Misrepresentation

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Before signing on the dotted line, the parties involved in a contract need to feel comfortable with the terms of the agreement. A business woman from Bettendorf, Iowa, who was quite adept at generating lucrative contracts for her employers and bonuses for herself, committed food stamp fraud and Medicaid fraud by accepting benefits from the government while also earning six figures. (She misrepresented her household income, but wait, that’s not all.)

As far as contract law goes, there are typically three types of misrepresentation. Negligent misrepresentation occurs when a person makes a false statement causing another to enter into a contract; however, the person who made the false statement may not have known that their claim was not true at the time. (Perhaps they made an assumption without checking the facts.) In an innocent misrepresentation, the person who makes the misrepresentation may have every reason to believe that what they are saying is true, but unfortunately it is not. With fraudulent misrepresentation, an individual deliberately makes a false statement that causes another person to sign a contract. (That, my friends, is what our profiled fraudster did. And, she did it in a big way.)

 In February 2012, the Bettendorf woman began receiving Supplemental Nutrition Assistance Program (SNAP) benefits and Title XIX Medicaid benefits through the Iowa Department of Human Services (DHS). About two years later, she was hired as a sales director for a healthcare solutions company out of Boston, Massachusetts.

The Iowa woman’s career appeared to take off like a rocket. It wasn’t long before she landed five new clients worth more than $1.8 million to her employer. Her salary, commission and bonuses added up to $115,973. (There was just one tiny problem. After all the celebrating was over, it was determined that her contracts were fraudulent, including the signatures she forged.)

While she was working on her forgery skills with the mobile messaging company, she also worked from home for another group that provided multi-channel sample management solutions to pharmaceutical and biotech companies. (Not sure what that is, but it certainly sounds impressive.) During the six months she worked for this entity, the woman claimed she landed a contract with Nevada’s prison system to provide pharmaceutical medications over five years. (Once again, she forged the signature on the agreement.) It is unfortunate that the forging fraudster caused this particular company to suffer a severe financial loss of nearly $400,000. (That could put a company out of business depending on the size.)

The enterprising woman’s employers were not the only ones who suffered financial losses. Iowa’s DHS paid out $11,514.91 in food stamp and Medicaid benefits that were undeserved because she neglected to report her household earnings. Evidently, she was afraid the DHS would cancel her public aid if they knew about her lie. (Well, yeah. Funny how that works.)

The 45-year-old deceptive Iowan received a sentence of six years in federal prison for forging bogus contracts and committing food stamp fraud and Medicaid fraud. In addition to serving three years of supervised release following her prison term, the fraudster was ordered to pay $384,869.57 in restitution to the company in which she caused a severe financial loss and $115,973 to the mobile messaging company she scammed. (I’d say that the government in no way shape or form misrepresented how they felt about this woman’s multiple crimes. She did the crime, so she has to pay the time.)

Today’s “Fraud of the Day” is based on an article entitled, Bettendorf woman sentenced to six years in federal prison for wire and benefits fraud,” published by Quad-City Times on February 14, 2018.

A Bettendorf woman has been sentenced to six years in federal prison for five counts of wire fraud and one count of benefits fraud she committed while working as a sales director for a healthcare solutions company.

Michele Lynn McGee, 45, was sentenced Wednesday by U.S. District Judge John Jarvey during a hearing in U.S. District Court, Davenport. In addition to her prison sentence, McGee must serve three years on supervised release after she completes her prison term.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.