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No Support for Services and Dead End Cash
Episode 1716th July 2021 • Friday Fraudster • Kelly Paxton, Jo Erven, Robert Berry
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This week on the Friday Fraudster we talk about what happened to the support services for one community. Meanwhile, cash hit a dead end for group of scammers.

Another fraud, another Friday.

Your Friday Fraudster hosts are passionate about ethics, fraud and good business practices.

Kelly is known as the Pink Collar Crime guru. If there is fraud, she can find it.

Jo is the Ethics Expert. She can identify and correct those stick organizational ethical issues.

Robert is a process. He looks at the controls to determine if you are performing actions to get your desired results.

Join Kelly Paxton, Jo Erven and Robert Berry on this weeks episode of the Friday Fraudster.

Find Kelly at https://kellypaxton.com/

Find Jo at https://www.auditconsultingeducation.com

Find Robert at www.thatauditguy.com

Transcripts

Rob Berry:

Welcome to another episode of the Friday fraudsters. This is episode number 17. Wow.

Kelly:

That's crazy.

Jo:

It's crazy.

Rob Berry:

That is very very crazy. So look guys, we have Kelly Paxson our pink Collar Crime guru and host of The Great women in fraud podcast. Joe Irvin our culture and ethics expert and me, Robert Berry, that our IT guy, this is the darn bestest fraud edutainment in the world. That's right, the best live show discussing fraud in the world. And today, we're talking about two things. We've titled them the no support from support services and the dead in cash. But before we jump into our topics for today, we want to know how you guys are doing you know what to do when you come into a room with me in the chat, drop those emojis that signify the mood that you're in right now. Now, some of you guys may think that I'm crazy for doing that, but we really do care about you and we want to know how you're doing and that is why we asked you to drop those emojis into the chat so that we can see how everyone is doing and you know what, Joe? People really missed you look Oh, that makes me feel good. Thanks. I appreciate his he really missed you last week.

Unknown:

Thanks, bozo.

Jo:

I am glad to be back. I had a heck of a time getting a flight to Vegas last Friday. Let me just tell you guys I would have rather been with you then on delayed delayed delayed cancelled. rebooked on a different airline finally got there. Really, really late Friday night. So I really, really would have rather been with you guys.

Rob Berry:

You know what, though? I think Kelly and I don't feel sorry for you. You just did you were on a flight to Vegas.

Jo:

It was 117 in Vegas, and I was working all weekend. So you can't feel that. Don't don't feel that envious guys series. I mean, to go on a little bit of a jaunt. And you know, I may have gambled the like some of our fraudsters. No, no, no, no, no, I can't stand losing money. You also, you know, it was very minimal for me.

Rob Berry:

Now, you didn't gamble with any money that you stole?

Jo:

My own money. Thank you.

Kelly:

Travis was looking at your card that morning.

Jo:

That's right. Yes. Right. He was like, she can't go to the ATM.

Rob Berry:

So you guys Heather's in a really good mood. And Heather has doughnuts. Oh, that sounds excellent. Hal is saying no, no frog. No fraud. Oh, no fraud. No fraud fraud. Yeah, sorry, I'm a little slow today, you guys. pozo says Happy Friday from NYC and she is happy Joe is giving everyone hugs alone that one. Benita

Kelly:

poza was on in Prague this week. So if you guys haven't had a chance to take a listen, I have the Duchess of accounting. We're both Scorpios

Rob Berry:

make that three Scorpios I am one as well. Oh, my Scorpio peeps so anggaran ale is doing flips all the way from the Bahamas. And going he also says Welcome back. Joe. Dad is in a really cool mood today. And Leslie is here again. Leslie is really cool today. Matt Jones is back and Matt is all smiles. And Mark says Joe, that is what happens when you go to Sin City.

Jo:

I know they take your money.

Rob Berry:

It's really sad. Really sad. Mark says ching ching. And Leslie Welcome to the Scorpio club my friend. We are all in good company.

Jo:

Are my areas that any areas on call all the love to the Scorpio people there's a few horoscope people on here probably going Oh, that explains a lot. explains a real lot.

Rob Berry:

It does. It explains Oh like so you guys see my mood. I mean, this is usually my mood 99.9% of the time, right?

Jo:

Yes, yes. You're always a happy guy.

Rob Berry:

So that reminds me the Friday froster is also a podcast. Let me tell you guys, Joe, I didn't tell you and Kelly the latest. So I look at the stats from the podcast. We are getting a lot of downloads in in South Africa, Nigeria, India and Ireland for some reason and other parts of the UK. Some people in Canada, I'm assuming those are bonitas friends, right? Even though Benita is in the us right now. She's told all her Canadian friends and they're just downloading the podcast. We are also on YouTube now you guys so if You go in search for that audit gown to view all of the episodes on YouTube as well. But while we're talking about the Friday for us, and don't forget to get CPE credit just for watching us talk about fraud. I'm sure you're wondering how to do that. Go To www dot Friday froster.com

Jo:

and put it in the comments. Not that it's hard to remember. But

Rob Berry:

so now, so why don't you tell everybody what you were doing when you were away? You were doing something pretty cool.

Jo:

Yeah, so I was just telling Robert and Kelly, the the thing I loved the most about this conference. So it was a national conference for the National Speakers Association. And the theme of the conference was radically relevant, and how to stay radically relevant as a speaker as a trainer in what we do. But I took that theme back I actually got home at one in the morning, Monday morning and I woke up had a webinar Tuesday, and I weaved that theme throughout my audit webinar Tuesday morning. This idea of being radically relevant So anyway, that's my my little tidbit. I got lots more from this conference. It was a working Vegas weekend for those of you just joining but it was it was great just even I just love that term. So if everybody starts adopting, maybe it's a hashtag Kelly. Hashtag events Hello. It's just awesome. It's great for auditors to so

Rob Berry:

now you know, one of our good auditing friends always talks about being relevant in Hell is an Aries

Jo:

fellow Aries All right, how maybe that explain a lot how between me and you?

Rob Berry:

And how is always talking about how auditors we need to be and remain relevant. Now Heather is a Sagittarius. Huh?

Jo:

Heather and my husband, my husband's a fellow Sagittarius. So why does he care so much about our finances? Heather, I'm just kidding.

Rob Berry:

And Kelly is dropping the hashtag into the chat already radically relevant. I think we should make it a thing. Yeah, photo says that that is a great theme. radically relevant.

Jo:

Oh, how? It means great minds. Like how that's what it means.

Rob Berry:

But which one of you is the great mind both for the job that was a bad joke. Alright, so guys, the first story, no support from support services. Okay, this one, this one's pretty good. But I would advise you guys to hang on for the second one. Of course, I would put the best one, the very best one. This one's good. But the very best one to make you guys Hang on. But let's talk about this first one. So there's this company called the victim support services. It is in kirksville, Missouri, it opened march of 1986. It receives money in the form of grants donations and from the United Way to help well, victims victims of crimes specifically. However, Friday March The 30th 2019 was their last day in business and approximate approximately six employees from the nonprofits corporate office and the safe house lost their jobs. The nonprofits board president Sue Barrett said that they closed due to funding issues or lack of funding. We'll see what that means in just a minute. You guys. Your organization was under investigation by the Missouri Department of Social Services and it had been starting in summer of 2018. Now bear, it said that the grant administrators discovered something that raised an eyebrow during the review and the longtime VSS Executive Director Kim LeBron. not related to LeBron James, you guys. She took a leave of absence in July of 2018. When that medical leave of absence was up, she voluntarily submitted tendered her resignation. letter that sounds odd, right. Every time someone resigns, there's something either they knew something and they were forced out, or they did something and were forced out. Right. That's usually the way that works. The board person is the board president is saying that she was hoping that the closure would be temporary and they that end that they could reopen after the investigation was complete. Hmm. So guys, here is what happened. According to federal investigators between July 2016 sorry, January of 2016. In June of 2018. LeBron, the executive director submitted false and fraudulent invoices for funding under the Department of Justice's video. Don't have crime administrators grant. Here's what here's what they said she did. Specifically she inflated the numbers related to shelter stays. Not only did she inflate the numbers, in many cases, the documents say she turned away clients claiming that the shelter was full, when in fact, it was not full. And in some instances, it was vacant. So people wanted to come to the shelter because they were victims of violence. And she turned them away saying that it was full when it wasn't. As a result, her allege as a result of her alleged fraudulent actions. The DOJ, the Department of Justice, paid her approximately or her organization approximately $173,000 in grant funds during the period in question.

Rob Berry:

What do you guys think?

Kelly:

So much, so, so much. It's wrong on so many levels. Um, first off that one of the stories is that she entered a place she didn't go to trial. They don't go to trial. It's pretty, pretty black and white. And like, the invoices have falsely inflated numbers. This is your guys's specialty of audit? Like, it's just really easy to is it easy. I mean, it is easy to track things like this. Like, you know, it's just, again, hashtag. It's not rocket science.

Jo:

Yeah, and it seemed like a lot of the people working there, obviously, it always goes back to a culture thing, right, though a lot of the people working there wouldn't even comment would want to be anonymous. So obviously, again, you you have people who don't have the guts, or the courage maybe to speak up, you know, and we've talked about, maybe they're rationalizing, maybe they need the job, we all of those factors obviously come into play. But it's just so sad to know that a lot of people worked for this woman, knowing that she was turning people away. That's I agree with Heather, it's deplorable on this one.

Rob Berry:

Alright, so there are a couple things to really considering the Think about what this particular case. So she was getting grant money from the federal government. And here's what happens when you get a grant through the government. Oftentimes, you have to submit a proposal and after that proposal was accepted, the government will just funnel money to you. Now the government will typically hire either third parties, or sometimes they have entities of under governmental agencies that will go out periodically and audit your usage of the grant funds. In the meantime, you should be sending reports to the government that tell what you're doing with the money. But the audits don't often occur on a regular basis. They just occasional. And this didn't even happen from the federal government. This happened at the state level where some auditors went in and started taking a look around. So we have some questions from a lot of people. Clarence is asking, did she go to jail? We'll get to that. And Michelle is saying what was the money spent on there? Probably the woman who was in charge, and Claire is saying that she paid the money back. They are asking her well, they're forcing her to pay the money back as a part of her plea agreement. She was ordered to pay back I think $200,000 or $225,000. So Kelly is correct. She has not been sentenced yet. Clarence. So yeah.

Jo:

Yeah. And and Kelly, I make made notes as I was looking, because I know you're like the expert on more the court side of things. She's been indicted on male fraud. Right. So can you like the this is always me going, what the heck does that mean? Like I know what it means. But can you just give your insight on that? And again, is that what the courts kind of hold on to to get somewhere? Like explain that

Kelly:

to us? Yeah. So that's just the easy charge. And Mark can respond to this also, but it's kind of like wanting to a federal agent, wire fraud mail fraud. They don't even I believe they don't even have the charge of embezzlement anymore. So it's just kind of a bucket. That is easy. And that's why statistics are really hard on white collar crime because this is an embezzlement but it shows up as mail fraud because they probably got checks via the mail. And if they got checks via wires, it would be wire fraud, but that's what makes the statistics so incredibly difficult, is they will charge you know, mail fraud or wire fraud when it's really straight up embezzlement. So I don't know it's March. What do you think?

Jo:

Right? So, go ahead.

Rob Berry:

This is what I love about our audience guys. pozo says such a disservice to victims of violence. She says that she's audited organizations that offer shelters fees are pretty high and living conditions aren't the best. So, now Heather has said that her mom worked at a shelter for women. And it's unthinkable that these poor women have nowhere to go in bad times. Heather, I will say, this is not a shelter for just women. This was a shelter for people who were victims of violence. So while 52% of women are victims of domestic violence, that also means that 48% of the victims are men.

Jo:

Yeah, or any I mean, you know, think about children running out, you know, I met I know, My mind goes to like gang related things, or I don't know, just trying to get away from different types of violence. This could have helped so many people. And I mean, these are always the saddest examples that we talk about.

Rob Berry:

Yeah, oh,

Kelly:

six people have lost their jobs. Now. The buildings for sale, six people have lost their jobs. The victims of violence aren't going away. So what happens to all of this? I mean, it the sort of pond effect is huge.

Jo:

Yeah. And Heather, Heather asked about the Florida Governor, so we can get to that next after you do this one, Rob.

Rob Berry:

Yeah. So Mark is saying that it's a simple charge is easy to prove, so that they're taking the easy route, which, I mean, I understand that it gets the person convicted, but it may not get them convicted for the right thing. But but I get it. Yeah.

Jo:

Yeah, one of the articles I did put all three of the articles about this subject. There's one from I think, 2019 2020 and 2021. That Robert found for us. And one of them, the board, executive, the board. I don't remember her exact title was the one it was her perspective on it. So Heather, check that one out. But it really seems like we've got a lot of denial happening, that this really even happened to them. I think it was, I don't know, it just to me felt like her response was very, not nearly as dramatic as it should have been. So then it made me think, did she know this was happening? Like, you know, maybe it's self preservation? She's, you know, she's trying not to make as big of a deal about it. But anyway, that's the take I got from what board might have existed.

Rob Berry:

Yeah, well, and in addition to the board, this place was a pretty corrupt from a culture standpoint. So for example, in some of the articles, there were some former employees who said that lebaron, the old executive director, would sometimes brag in front of them about how well she was paid by the board. She even had her own personal garage at the VSS offices and workers said they were instructed to tell potential clients that the VSS safehouse was full. And the organization wasn't accepting new clients when it was not full. So these are things that employees came forward to talk about after all of this happened. And here's a picture of her holding an award for victim advocate of the year.

Jo:

Just so sad that you can live you know with that as on your conscience. I don't don't you guys just wonder about people. I know Kelly, she always wants to think the best of people that do this, but this one just I just can't even see the

Kelly:

best and that I don't know. Well, and you know, this isn't this is this is an irregular, there's a guy who stole from Connecticut College and he was like, you know, Employee of the Year, several times, there's a woman I post about who at a parking lot. They're mostly not just disgruntled because they're getting a good side hustle from their thieving. So um, yeah, it's, you know, look at how happy she looks.

Rob Berry:

Well, and I think what really stumps me about most cases in general, but let's talk specifically about this one. I always wonder, what benefit Are you gaining from it? That's the question I always ask. And so with this one, I think logically about it. Okay. So she was turning people away from the shelter saying that it was for when it was not, and she was collecting a check. And honestly, the only thing that I can think of with this one, two things, either laziness, not wanting to work, and or if she really allowed the facility to feel to capacity, she may have had to work harder to bring in more funding to actually fund the operations because they may have needed more than six people. Because that was just a part of their funding. They got money from donors and from the United Way, so She could be lazy if she kept the number of occupants to a minimum and then still overbilled the government and collected her salary because she was paid a salary not any sort of fee based on per occupancy. So the only thing I could think of with this one was just pure laziness.

Jo:

Kind of Yeah, I agree with that how said, You know, I deserve it, I think, you know, she might have just really felt I'm trying to think of the right word here, like just very proud of her job. And like, she like a control thing. Right. This was probably the one thing in her life she had control over to some degree perhaps. And that's, that's kind of where my, where my mind went to. It's like, she's just kind of exerting what control on the world that she figured out she had. And the

Kelly:

other thing is like, she's going, I'm helping you people. You're lucky I'm here helping you people. You know, again, we do so much victim shaming, and I was listening to a podcast, the Human Factors security. And, you know, there's a whole thing about ransomware and things like that. And we even corporations, we victim shame like, Well, you know, colonial didn't have the right, you know, compute or infrastructure for this huge ransomware and everything like that. So we just have no problem victim shaming, and she probably, I'm gonna guess she had quite an attitude. And she's like, you know, you get what you're getting. You're lucky you get what you get. Yeah.

Rob Berry:

Yeah, I can agree with that. And Clarence says, it's easy to get away with crime when no one is watching because people trust you. And I'm guessing that they really trust her because like, Joe, I, I'm recalling the article with the board chair, woman and she was just, it was almost like she was oblivious or complicit, you know, and in some of it was a Pollyanna. Well, I'm hoping we can open back up once this investigation is complete. No, ma'am. This is something very serious. If you open back up, it's probably under a new name with a new organization with whole new people not including you.

Jo:

Yes. So this is like, I just brought up the article with with her, and she's the one that said her last name is Barrett Barrett told us a team of people representing the grant administrators discovered something that raised an eyebrow during a periodic review. So I love you know, Robert said occasional, like, this is like, thing, you know, where's the where's the controls around doing these reviews? A certain prototype? What is periodic mean? Right. And then it says, Barrett said to her knowledge, there is no money missing from the organization. So again, she's like she's downplaying, you know, and it's like, what? First of all, that's, that's kind of not the point. I love. Dan already said, collusion. Yeah, my mind is going to like, why is this woman kind of not maybe not defending? But just really, I don't know, sitting back and watching it. She asked also if any money had been misused? And she said, No comment. So yeah, I just very little from this person who was on the board. So obviously, culture goes way up to the top. So

Rob Berry:

what I think a big problem too, is with nonprofits, especially those receiving grant funds. A lot of times when the people come in to audit, they're just looking at the money. These aren't internal auditors, these are specifically grant administration auditors to see if you're administering the money that you've gotten in a way that's in line with the grant. And I think that's the bigger I know, that's a bigger issue with a lot of nonprofits. Again, they can't afford the huge firms to come in and provide some sort of Internal Audit Services. So if you're a nonprofit out there, and you're watching, call me. Yeah. Yeah, no, and I think pozo makes a really good point, she said, People feel entitled when serving people less fortunate than them. I think those are bad people that feel entitled when they serve people less fortunate than them.

Jo:

And I just, I mean, let's go back to what I said that theme of the conference was, I said, wouldn't we all want to wake up and feel like we were radically relevant in everything that he did every day? So I mean, hats off to these grant administrators that, you know, saw something that raised an eyebrow and finally said something, you know, because they brought a new sense of relevance to their role even. And so I mean, that's what I, I mean, I just preach that to everybody, no matter what your career is, you can be radically relevant, like, look at other things don't just look this way. You know, look at what's happening around you. We just, there's so many opportunities out there for that.

Kelly:

And I want to give a shout out to Joe and I didn't get to go this year, but we did. We met two years ago with the NSA. But you could be your subject matter expert and fraud and all Got it and everything like that. But if you can't spread the word via like being a talented speaker and going, so I don't just take fraud courses, and Joe doesn't just take fraud and audit courses, and neither does Robert, you have to expand your skills in order to get the message out. So shout out to Joe and NSA, which I'm a proud member of, because radically relevant, she immediately instituted it the next morning. And we do need to stay radically relevant. So because I get a lot of people are like, what fraud course it's not just our tunnel, we have to go out. Like, I mean, for me, a lot of my stuff is behavioral science. I'm just fascinated by it. So but if we're just going to be in this one tunnel, we aren't going to, we're working to understand how could a good person makes a bad choice, if we're about the technical part of it?

Rob Berry:

Yeah. And I'll piggyback on what Kelly's saying, we have to be good speakers and presenters. Because when we find things, we have to be able to articulate them to executive management in an organization. But we also do have to understand the psychology of the human mind and how it works. That's whether you're an auditor, a fraud investigation, a compliance specialist, you have to understand how people operate so that you know what questions to ask them, you know, what documentation to look at how to put the pieces of the puzzle together. And Michelle has added a little bit of comedy, I don't, although I don't think she was doing so on purpose. She said the money is not missing. She knows where it went, yep, she absolutely knows where it went. Now, imposable makes a really good point to board members of nonprofits don't always know, do do their role when it comes to governance. And I will say a lot of times, they don't do their role, but it's because they don't know their role. Oftentimes when someone is on the board of a nonprofit, it is because they are either a significant donor to whatever cause that is, or b it is something that they are passionate about. And and your board members are usually some of your most impassioned members, but they don't necessarily depending on their background, understand the concept of governance, a lot of them are small to medium business owners who have made, you know, a significant amount of money for themselves being a small to medium sized business owner. So they don't have to do things like corporate governance, if they want to make a change. They just do it. If they see somebody stealing, they just fire them. And when it comes to larger organizations, that's not necessarily how it works. Yeah. Benita says great points, Kelly. And Joe and Joe. Thanks. And of course, Robert, what am I chopped liver? No, I'm just kidding.

Jo:

Girls, we got to stick together. Just kidding. Kelly, thank you for that. And like, you know, shout out same back to both of you. And Robert does it with auditors he makes sure auditor stay radically relevant by asking the right questions by communicating right, like that's the exact same thing we're talking about is just getting out, you know, veered from your lane a little bit. So, you know, I think that the good news about all the story we talked about is somebody veered from their lane, and and decided to be somewhat of a whistleblower, or point something out and those are the people. We want all of you to be right here from your lane. Speak up. You know, silence is not golden people. That's I mean, that's the everyday ethicists mantra.

Rob Berry:

So Mark says, I'm not chopped liver on liverwurst. But yeah, to Joe's point, if you see something, say something now, here's what I will say there will be consequences if you say something. Yeah, there will be you could lose your job. You could lose your reputation. People might talk about you, but as long as you hold on to the truth, who cares? Who gives a rip what people say and think as long as you are operating in truth and honesty? What are your core values as a person?

Jo:

Yes, speaking of values waiter, the next story

Kelly:

just another shout out for so we have posted this weekend great woman in Prague next week, we have boy debt by Miro. Oh my god, you guys need to listen to it because she's an attorney over in London. And she has this investigators mindset. And her whole thing about whistleblowers. So it's a it's always they're great episodes. But it's interesting hearing the sort of English point of view on all of this, so

Rob Berry:

very cool. All right. So here's our friend here, who will, let's give you an update on her. So earlier this month, as in the month that we're in right now in July, her trial was set for July 26 in federal court in St. Louis, but on Wednesday, June the 23rd. She had her attorney instead requested a change of plea hearing. And in that hearing, that hearing was scheduled for June the 29th. And what she did was she She ended up pleading she she pleaded guilty, didn't she Kelly?

Kelly:

Yes, they always do. 99 times out of 100.

Rob Berry:

So, that is the update on her and what happened in this situation? So we are about halfway through. That is our first story where we had no support from our support services organization. Kelly Jo, you guys want to tell the people what you guys are up to? Oh, hello, Kelly, what are you up to?

Kelly:

Um, great one in fraud podcast,

Unknown:

um,

Kelly:

the, you know, still selling the book sending the book to people. I am reading Robert tell Dinis newest version of persuasion. And oh my gosh, yeah. Crazy. Good. So, um, and just working on some online courses that I hope to have eventually.

Rob Berry:

Oh, nice. You have to keep us up to date on the online courses. Joe? What's happening? Oh,

Jo:

well, I was just telling Robin Kelly, I've got two big presentations that are unique for me, because they're in two new industries. So next week, I get to spend time with financial planners talking about it. So I might just leave that there. But I it's a bit of a challenge for me, because I want to make it very relevant for them. But it's hard, maybe not to make some financial planners uncomfortable when it comes to the ethics of some of the work that they do. So anyway, working hard on that. And then the next conference the week after that is actually called bottles, bottles, bottles, bugs and brews. So it is with like six or seven state CPA organizations. And I'm actually doing an entirely new training on how to create a risk and control matrix for the cannabis industry. So I always Colorado, so it's big here. And it's a client that I got during COVID. And it was a fun adventure to work on that risk control matrix. So now I'm going to train on it. So anyway, two new things I'm working on.

Rob Berry:

So Joe, I have some people you may want to talk to in the cannabis industry. Awesome. I'm any we'll have to we'll have to talk. Okay. All right, so Well, I mean, I'm working on making this the most widely distributed podcast on fraud on the planet. I'm also working on making sure that you guys have some quality CPE for this podcast at a reasonable price. Right now it's priced at about 699 for one hour of CPE. So, Friday, froster calm. I've got some new programs coming out in about the fourth quarter of this year. One of them is called assertiveness for auditors. So we're going to teach you how to be assertive, and the other one is going to be delegation for others. So look for that. Probably around September, October, November, December, January, sometime later this year. Seriously, you guys. And don't forget to visit my website that already guy.com sign up for my mailing list, because there's a lot of new stuff coming soon. But there's one other thing that's happening, and Joe and I are actually doing it. Let's talk about this for just one minute as we get this woman off of our screen. coming up soon we're going to be doing the innovative auditor challenge. It is five days of CPE one hour each day, one new speaker each day, one new topic each day with one new speaker each day, for a total of five hours of CPE. All for $25. You can't beat that. And besides you get to see me Joe, Michelle Fowler, Trent Russell and a special Friday guest this time, Joe Horowitz some people that are here with us today have participated in the innovative auditor challenge before if you can drop into the chat how good it was, so that everyone knows just how good it was. If you think it was bad, keep it to yourself. Don't tell anyone. But But. But that is happening. Dude, Joe, what's the date? I forgot?

Jo:

I put it in the comments because I was like, Oh, I forgot to talk about it July 26 through the 30th. So thank you last full week of July. Yeah. And I put the website out there. So it looks like Heather's joining us. I'll drop the link in again for everybody.

Rob Berry:

Just the last room. Yep. Thank you, Joe. Now, here's something else that we're doing. Next week, we're going to give you guys a preview. We've already done one preview but next week. Monday through Thursday, we're going to take each one of our presenters will accept zero we might be able to get Joe, the other Joe sorry, Joe, it's but Monday through Thursday, we're going to do about a 10 to 20 minute preview. So we're going to talk to each of our presenters live here on LinkedIn. So look for that and sign up for that. That's free. Obviously, but we're going to talk about who they are, what their business is, why they got into the business, why they're passionate about the topic that they're talking about during the challenge. And you get to ask them some questions live right here on LinkedIn. So look for that happening next week. Ooh, this is all fun and exciting stuff, isn't it? Guys?

Jo:

It is. Hey, who's interviewing you, Robert, can I interview you for your life?

Rob Berry:

You know what? I was wondering who was gonna interview me because I hadn't gotten that far yet. Yes. interview me. This is gonna be fun. Okay. Check this out. malesko I think we've dropped the link for you.

Jo:

Hopefully let me know if you don't get it.

Rob Berry:

Leslie is saying it is a must attend event and Leslie is saying that Why? Because she has attended before. Now, but Nita is saying it is like Friday fraudsters but on steroids. Love it. Yes. Heather the 26th through the 30th. Thank you because you know, I can't remember stuff. You know, I'm getting old. Michelle is saying it's fantastic. entertaining and educational. You know what I call that Michelle edutainment proposal says it was amazing. Got a few ideas for audit class assignments, great daily challenges poses as a teacher, you guys and she teaches the youth so we gave her some good ideas to take back to her students. And Benita is saying, whoo. And she's also, you know, hey, now Alicia is saying thank you for the link. So that's what's happening with all of us. The innovative auditor challenge is coming up. So now let's move on to the next one that we're calling Darien cash. Alright guys, you know, every once in a while we get one that just kind of upsets one or all three of us. This one kind of upset me, but we'll get through it. So listen, a couple has pleaded guilty of defrauding the North Carolina Medicaid program of $13 million. Here the two people Timothy Mark Heron. on his Facebook page, he describes himself as an entrepreneur, an author, a husband, a traveler, a jet setter or wind kind of sore and a lover of fun food. On his wife's Facebook page, she describes herself as well. Her motto is let your dreams be bigger than your excuses. For years this co live the dream traveling to Australia, the South Pacific Malibu, Napa, Italy and other destinations. Tim Herron routinely posted selfie videos at resorts or the penthouse that they have in Las Vegas, over a three to four year period. They were true jet setters flying around the world in their $900,000 plane. So let's talk about what Medicaid is in the United States. Medicaid is a federal and state funded program that helps people with health care calls people who have limited income and resources. So now let's go back to how this probably can have started. Leticia Heron, the wife founded a company called a gobby healthcare systems Inc, and was able to enroll in the Medicare service provider as a Medicare service provider, even though she had been previously convicted of identity theft. After enrolling she billed North Carolina for home health care services. So in other words, nurses were going out to homes to visit patients in the North Carolina region. She then moved to Las Vegas, and in 20 in 2017, and married Tim and 2018. Now, she renewed as a Medicaid provider, but she didn't disclose them to Medicaid that well, not only was she convicted of identity theft, but Tim was also a convicted felon. The couple then incorporated not one but two homecare healthcare services in North Carolina and Bill the state's Medicaid system for at least $17 million. Most, if not all, of the people that they claim to have helped. Were already dead. Investigators said that what they would do is they would they would obtain names from people's obituaries, cross check them with the Medicaid database, and then bill for services purportedly provided to the people before they died. That's the background.

Jo:

You know, is it sad that the first thing that went through my mind was that was a really smart scam? I mean, seriously, $17 million. And I mean, it always amazed me they don't think they're gonna get caught. But how easy was it for them to do that? And how often is this happening? I don't know. I, it raised questions in my mind,

Kelly:

text me to one of the Oregon chapters of the acfe. We had a state Medicaid fraud investigator come and give us a presentation. And this was, you know, six years ago, I think. And she said, for every dollar that I'm paid, I recover seven. So why that return on investment is so huge. Why don't we do it more and I get um, it's the Coalition for fraud or some newsletter, two different newsletters a day, prod news dailies. Some of the biggest frauds are Medicaid and Medicare. Like, just huge because health care, there's so much money in it, so so much money in it. So why aren't we having more Medicaid and Medicare and health investigators because they bring back at least in Oregon, it was seven bucks for every dollar of her salary.

Rob Berry:

You know, here's what I'll say. Most of them actually recoup more than they cost. But I'll take it a step further. Why don't we prevent some of this crap from happening before it even gets started? This one is so agree just and stupid, but we'll get to that in a moment. Let me let me let me go to something else. Before I get on that tirade. I'm gonna try and calm down for a minute. So the herons it is alleged that they then launder the Medicaid payments into various luxury items, including a private jet and Aston Martin sports car. And if you know anything about sports cars, those are very expensive. Tiffany and company purchases barrini clothing and jewelry real estate in Maryland and Eastern eastern North Carolina, a penthouse apartment in Las Vegas and gym equipment. Many of the items along with cash in their bank accounts have been forfeited to the government as part of their guilty pleas. And if you look there they are outside of the plane and here he is posing somewhere with nice blue water grenade Oh, is that in the Bahamas? I know the Bahamas has nice blue water. But anyway. And there's another picture of is that a? that's a that's a Tesla? No. Is that an astronaut? Whatever. There's a picture of one of the cars

Jo:

can I read my favorite quote from Tim Herron? The guy pictured on the right hand side side it says they're they're like, quote, people, you can tell they're very inspirational. They want people to follow them and because they're such great entrepreneurs and all stealing money. So his quote is I'm not doing a business that's new. I'm doing a new way of doing business. And I wrote the article it says new maybe illegal definitely. And I thought wow, okay, this is okay. I was saying radically relevant. This is radically illegal right or radically crazy. I don't know what that is. But I mean, I love that he just thinks he's this great entrepreneur. Oh, that would just got me.

Rob Berry:

Yeah, so So Dan says $900,000 plane is not jet setting. Melissa says she loves our titles. Heather says no background checks. Heather we're gonna get into that in just a moment. Oh my goodness and Charlene is just in shock. Say what? See Charlene is not an auditor or compliance person Charlene is one of my friends and Charlene keep tuning in. I noticed you've been here a few Fridays, you'll see that this world is kinda corrupt with only a few people though. I still say a majority of the people in the world are good people. But my goodness, the corrupt ones are really really crazy. And Megan is like whoa, like at home alone, right. And pose Oh, wow. Just Wow. And they didn't even claim for post mortem services. Nope. House is here. No Evil See No Evil speak no evil hell, this is just all evil here. My friend just Oh, evil. And Mark is saying Joe. You should appreciate the creativity.

Jo:

Well, it was they were smart because they didn't do port postmortem. They even looked at when people died. And man they really they did make a business out of this. This was their business their business of being illegal. I like radically illegal to Kelly that's great. Yeah. Please smart and illegal nuts.

Rob Berry:

Now pose Oh, the forever comedian. The quote was a tip.

Jo:

It was a flag, a red flag, whatever white flag whatever color

Rob Berry:

he was telling on himself because he says he's a legend in his own mind. Yep.

Jo:

Well, I mean, parking lot audit. Right, Kelly Park up.

Kelly:

How about boat audit playing on an audit? Yeah, I mean, again, it's this crazy lifestyle. Like I just you know, once Someone post stuff like that. It's like, hey, look at me Look how fancy I am. It's, you know, there's something to be said for the, okay, we're not getting political or caste, like, there's something to be said for the really, really wealthy that don't have the, you know, monogrammed bag or anything. They're very, they just try to go under the radar. And then there's a class of people that don't want to go under the radar. They want to fly again, the pink flag of I'm a thief. But this goes to also process. Can you set it said in the article that he already was a felon? I'm sorry? Why can't the government bar felons from doing stuff like this? Okay, glad you asked that question. ignorant. But why can't the government just, I mean, they bark other people from other things? Why can't that just be a? You know, check? So

Rob Berry:

glad you asked that question. Let's talk about this, my friend. Let's talk about this. So how in the world did this thing get caught? There was an audit. According to a state audit. The Department of Health and Human Services allowed unlicensed providers to remain in the Medicaid program. Here's some other things that happened. Dozens of healthcare providers whose licenses were revoked, suspended or had limits placed on them were allowed to continue treating Medicaid patients. And then bill for the services because of what the audit said was lacks oversight. So investigators with the State Auditor's Office found that now get this 18 out of 24 providers that they 26 providers that they tested, they only tested 26 providers and found that 18 of them had errors. So what happened is 18 of them had licenses that were terminated or suspended in 2019. And they weren't removed from the Medicaid program. But it gets even worse. Two of them were disciplined for sexual misconduct, and one of them had been convicted of health care fraud. Now, 14 of the 18 will removed only after the auditors question the division of health benefits with them.

Jo:

I mean, isn't there that that concept of extrapolating the sample like can you could we do that with 1826 and wake up and say like, this is probably a huge problem. But

Kelly:

this is one of the other things it's like, you know, people complain about government regulations, and blah, blah, blah all the time. But this should be kind of a checks a box and an annual check the box. I mean, how many things do we have to do to like, we have to file our taxes every year. Like, they have to validate things every single year, and so much of this can be automated.

Rob Berry:

Oh, but it gets better. Speaking of automation, I'm so glad you said that, Kelly, and you know what, we didn't even practice this, you guys this stuff just makes sense. Okay. So the auditors determined that that that the division of health benefits officials didn't check the disciplinary actions taken by various state licensing boards. So in other words, they didn't check to see if any of these providers had been sanctioned. But what they did was they relied on an electronic health system that hadn't worked properly, since it was put in place in 2015. Teen Now see, hold on, this is where this was really just makes me upset. So again, when you deal with federal, federal, state and local contracts, those contracts are typically awarded to the lowest lowest bidder, the lowest bidder doesn't necessarily have the best product, you know that this product hadn't been working since 2015. Yet you decided to keep doing what you were doing. How asinine is that? I mean,

Kelly:

this is where people get really frustrated with government, they see a story like this, and they're just like, Well, why am I gonna pay taxes? And and I'm not saying that people that have a record should be barred from any type of work, but can we have like a 10 year bar disbar from maybe health care? Or, you know, maybe they just have to have find a different field? like nobody gets better? Oh, God.

Rob Berry:

So okay, so so the auditor has asked the agency officials about this, you know, the thing that you would expect, Hey, guys, look, you got this system in place, but why didn't you just check manually if you know the system didn't work? or Why didn't you buy a better system? Why didn't you say something to the vendor that provided the system? Here's what the agency officials told the auditor, they they said that they didn't have the authority to remove providers from the Medicaid system. them simply because of limits placed on their licenses. But here's the deal. Here's where it gets even better. The federal Medicaid regulations state that the states must confirm that there are no current limitations on the providers licenses. So what they were trying to do is say that, well, we don't have the authority to do it. However, when you look at the federal regulation, it is telling the state regulators that they should check the licensing status. Interesting. Oh, sorry,

Kelly:

let's just do a really vulnerable population, that this money should be going to a very vulnerable population. So I

Jo:

can, can someone I guess, can you guys help me understand a Medicare Medicaid provider? What that means, like a doctor, like I mean, this, she's got, obviously a clinic set up, right? I mean, I've read the articles. Like is there, I don't know. I mean, it just kind of blows my mind that this existed completely as a shell. I mean, this, to me is like a shell company. I don't

Rob Berry:

get it as a real company. So So here's how it works, your Medicaid and Medicare providers, they could be physicians, so they could be doctors, but they could even be mental health providers, they could be physical therapists. So if you have a license and physical therapy, you can apply to be a Medicaid provider, or Medicare or Medicaid provider. And once you are on that provider list, you provide services and then you turn around and you bill, Medicare and Medicaid for the services that you provided. So you collect all the standard information, their name, social security number, firstborn, blood sample, you know, liver, no, seriously, you collect all their information, and then you have you have to go in the Medicare Medicaid system and ensure that they are able to receive it. And so now you provide the services, they're eligible to receive it. And there's a match, you get paid. Yeah. And I mean,

Jo:

yeah, I mean, that's what I was guessing. That's how the process works. Not knowing but again, can we I mean, this is to me why this was kind of a smart, broad. I mean, the way they did it, it works perfectly. And I mean, to some degree, like it, I don't know.

Kelly:

So my mom passed a year ago. And I still every so often get a call from the hospice provider wanting to know if I need counseling. And, like, I mean, they call me, I'm sure it's a calendar, it's probably every four months. And I'm like, Come on, stop. And, you know, I don't I don't reach out to like, the whatever organization and say, Hey, is there a bill out there for like, they're providing hospice services for me, because it's too, I wouldn't even know where to go. But the chance that it's happening, crosses my mind.

Rob Berry:

Oh, but you guys, it gets even better. In addition to not removing providers with licensed troubles, state officials didn't verify the professional credentials of hundreds, possibly 1000s of Medicaid providers, including some that hadn't been verified in more than five years.

Jo:

I think that's what I was getting at, like, Where are the checks to make sure these are legitimate vendors, like we would do in a vendor audit? You know, where are the? I don't know, where are those tracks like there, there's no real website for this gal, maybe she did have a legitimate business at one point. So maybe it would have all looked legitimate, or I'm sure they were smart enough to make it look legitimate. But I don't it feels like there's something missing the prevention side of it

Rob Berry:

was missing his data analysis, right? You have all the data there. And what's missing is you have a state agency that wasn't doing its job, and then was trying to funnel their responsibility off on saying we don't have the authority to do it. However, when you look at the federal regulations, they actually were required to do it.

Jo:

Yeah, crazy.

Kelly:

Always limited resources. But you know what, in cases like this, the, the ROI is huge. So, you know, I think they can make a case to state legislators or whatever, that look at the ROI. It's huge. you more money, we're gonna get more money. This isn't that hard to prove. It's not like, you know, sending a person to the moon that you're gonna get better.

Jo:

Oh, but wait, but we've got it before you let everybody go. You gotta let at least make them feel good about what's happening to this woman because she's already been scented, so you got to give them the

Rob Berry:

after this, we'll talk about that yet. State officials said that they weren't required to check ownership information. Even though the federal agency that runs the Medicaid program said that such background checks are best practices. So they weren't required. They would just best practices from the Fed standpoint. So the state said we aren't required to do it. Huh?

Jo:

Can I just give a little tidbit? 30 seconds, I've heard that we should all stop using best practices. Because that means that we have reached the end of what we can learn and be and do. So everybody says us better practices. So I've now changed my lingo in training, internal auditors don't help your company, find best practices, help them find better practices, because then they continue continue to do that and get better. So tidbit, I thought that was excellent. Let's see what might have been in think again, but I think again, I'm like I loved that I needed if it was credit, Adam Grant, sorry, there was so much in that book. Like how I'm still taking things away from it.

Rob Berry:

Oh, one more thing before we talk about what happened to them. So an update to the automated system that checks to providers credentials is expected to be operational by July of 2023. bull crap. Yeah. Yeah. By the way, if you want to talk about some bull crap, buy my book business bull crap. There you go. How about that? Big a bunch of bullcrap. Okay, so now they both have pleaded guilty. And I forgot I lost in my notes. What exactly is happening? You guys have it pulled up.

Jo:

Oh, I do. I've got it. So I'm Tim Herron is awaiting sentencing. But his wife will spend more than 14 years in prison and was ordered to pay 13 point 4 million to the Medicaid program. So one can only hope that the Medicaid program gets 13 million of the 17 million back. We'll see about that. But at least she'll be in prison for 14 years, hopefully. Well, that's at the end of the end of that story. Maybe maybe until she gets out does another one. Right? I mean that this was our second time. Maybe we think Third time's the charm. time's a charm. That's right.

Rob Berry:

Now pause. Oh, that wasn't a joke puzzle that was for real. That system will be up and operational in 2023. Puzzle thinks that I'm joking about that. No, that was very serious. That is what the state officials said. So we'll just have we'll just have very loose controls until 2023. Right, we don't care about it.

Kelly:

And let all the fraudsters know we'll have loose controls until 2023

Rob Berry:

right that's the other thing like you Jesus.

Jo:

So hopefully we don't have a lot of copycats out there on this one because looks doable.

Rob Berry:

You can't make this stuff up. Okay, no.

Kelly:

Drinking a pink cop just FYI. I got this whole subliminal pink thing going on.

Rob Berry:

And Joe and I actually have a meeting to go to right after this. We have to go. Kelly last words.

Kelly:

Great women in fraud podcast. Listen, download, leave reviews.

Rob Berry:

Joe last words.

Jo:

I'm glad to be back with everybody. excited for next Friday's we've already started talking about it, so don't miss it.