Benefits Fraud can be charged in both the State and the Federal system. Federal Benefits Fraud is often investigated by the IBFU (Identity and Benefits Fraud Unit) and by the DFTF (Document Fraud Task Force). HSI Special Agents are often utilized during the investigation. They will often coordinate with the USCIS (Citizen and Immigration Services); the USCBP (Custom and Border Protection), the U.S. Department of State or the U.S. Department of Labor. Government Benefits Fraud can be committed by both employers and claimants.
The Governmental definition of Benefits Fraud involves the willful misrepresentation of a material fact on a petition or application in order to gain a Federal Benefit. This could include misrepresentations made for purposes of immigration, unemployment benefits, social security benefits, welfare benefits, and a host of others. It is normally alleged by the Government that this form of White Collar Crime is very lucrative and can involve sophisticated schemes involving multiple coconspirators.
If the case involves Medicare Fraud under 42 CFR 455.2, it must be shown that the Fraud was committed by a person who simply:
- Knowingly;
- Obtained a benefit or payment;
- That they were not entitled to.
This normally occurs through a False Application; using somebody else’s identification; a doctor’s bill being submitted for a service which was not performed; or transportation abuse.
AHCCCS Fraud is normally investigated by the OIG (Office of Inspector General). AHCCCS is the acronym for Arizona Health Care Cost Containment System. They use an internal review process in order to prevent, detect, or recover fraudulent funds. They look for improper payments, plus they use a self-disclosure program. AHCCCS has a $14 billion annual budget, so they are well-funded in the prosecution of their cases.
SNAP Fraud is investigated federally through the USDA (United States Department of Agriculture), food and Nutrition Service. SNAP is the acronym for Supplemental Nutrition Assistance Program. On the State level, SNAP fraud is investigated by DES (Arizona Department of Economic Security). DES is looking for very specific types of Benefits Fraud. These can include:
- Unemployment Insurance Fraud (which would include ID theft, refusal to work, and PUA- Pandemic Insurance Fraud,
- SNAP fraud,
- Cash Assistance Fraud (per the TMAF),
- Childcare Assistance Fraud,
- Medical Assistance (Medicaid) Fraud,
- Developmental Disability Fraud
- Worker’s Compensation Fraud.
POSSIBLE PUNISHMENT
Different types of Federal Benefits Fraud involve different types of punishment, depending on which statute governs. For example, pursuant to 42 USC 1011, the penalty for Fraud can be up to 5 years per violation plus restitution. Per 42 USC 1307, which involves Social Security Fraud, the penalty can be a Misdemeanor with a $1,000 fine, all the way up to a Felony which includes prison time and a $10,000 fine for each violation. The generalized range for Felony Benefits Fraud can result in incarceration of anywhere from zero to 6 months in jail, or 20 to 30 years in prison, per violation. An individual can be fined up to $250,000, plus restitution. If a Corporation is convicted of benefits fraud, they can be fined tens of millions of dollars.
If the case involves Health Insurance Fraud under the False Claims Act, then the penalty in the U.S. District Court can be $5,500 to $11,000 per act/fraudulent bill. In addition, prison time under the Federal Sentencings Guideline can be mandatory based on the number of violations. If a Corporation is convicted, not an individual, under the False Claims Act the fines alone for each violation are often well into the millions.
WARNING: Moral Turpitude consequences; a conviction for Federal Benefits Fraud will be deemed as a crime of “Moral Turpitude.” This can affect the Immigration status of any non-naturalized person living within the United States. In other words, if you are not a citizen and you are convicted of Federal Benefits Fraud, you will most likely be deported. It is important to incorporate the use of an Immigration Lawyer along with your Criminal Defense Attorney to make sure there are no unintended consequences of a Guilty plea.
In Arizona, State Benefits Fraud has penalties based upon the amount of money misappropriated.
- Class 6 Felony: if the theft is between $1,000-$2,000, then the possible prison range is 4 months to 2 years in DOC;
- Class 5 Felony: if the theft is between $2,000-$3,000, then the prison range could be 6 months to 5 years in DOC;
- Class 4 Felony: if the theft is between $3,000-$4,000, then the possible prison time is between 1 and 3.75 years in DOC;
- Class 3 Felony: if the theft is between $4,000-$25,000, then the possible prison range is 2 to 8.75 years in DOC;
- Class 2 Felony: if the theft is $25,000 or greater, then the possible prison range is 3 to 12.5 years in DOC;
If any of the amounts are below $100,000, then it is possible to be sentenced to Probation with jail time instead of prison. That jail time can be anywhere from zero days in jail, up to one full year in jail.
WARNING: If the amount is $100,000 or greater, there is a statutory sentence Enhancement which requires that prison time (and not probation with jail) be imposed. Many times we are able to have this Enhancement dropped during the plea negotiation phase, and we have had many clients with allegations of over $1,000,000 who have been sentenced with probation and zero days in jail. There is hope.
POSSIBLE DEFENSES
Many times people charged with Benefits Fraud don’t realize they are being used by others who are the head of a larger Fraudulent Scheme. They think what they are doing is perfectly legal, when it turns out it is actually in violation of the U.S. law. Many times we are able to show that our clients were merely “Straw Beneficiaries”, and we are able to cooperate with the Government in order to keep any charges for being filed, or having charges reduced or dismissed entirely.
Often employers don’t realize that they have somebody in their management who may be engaging in Benefits Fraud for the benefit of the corporation. This happened with a large Arizona car wash company who had been employing illegal aliens via false identities in order to have them work within the car wash. It was alleged that the owner of the car wash and some of his management team were unaware that the highest level manager was engaging in this practice. We successfully used this defense for one of the higher level managers who was ultimately not charged with any crime whatsoever. Unfortunately, the owner of the cash wash used a different law firm and was not so lucky.
Additionally, because our law firm fights convictions from all angles, we would assert a wide range of defenses and challenges regarding constitutional violations which can apply in all criminal cases. The possibilities are numerous and diverse. One of those that we frequently assert is a “Miranda Rights Violation.” In Arizona, the standard of whether any incriminating statement, (i.e., a statement which intends to admit guilt) is only admissible into evidence based upon a “voluntariness” standard. If we can demonstrate that the police coerced you (i.e., intimidated or tricked you) into making a confession or an inculpatory statement, or that they did not properly read your Miranda rights, then we can suppress those statements and have any evidence gathered as a direct result of those statements. In addition, “Denial of Right to Counsel,” is another common defense which is often raised. This occurs when a suspect is in custody and requests to speak to their attorney, but is denied that request and the questioning continues.
Other defenses which can be used in more serious cases may include challenging the validity of any search warrant, or whether there were any “forensic flaws” during the investigation of your case. Depending on what else you have been charged with, this could include exposing flawed procedures regarding computer analysis/cloning hard-drive procedures; forensic and financial accounting reviews; etc.
Lastly, one of the most common defense tactics is exposing sloppy or misleading police reports which include everything from misstatements, false statements, flawed photo lineups and witness identification procedures.
PRE-INDICTMENT/PRECHARGE CASES
Once an allegation has been made, or an investigation has begun, it is important to get DM Cantor involved as quickly as possible. Many times we are able to contact the Assistant U.S. Attorney or Federal Investigator to stop them from proceeding to a Criminal Indictment. If we can utilize Forensic Accountants to go back and “trace” where the assets went, it may be possible to show that it was not the defendant who actually took the items, but somebody else who is attempting to cover up for it.
Many times, we are able to show that the misappropriation was Unintentional. This could be due to a miscommunication or a misunderstanding of the job duties or the law. If the items or money can be returned, or in an agreement to return them over time can be reached, then it is often quite possible to keep charges from being filed.
Another defense has to do with what is known as “Sloppy Bookkeeping.” This occurs when the employee or bookkeeper doesn’t know to property maintain balance sheets or profit and loss statements. If the mistakes can be undone, and property can be returned, it is often possible to resolve these cases with a “civil resolution.”
It is important to hire the right Benefits Fraud defense attorney in order to have your charges dismissed. Our firm has handled numerous cases such as these and we have had them successfully defended throughout Arizona. Visit our case victories pages and click on Benefits Fraud in order to view our most recent successes.