USLegal Reporter

Mississippi Gulf Coast residents, Vincent Pempeit and Sandy Barron, pleaded guilty today to fraudulently seeking disaster assistance following Hurricane Katrina. By falsely claiming he lived in a particular home, Pempeit received $9,558 from FEMA and was approved by the Mississippi Development Authority for a $60,449 grant. Barron received $15,184 from FEMA after claiming hurricane damage to a former residence.

Pempeit and Barron are set to be sentenced on October 9, 2007 and face potential penalties of anywhere from 30 to 100 years in prison, as well as fines ranging from $500,000 to $5 million.

Source: http://www.clarionledger.com/apps/pbcs.dll/article?AID=/20070710/NEWS/70710038

Connecticut attorney general Richard Blumenthal has announced a lawsuit against Best Buy accusing the chain of using in-store computer kiosks to deceive consumers and overcharge them.

Best Buy is one of the nation’s  largest consumer electronics retailers.  The lawsuit was filed yesterday. It accuses Best Buy of denying customers the best prices quoted on Best Buy websites by having its employees refer to look-a-like internal websites which quote higher prices.

“Best Buy used in-store kiosks to conceal lower online prices and renege on its price match guarantee. Consumers seeking bargains were led to believe that lower online prices had expired or never existed. Best Buy treated its customers like suckers, not patrons to be prized,” said Blumenthal.

The lawsuit seeks consumer refunds, civil penalties, and other remedies. Best Buy has until June 13 to respond.

See http://www.ct.gov/ag/cwp/view.asp?Q=382168&A=2788,

 http://www.star-telegram.com/business/story/114130.html

Clay Johnson III, Deputy Director for Management of the Office of Management and Budget, issued a memo on Tuesday to all department and agency heads ordering the implementation of new security measures to fight identity theft.

The agencies have until early 2009 to reduce and protect the personal identifying data that they maintain in records for public citizens and employees. The agencies must review their files within 120 days to identify cases where Social Security numbers are not required and “establish a plan in which the agency will eliminate the unnecessary collection and use of Social Security numbers within 18 months.” The agencies also have 120 days to establish a policy for notifying security officials, possible victims and the general public of loss or exposure of identifiying information. Further, agencies must encrypt all data on mobile computers or information storage devices unless there is written certification that the information is not sensitive, and must secure a safe method for remote access to sensitive data. Finally, agencies must improve security training of employees and establish written discipline descriptions for violations.

The memo stemmed from recommendations from the Identity Theft Task Force to reduce the growing loss and theft of personal information. 

Source: http://news.findlaw.com/ap/o/51/05-23-2007/f1e100298b396793.html

A woman in California was charged on Thursday for filing false claims against the U.S. with a possible penalty of up to 15 years in prison. The accused admitted to Internal Revenue Service agents that she filed and submitted more than 200 fraudulent tax returns equalling more than $1 million in tax refunds, under the stolen identities of dead persons. The government paid almost $604,000.

The IRS uncovered the scheme when they noticed that numerous returns requested that the refunds be deposited in a small number of bank accounts belonging to Uzeegoa Makeba Sayles and a family member. They further discovered that the persons supposedly filing the returns were deceased. Agents claim they identified Sayles’ fingerprints on many of the false returns. Sayles’ initial court appearance is set for May 3, 2007.

Source: http://www.pe.com/ap_news/California/CA_BRF_SoCal_Tax_Scam_283189C.shtml

Disasters are often followed by fraud schemes as people falsely claim to be victims in order to benefit financially. The U.S. Government Accountability Office (GAO) has uncovered several dozen fraud schemes involving false claims for property damage due to Hurricane Katrina. More than 600 people have been charged in federal cases in 22 states and the District of Columbia for using false names, social security numbers and addresses of damaged residences. The GAO has referred more than 22,000 potential cases to the Katrina task force. The types of fraud found include extortion, bank larceny, overbilling, public corruption and identity theft (including the use of social security numbers of deceased persons) and range in value from a few thousand dollars to more than $700,000.

Source: 

http://news.findlaw.com/ap/o/51/04-02-2007/95bd00af8da9056d.html

A U.S. District judge has approved a 72.5 million dollar settlement between Arthur Andersen LLP and investors who brought suit against the accounting firm for its auditing role in the downfall of Enron Corp. Investors contended that Arthur Andersen aided Enron officials in perpetrating fraud. Arthur Andersen was convicted in 2002 of obstruction of justice and ceased most of its operations. The U.S. Supreme Court overturned the conviction in 2005. The settlement order entered into on May 9, 2007 ends the accounting firm’s involvement in the 40 billion dollar class-action lawsuit.

See http://jurist.law.pitt.edu/paperchase/2007/03/judge-oks-725m-arthur-andersen.php

The U.S. Supreme Court on Monday denied the appeal by former WorldCom, Inc. Chief Executive Officer Bernard Ebbers to overturn his conviction, which resulted in a 25-year prison sentence for corporate fraud and conspiracy. Ebbers’ appeal was based on the argument that he was denied a fair trial. Ebbers contended that the trial judge wrongly refused to offer immunity to potential defense witnesses and instructed the jury in error that they could convict Ebbers on the basis that he suspected a crime was being committed but intentionally overlooked it. The justices did not comment when refusing to review Ebbers’ appeal of the defense witness immunity and jury instruction issues.

Ebbers v. U.S. 06-590 http://www.usdoj.gov/osg/briefs/2006/0responses/2006-0590.resp.html