The Many Faces of Fraud

The United States Federal Bureau of Investigation (FBI) has released it's May 2005 report on Financial Crimes.

It's written simply but with the American system in mind. I thought I would make this a 'didactic' post. This post contains a report I obtained by the Ministry of Health and Long-term Care in 2002 and not publicly available. Once you read some of the pages, you'll see why. Here are some excerpts:

Corporate Fraud

Involves following activities:

1) falsification of financial information, including false accounting entries, bogus trades designed to inflate profit or hide losses, and false transactions designed to evade regulatory oversight.

2) self-dealing by corporate insiders, including i) insider trading ii) kick-backs iii) misuse of corporate property for personal gain; and iv) individual tax violations related to self-dealing

4) obstruction of justice designed to conceal either of the above-noted types of criminal conduct, particularly when the obstruction impedes the inquiries of the securities and exchange commission(SEC), other regulatory agencies and/or law enforcement agencies.


To Identify Money Laundering

1) beware of large scale cash transactions, the large or rapid movement of funds and an unrealistic net worth compared to reported income and/or employment

2) maintain and test internal financial controls, policies and operations

3) recognize and report suspicious transactions, maintain professional skepticism

Health Care Fraud

We don't have the extent of health care fraud in Canada as in the United States, but there are some things that are probably ignored by law enforcement here.

For example, in Ontario, I don't believe billing schemes are considered fraud within our health legislation. The College of Physician's and Surgeons (CPSO) and the Ministry of Health and Long Term Care allow doctor's to charge whatever hourly rate they want when preparing a person's health records for release. There are no regulations allowing a limit on hourly rates.

There is no offense clause in health legislation that covers false or exaggerated medical disabilities as well as altered or fabricated medical documents perpetrated by physicians (this includes psychiatrists).

Even if there were, the 'authorities' would refer a complainant to the CPSO and the physician, for example, would not face the same penalty as other Ontarians for the same crime. It would be rare if the College chooses to deal with it since most of their disciplinary measures are a majority of sex related cases.

In this KPMG report on page 22 81% of complainants and 67% of physicians did not feel that the complaints process reflected the CPSO's responsibility to protect the public interest. 77% of complainants and 56% of physicians did not feel that the process reflects current public expectations and social values. On page 21 70% of complaints and 46% of physicians did not feel that the Complaints Committee gave an adequate rationale for its decisions.

This report is now somewhat outdated. I am currently in the process of checking to see if the 'Conclusions and Recommendations' by KPMG listed in pages 47 to 51 and its findings of its 'Decisions and Public Interest' on pages 39 to 46 (which is quite incredible if not corrupt in its own right) by the CPSO and Minister Smitherman's office.

The list of people I have attempted to contact about this report is long. It includes Dwight Duncan, Sandra Pupatello, at least 3 policy persons and a lawyer in the Minister of Health's office, and numerous letters sent to me by Minister Smitherman all ignoring my requests and the government's own responsibility to protect the public interest.

This report has implications in the Toronto SARS crisis as a future post will show and my allegations of Ontario government negligence.

I've also attempted to contact CTV, City T.V., and the CBC about this report but no one contacted me back. Oh well, c'est domage. You snooze you loose.