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Fact Pattern A: John and the Food Stamps
John was a divorced father of four. He made a lot of poor business choices, and as a result, he ended up losing his business. Further, creditors sought payment from loans he had taken out when his business was running. They won judgments against him in amounts over $190,000. He was working as an admissions counselor at a small community college when his checks started being garnished. He decided instead to enroll in school and stop working. He thought he could get money from federal grants in his role as a student to live on. He did get some money, but it wasn’t enough to pay his bills. Instead, he decided to try to get some welfare aid, including food stamps and money from the state he lived in. His custody agreement permitted him to have his kids every weekend. However, in filling out the government welfare forms, he claimed he had full custody of his children. This allowed him to receive more aid in food stamps and other monetary funds from the state, since it was for five people instead of one.
After doing this for a year, he started to get nervous he would be uncovered. He decided to seek full custody of his children from their mother. During the process, mother’s attorney discovered John was claiming the children as his dependents when they were not living with him. Attorney reported him to State Agency. State Agency contacted John, and he stated again that children were living with him full- time. He signed a legal document stating the same.
State Agency turned the matter over to State Police. On Thursday afternoon, police went to John’s house, where he was outside reading a book. Police began to ask John questions, including where the children were. Unaware what they were investigating, John answered, “They are at their mother’s.†Officer Smith asked John who had custody of the children. John stated, “Their mother does.â€
These statements were used against him in a criminal welfare fraud trial.
Fact Pattern B: Mary and the Shipping Department Practices
Mary works in the shipping department at a local office supply company, Paper Company. There is a lot of pressure to keep sales up, especially in this down economy. Mary is training a new employee, Mike. She says customary practice is to send orders to customers consistently, even when they haven’t ordered anything, unless they complain. Mary explains to a co-worker that most of the time, the companies think they have ordered the materials. Many customers have their credit cards on file with Paper Company, and Mary charges the cards as the shipments are sent out without the requisite approval.
Mike isn’t comfortable with this policy, but Mary explains, “Hey, the last person was let go because she wasn’t sending out enough orders. I have 3 kids to feed and I’m a single mom!†Still uncomfortable, Mike approached the company CEO, Scott. Mike recounted every detail, to which Scott replied “Hmm. Okay, thanks, Mike. I’ll look into it.â€
In truth, Scott was not bothered by the practice and did not want it to stop. He received a big bonus the last two years, likely stemming from Mary’s shipping practices, he now realized.
Two months later and without any change to the shipping practice, Mike reported the practice to the local police. Police arrived on the scene to question Mary. Mary refused to answer any questions. Frustrated, the police arrested her. At the police station, Mary was read her Miranda rights, and she immediately demanded an attorney.
The case was forwarded to the district attorney’s office. They promptly filed charges against Mary, Scott, and Paper Company.
Fact Pattern C: Dr. Pointer and the Sweaty Palms Surgeries
Dr. Pointer, a plastic surgeon, was accustomed to living an expensive lifestyle. He had houses in several states and took international vacations several times a year. However, the recent downturn in the economy produced significantly fewer clients than in years past. He was having difficulty paying all his bills, much less doing the expensive things he liked to do.
He realized that people might be in need of money and started advertising for “sweaty palms†surgery, where he would “fix†their sweaty palms issues without any cost to them as their insurance would cover it. In fact, in person, he promised patients he would give them $500 for having the minimally invasive surgery. Many didn’t have a legitimate “sweaty palms†issue, but Dr. Pointer assured them what he was going to do wouldn’t make much difference. They would agree to a minimally invasive procedure, and Dr. Pointer would overcharge insurance companies by $2500 a patient, then pay out $500 to each patient.
On top of that, he kept minimal records on each patient and didn’t do any follow-up visits.
Sometimes, patients expressed hesitation. They didn’t really think they had a sweaty palms issue. Dr. Pointer started submitting false invoices to insurance companies on these people as he now had their insurance information.
One such person, Beth, received a confusing statement from her health insurance company regarding sweaty palms surgery with Dr. Pointer. She had met with him but opted not to have the surgery. She called the police and reported the matter to them.
Local police went to Dr. Pointer’s office to investigate. His assistant told the police he wasn’t there. The police demanded his office files. The young assistant didn’t know what to do. She said, “No, I don’t think I can turn them over to you. I haven’t seen any legal documentation that you are allowed to do that.†However, the police raided the office anyway.
The police found Beth’s file, which indicated her insurance company was billed for a surgery she said she never had. The police turned the matter over to the district attorney, who decided to prosecute. The DA got a warrant for Dr. Pointer’s arrest and gave it to the police.
The police went to Dr. Pointer’s house. The door was open, and they went inside without knocking. They saw him sitting in his back pool and arrested him.
Fact Pattern D: Bill’s Investment
Bill lived in Denver and was always careful with money. However, he realized he could make his money grow by investing it. He researched a few options, but nothing sounded good to him until he was approached in a local bar by Amy. She started talking to him about “Western Tool and Equipment Repair and Investment Services†(hereafter, “Western Toolâ€). She gave him her card with that business name on it and with the title of “Investment Manager.†She explained that the purpose of Western Tool was to use invested funds to purchase used tractor-trailers. They would be reconditioned and sold for profit to large corporations, like K-Mart and Wal-mart. They would also be sold internationally.
She explained that they operated at a distant plant out of state in Texas but that there was a local headquarters nearby in Boulder, CO. She stated that investors made a 36% profit within the first year and that investment checks were distributed every 6 months.
Bill thought this idea sounded great. He asked for some documents to review, which Amy provided by e- mail. The numbers were too good to be true! He decided to invest $20,000 at the start.
Six months in, Bill received a check for $259 from Western Tool. He thought this was significantly lower than he was supposed to receive based on the numbers Amy provided him. He contacted Amy, who stated Bill needed to be bringing in other investors to reach those higher numbers. Amy said she would get him the information to bring others in, including some business cards and updated files.
A week later, Bill received business cards with his name on them and the title of “Investment Manager.†Bill was confused because he was not an investment manager. However, he believed in the goals of the company and set out to bring more people into the business. He connected three individuals with Amy, and each person invested $5000. When Bill received his next investment check six months later, it was for $98. Now he was confused and angry. He managed to get other people to invest, and his investment proceeds decreased, contrary to what Amy told him.
At this point, he asked Amy for a face-to-face meeting because he wanted his money back. He suspected something was not right with this investment arrangement. He last saw her in the local bar and never went to headquarters in Boulder.
Amy never responded to his e-mails or phone calls. Bill drove to the address listed as headquarters in Boulder; but when he got there, it was a P.O. Box.
He hired a private investigator to find out more information. It turns out the Texas plant address didn’t exist.
One of the people whom Bill managed to get to sign up, Dan, called the police after his own small investment check for $27 came in the mail. Dan thought this was some kind of fraud. He explained the details as he knew them to the police. Bill never hid any information about himself, so Dan had Bill’s home address. Police went there to talk to Bill. Bill wanted to be helpful to the police. He answered the door and let them in. They began asking him about Western Tool. This was not the first time they had heard about the company, but Bill was the first person to provide significant information. With all the information Bill provided, the police forwarded the matter to the DA.