self reporting. So as you can see, it's already kind of easy to take advantage of because so much of this is self reported self checking. Right. It's almost like a trust system. Then how does the fraud work in this case? First off, you know, a number of These nonprofits really weren't legitimate nonprofits. They made, like shell companies that just appeared on paper to be legitimate. You know, then a lot of these sites submitted that they were doing thousands of meals a day and it wasn't even occurring. Like, the crazy thing is some of the locations, if you actually went to the physical address, it was like a storefront. There wasn't even a to feed anyone. And some are empty warehouse spaces, etc, Right? These are not places where children are being fed, you know, in any capacity. Then there was just a lot of fraudulent documentation. So, of course I told you the meal counts. There was invoices for the food bought that was never purchased, and they were just made up. And then, of course, these attendance rosters saying, you know, how many kids frequent this location to be fed. The money was continuing to be dispersed to these locations and nobody was coming to verify. Is this business even servicing children? Right. Are children at this location? Is anyone being fed? Is there food storage? You know, is there food prep? All these type of things we're paying for. And really none of that was occurring. And so now there's, of course, a lot of cases, you know, against the fraudsters involved in this. You know, there's one case I want to bring up, the DOJ highlighted, and they had a defendant who claimed that they served nearly 5 million meals a year and they took a million dollars of what the USDA gave them, they transferred it to another company and literally bought commercial property. Right? So nothing was feeding children. And then the money was used to buy commercial real estate. I mean, this is the crazy thing about, you know, these fraudsters. Now we're going to go into, like, a second one. And this is under, like, the Housing Stabilization Services. And this is a piece of the Medicaid fraud. You'll hear there's lots of Medicaid fraud, and we're going to talk through kind of the more popular ones today. What you need to understand about the Medicaid fraud is once someone learns how to fraud the system, they can do it across other programs, and then they can also, like, double up fraud. And I'll explain to you. So they could run concurrent frauds and be getting extra money from Medicaid through this. And you'll see how simple this is. So in this case, how this program was supposed to work is Medicaid covered the administrative costs to help vulnerable people find housing. Okay, so it wasn't like covering the rent, but it was like, you know, maybe like apartment search services. So think of it from that point of view. Now, the program was only supposed to cost 2.6 million a year. And the crazy part is they paid out over $100 million in reimbursements. I mean, think about that. You budget, hey, this program is going to cost us 2.5 million. We pay out over 100. Like, once you paid out 2.5 million, there was nobody putting the brakes on being like, hey, we just hit our budget. Like, this is a problem within the government, right? I mean, it's almost insanity to think about this. So they paid 3,700% more than they budgeted for this. Okay, so this is why it's so easy to scan these programs, because there's like no checks and balances, right? So how did this fraud happen? So these providers who are supposed to help the vulnerable people find housing, they billed for things like phone calls, emails, and then any time they spent online, like doing these searches looking for affordable housing, there were no requirements that, hey, if you put time in to these searches, you have to show proof that Jane Doe, this person actually found housing. So nothing here is outcome based. You didn't actually have to find any. So of course, when that happens, they were just making up calls, searches, you know, double billing hours, et cetera. They were copying and pasting different documentation from, you know, maybe a few of the legitimate cases they work. So when you have a government program and it doesn't pay for results, then likely the money is not going to go to the people it was intended to help. And that was the case with this program. Now, the next program is also under Medicaid and it's autism and behavioral therapy fraud. This is horrible. They frauded the autism program. These were the Medicaid funds under early Extensive developmental and behavioral intervention. It's known as eidbi. This is the program where they help put funds towards children who are diagnosed with autism. The crazy part is, in one case that the DOJ worked, a defendant charged to the government more than $14 million in like falsified billing, right? And our government paid this out and they weren't helping any children with those funds with $14 million just gone like that. Now, here's how this fraud works. Okay? So children were diagnosed as having autism when they weren't, or they were rapidly diagnosing them before they could even prove that there could be an autism problem. Also, there was kind of a push on families. Hey, you know, if you say your child has autism, you can get some funds out of this. It'll be a benefit to us. A benefit to you. Unfortunately, that's a really sad way to look at it, but it's true. The recessions build where there weren't children at all. And then the other crazy part is children did come to some sessions and there wasn't really like a licensed professional presence. So like they showed up at the center and they met with me for an hour. Right. Who has no background to help an autistic child in any way. Please come in. Hi, welcome. How much is it? $300. And then the billing went to the government at full price as if I was a licensed therapist in some way. You know, hand these children. So it's a very, very frustrating thing when you look at it that way because it was really just to bring in money. There was very little focus or interest in a lot of the scam pieces of this in helping the children with autism in any way. Here's a quote from the U.S. attorney's office. This is not an isolated scheme. From feeding our future to housing stabilization, which we just talked about, and now autism services, these massive fraud schemes form a web that has stolen billions. Right? Remember billions. You kind of get lost in that number when we're talking about billions. This is billions taken away from programs to help American children. I think that should really frustrate people to help the elderly or help people in vulnerable situations. Right. We put all this money in to try to help Americans and it's not getting to them. And I think this is where everyone's getting super frustrated. So the next program is in home care and integrated community supports. I'm just going to tell you the exact name programs under this as listed that were involved in the fraud according to doj. Personal care assistance, Integrated community supports and then the home and community based services. How the fraud was occurring in this was really easy to see and find and I'm surprised there isn't some sort of just set mechanism to find it. So here's one of the things that were being done. So let's say I'm in this program, I'm doing this in home care. And so normally maybe I would go actually help someone all day, right. They need that type of care. So I go and I would do eight hours of care where in this case they were billing like 20 to 24 hours of care just in a day for one person. Of course I'm not spending in this case 24 hours there. I went in and did an eight hour shift. The crazy part then is they were also billing the same amount of time on the same day for others. So let's say I did three, four hour shifts. I worked a really long day. You know, I went to three different customers. Well, for all of them, I billed that I spent 24 hours with them on the same day. So of course there's all this double billing. There's, you know, all these caregivers using up the same slots. And then another thing that was occurring is I'm just a family. So I fill this out and then I say I'm helping, let's say eight people, but I'm really not. I might be helping one. The other seven are my family. And I'm kind of pretending I'm giving these services to them. I'm pretending they have medical issues that they don't have. And the whole thing is kind of an internal family fraud. And then there's just a lot of services billed for things that I just never did or never happened. Right. So with Medicaid, they really simply reimburse on what's reported. Right. And it takes a long time for these audits to catch this. So it's a really great opportunity for fraudsters. Of course, normal, everyday Americans really rely on Medicaid. They need to keep it funded. They follow the rules. And it's these fraudsters who steal so much from the program and kind of put their benefits at risk. It's very concerning. So another one, of course, Medicaid. So this is non emergency medical transportation. Right. So this is just the vehicles that will move Medicaid patients, customers, et cetera, to their appointments. Right. If they have a medical appointment, you know, they'll pick you up and they'll bring you to your medical appointment. Right. So very simple. You wouldn't expect there to be fraud in that. But of course there's fraud in that. So providers were billing for trips that never occurred. They were also adding on services like interpreter services. And we'll explain this. This is where I said you can start bucketing your fraud and getting even more from the government when they didn't even have maybe interpreters in these cases. Right. They were just saying, oh, this happened. There's also kind of like poor GPS tracking and mileage tracking. Again, a lot of these things end up falsified and it makes the fraud really easy to do. And think about it when you have small amounts, Right. So we have just someone being picked up and brought to an appointment. It's not a huge dollar amount. So it's easier to commit fraud when it's all these small dollar amounts because people don't focus on that. Right. So it makes it easy now then the interpreter one is a whole other fraud that we talked about. Again, this is a very simple program in Medicaid. So you have an interpreter if you need them for your services. But of course, they were logging interpreters, being on trips they were never on, involved in cases they were never involved in. There was all these bills when it didn't happen. And again, they are combining this with some of the other Medicaid programs. So the government is paying 2, 3, 4 times for this one billing event. And in some cases, you know, the incident didn't even occur at all. But these piggybacks on other Medicaid fraud is a problem. But because there really is no verification, it's so easy to do this and kind of keep double billing Medicaid. So another program that we want to talk about is under Disability Services, and a lot of people call this one case management fraud. Okay? So this is supposed to be the purpose of the program is case managers are paid to coordinate different services for disabled beneficiaries. How the fraud occurred is they billed for coordination. Like they say, I worked with these different persons to help them find services. Of course, it never happens. They made up case notes or just fabricated or just recopied the same ones over and over again. They did multiple billings and overlappings across multiple programs. So when you just have paperwork as kind of your proof of service and like what you bill off of and what you reimburse off of, and you don't do any sort of independent verification, you don't reach out to that actual customer and say, hey, you know, did they spend time talking to you? You know, what services did they provide? So of course this is an easy fraud to pull off. Right? We have a regulation issue here because nobody's really put any efforts into spending time on the transactions. Okay, we're already on the eighth fraud. So this is very famous to people, so I won't spend time on it. But it's kind of the COVID era relief and then the Small Business Administration loans, right? So this is under the payback protection program and then the economic injury disaster loans. So this was hundreds of billions of dollars that went to small businesses, of course, with the hope it would help sustain them through Covid. Remember, this program was designed for speed, but afterwards they realized, wow, we did not put enough fraud protection into this program and look at the mess we're in. So how the fraud worked is, you know, just to get into the program, you had people falsifying payroll records. They were putting in incorrect kind of metrics. Regarding their own business. Right. Because these are self reported, they chose what they submitted forward to get the loan. There was very little verification after the funds got dispersed. And then just like we told you in the beginning with some of the child scams, there was a lot of these shell companies created. They took the money and then they quickly moved into other shell corporations and kind of, you know, the money went through a web and of course it went to something that was not intended for the same use. Like we told you the commercial property example earlier. So we have multiple programs I've covered so far. And it's like, because there's no verification, you really can just use the same method over and over again. Right. You really only need one playbook and you can successfully pull off this fraud. I mean, think of how fast you could rack up money if you're just doing this to multiple programs. The last one I want to talk about really needs to be its own episode, but I just wanted to make sure we don't ignore it. Okay, So I wanted to focus mostly today on these domestic frauds. Right. Because obviously we should be able to verify money handed out in the US and make sure it's going where it's supposed to go. That should be a very, very simple thing to do where it's way more complicated. And now we know, hey, they're not verifying this in the US they're definitely not verifying overseas is the money we're sending to Somalia. We've sent billions to the company as our government to government. Right. I mean, we've sent money through humanitarian efforts just straight from our State Department or USAID or through the World bank or through the IMF or through United nations, etc. And then of course, we sent them a lot of money to do things like work on their military, counterterrorism operations, et cetera. So again, there are frauds all across all of that money that's handed out to them and all those different pockets of money. Right. We showed you nine different pockets of money. And then of course, Nick Shirley said a tenth that are domestically. Well, the same thing happens overseas. There's other, all these funding streams and then there's fraud within each of those funding streams. You know, it's, it's a crazy thing when you try to like go through and figure out what is the total here that got siphoned out and really became fraud. So what happened recently involving the World Food Program? You know, I have complained multiple times about the World Food Program because in Afghanistan, if you go to an Al Qaeda terrorist camp. The food you're eating is from the World Food Program, right? So I have a major issue with where our money goes anyway, when it goes to the World Food Program because I really don't think they're doing proper verification on the ground. And there really should be some reporting back if your food is being delivered to a terrorist camp. And they know they're delivering it to terrorist camps. Right. Because we have followed them into some of those locations. So World Food Program already is not atop of my list of being straight and narrow and lacking corruptions, full of corruption. But in this case, it became a very big international event because in Somalia, there was a giant World Food Program warehouse and it got raided and they took up 76 metric tons of food. I mean, this is crazy. I mean, just all stolen, right? So of course, the State Department said, whoa, whoa, whoa, whoa, whoa, we're going to cut off this funding to the World Food Program in Somalia because first off, you allow this massive theft to occur. And secondly, you're not even admitting that you allowed it to occur, Right? Like Somali officials are saying, oh, the food's in the warehouse. We don't know what you're talking about. Right? It's like, come on, you can tell if a warehouse is empty or not. So here we had international human aid going to Somalia, US Taxpayer funded, and that was vulnerable as well. And it was unfortunate, fortunately stolen in this case. But we know this happens all the time. And what really needs to occur is our government needs to really crack down and say, hey, these places where there's a systematic, repeated fraud, why do we keep dropping money into them? Right? Why do we do this when we know they're going to steal, they're going to commit a fraud, they're going to move money outside the country, et cetera. It's like, like, it's like we're in this toxic, abusive relationship and we just continue with these programs. You know, a lot of people got excited that USAID got shut down, but a lot of people aren't aware that most of those programs and the contracts, et cetera, just moved under State Department. So we're still funding those same NGOs, the humanitarian aid programs that aren't really helping anyone. And a lot of the fraud is still there. It just has. It falls under another branch of the government. Right. But it's the same problem. So it's very, very frustrating. Some cases there are criminal charges, especially with the feed, you know, our children program. There's been a lot of DOJ activity in there. So that's really exciting to see. Unfortunately, the fraud was known for a long time, and really under the last administration, there wasn't really a push to charge anyone for it. So under this administration there is, and we're seeing a lot of that. And that's where that coming from. The problem, though, is how these systems are designed and these programs are designed, right? They're reimbursed first, verify later. They trust paperwork over like the reality, right? If you go to a business and there's no children there, why are we giving them money for children? And then the other thing is there's just kind of this delayed or decentralized oversight, like nobody's checking it, or somebody thinks somebody else is auditing or checking it, and everything's falling through the cracks. So if we really want to fix this fraud, it's not just about prosecuting the fraudsters. It's understanding how this fraud even occurs, changing these programs so it can't occur. And that means Congress has to understand, the state agencies have to understand this, the federal departments do, and they need to tighten how they hand out this money. And unfortunately, sometimes some of them are involved in the fraud and they get kickbacks from the fraud. So it's very, very, very complicated. But, you know, I hope at least this overview helps. And thanks for joining us again on the watch floor.