The
Buckner Plan for Fighting Fraud
Gail Buckner
For
Georgia Secretary of State
The Buckner Plan for Fighting Fraud
1. Background
Fraud
appears in many forms, including identity theft, racketeering, investment and
securities fraud, not to mention mortgage and even home repair fraud.
Identity Theft
One
Georgia
district attorney recently said that ID fraud was the biggest prosecutorial challenge
in her judicial circuit. These concerns are being echoed throughout the state,
and the prospect of increasing theft trends will only increase the frustration
shared by Georgia
prosecutors. However, it’s much worse for victims.
When
criminals steal the identity of unsuspecting victims, the consequences are catastrophic.
In 2005, upwards of 10 million Americans had their identity ripped-off, resulting
in a net loss of roughly $5 billion. In 2001, 2,592 Georgians were reported victims
of identity theft. Last year, that figure had doubled costing victims an average
of $700. The stress toll of reconciling bad debts and diminished credit ratings,
however, cannot be quantified. Overall, Georgia
ranked 12th for the number of reported victims and 8th for
the number of known perpetrators.
Last
year, the personal information of over 160,000 people was stolen from a ChoicePoint
database in Alpharetta. Over the last two years, more than a million profiles
were compromised when hackers raided the databases of three state agencies and
four universities. Within that time, only four state governments experienced more
security breaches.
Investment and Securities Fraud
According
to Dana Hermanson of Kennesaw State
University, “the risk of
financial statement fraud is real and not going away.” That message rang out in July when Camden County
authorities arrested a man for bilking more than $150,000 from middle Georgia
seniors. The grand jury levied a 17 count indictment for theft and violations
of the Georgia Securities Act after charges surfaced from the unregistered sale
of investments between 2001 and 2002.
In
one instance, an 81-year-old victim was sold a tax deferred annuity only to be
asked months later to re-invest those funds, plus more, in a better investment
offering. The money was then wired to an offshore Bahamas-based bank, which was
later relocated to Belize.
In
most cases, the elderly victims were told the investments were safe, that they
would earn 12% interest, receive quarterly interest payments and that they would
recover their entire initial investment at the end of five years. The victims,
however, stopped receiving monthly payments in 2004. One victim lost her entire
life savings.
Later
that month, in an unrelated incident, an Atlanta man was indicted on ten counts of securities fraud
after fleecing an elderly Newton
County woman out of $100,000
– her entire retirement package. She was convinced that these “safe” investments
would generate enough monthly income to supplement the costs associated with her
medications.
After
receiving five years of monthly checks, the payments suddenly halted. Preliminary
investigations linked the case to a more elaborate investment scam that involved
the unregistered sale of promissory notes, which were supposed to generate 9%
returns for investors. All in all, at least 100 unsuspecting seniors were scammed
out of $7 million.
Home Repair Fraud
In
2004, a 90-year-old widow from St.
Simons Island
was manipulated out of $496,000. The scam involved billing the elderly woman for
repairs and construction that were never done, and overcharging her for minor
and shoddy household repairs. Convicted of wire fraud, the culpable party received
a four year sentence and was ordered to pay $223,225 in restitution – less than
half of what was conned. Sometimes an unsuspecting victim is hustled out of their
life savings as in this case. In other instances, they are tricked into taking
out a mortgage loan to fund expensive repairs.
At
this time, investigators from Clarke and Oconee
counties are still looking for a rouge carpenter who scammed nine homeowners out
of more than $60,000 for work that was never finished. After completing a 15-month
jail sentence for conning a Hall
County family out of $92,000,
the suspect allegedly picked up where he had left off, soliciting home improvement
and small construction projects by leaving flyers in mailboxes that showcased
bogus references from satisfied customers. This man, who victims say is a very
smooth talker, would then persuade his victims to front half of the money in order
to buy supplies, which is contrary to the way most contractors operate. Once he
received the up-front costs the suspect would vanish after completing minimal
work.
At any rate, home
improvement fraud is becoming more and more prevalent and statistics reveal that
elderly citizens are three-times as likely to be victimized. According to the Council of Better Business
Bureaus, home remodeling contractors ranked just behind car salespeople and auto
mechanics in attracting the most consumer complaints. Unfortunately, the callous
actions of a few often obscure the decency and quality craftsmanship of the wide
majority.
Mortgage Fraud
FBI
statistics reveal that mortgage fraud is one of the most common forms of white
collar crime, costing the nation $1 billion last year, up from $46 million a decade
ago. Georgia now holds the dubious distinction of ranking first in the nation for mortgage
fraud, which involves different ways to falsify loan applications, house appraisals
and purchases.
For
instance, "flipping" schemes have typified mortgage fraud in which a
house is bought, falsely appraised at inflated values - sometimes twice or more
what the property is actually worth - and then resold quickly to phony buyers
or using stolen identities for the closing documents. Homes are then abandoned and left to deteriorate, leaving an indelible
wake of diminished property values.
Mortgage fraud commonly involves middlemen
who pay "straw buyers" to purchase properties at above market prices,
and when the deals close, the seller kicks back the extra profits to the middleman.
The middleman promises that a management company will pay the mortgage payments,
but the payments soon stop, the straw buyers default on their loans and their
houses are foreclosed.
Over
the last year, one the nation’s worst fraud cases unraveled in Clarke County.
The scheme, which used "straw buyers" to purchase 100 out of 124 homes
in an Athens sub division at inflated prices,
may have defrauded homebuyers and mortgage lenders of as much as $7 million, according
to investigators. Officials so far have identified two dozen people involved in
the alleged scheme, and 13 have been arrested on state Racketeering Influenced
and Corrupt Organization Act charges.
2. The Buckner Plan
Regulating
corporations and the sale of securities and investments are major duties vested
to the Secretary of State. With steady and progressive leadership, Gail Buckner
will not only satisfy these responsibilities, but she will take the job to a whole
new level. As the state’s chief watchdog
against fraud, Gail will be relentless in her preventive efforts. She will work
diligently with the governor and attorney general to ensure that Georgians have
maximum protection against identity theft, investment fraud, as well as home repair
and mortgage fraud.
Gail plans to launch
aggressive education efforts to better inform citizens on the methods and perils
of fraud. She will also organize diverse committees of industry specialists, state
officials, investigators, consumer advocates and even reformed scam artists to
stamp out fraud before it strikes. As our next Secretary of State, Gail will ratchet
the screws on shady carpenters, scam artists, and identity thieves by clamoring
for tougher penalties. Moreover, she will mobilize all available resources to
educate Georgians on how to recognize and alert authorities to suspected fraud.
As a state representative,
Gail was a stalwart for consumer rights, and to properly cap that role introduced
two measures in the last session that would create the Identity Theft Prevention
Board as well as the Investment and Securities Fraud Prevention Board. To complement
these initiatives, she will form a Home Improvement and Mortgage Fraud Prevention
Board, giving Georgians a triple crown of fraud prevention.
Each
committee would bring together a highly skilled team of professionals to combat
and prevent all the various types of fraud. For instance, the Identity Theft Prevention
Board would be a nine member panel with representatives from advocacy groups,
information technology, law enforcement, banking, the General Assembly, and Office
of Consumer Affairs. Likewise, the other two committees would include reformed
swindlers and the most experienced and reputable leaders from the wide array of
relative fields and disciplines.
At
no extra cost to taxpayers, Georgia deserves a true people’s champion.
Our people deserve an outspoken advocate for consumer rights. The taxpayers deserve
an extra firewall of protection. Gail Buckner will work hard to protect Georgians
from all types of fraud.
