From Snapshot to Mug Shot

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Who knew the photo processing business is so ripe with opportunities to commit fraud (and that it even still exists)? According to a press release published by the United States Attorney’s office, a Kentucky man used the photo processing business he owned to bill insurance providers for nearly $650,000 in fraudulent claims and then failed to report the proceeds as income on his tax returns.

Court documents reveal that the man, assisted by an unnamed accomplice, received six sizeable insurance payments in response to fraudulent invoices he submitted over a six-year period. In the claims, he alleged that his photo processing equipment had suffered damage and then falsely claimed that he had replaced the equipment. (”Sorry, ma’am, I can’t do anything to fix your family’s strange red eyes.”) One claim blamed a power surge on lightning; another reported broken neon signs.

He also used two different Social Security numbers to file his taxes, resulting in an $82,381 tax loss, and in 2010 and 2012 failed to report $417,156 in insurance payments as taxable income, as required by law. (This scammer is too sloppy to be ”picture perfect.”)

An investigation by the Kentucky Insurance Fraud Investigation Division ultimately landed with the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigations and the businessman was brought to justice for filing false tax returns and conspiring to commit mail and wire fraud. Ultimately, he was sentenced to 30 months (more than two years) in prison and ordered to pay restitution of $649,506.

As if large-scale insurance fraud wasn’t enough, adding tax fraud to the mix is a sure way to get nabbed, and the results don’t make a pretty picture.

Source: Today’s ”Fraud of the Day” is based on a press release titled, ”Madisonville, Kentucky, Former Business Owner, Sentenced To 30 Months In Prison For Filing False Tax Returns,” published by the United States Attorney’s Office in the Western District of Kentucky on March 25, 2016.

OWENSBORO, Ky. – The former owner of Madisonville, Kentucky businesses was sentenced in United States District Court this week, by Chief Judge Joseph H. McKinley Jr., to 30 months in prison and ordered to pay $649,506.15 in restitution, for filing false tax returns and for conspiring to commit mail and wire fraud, announced United States Attorney John E. Kuhn, Jr.

Gholam A. Sattar-Shamsabadi, 58, operated a photo processing business in Madisonville, which he converted to a café, and a business called Fast Foto Finishing in Henderson, Kentucky, which he began in 2009.

According to court records, Shamsabadi, with the aid of an unindicted co-conspirator, filed false invoices for insurance claims for his business and one personal claim from 2006 to 2012. The total loss amount based on payout on six fraudulent claims totaled $649,506.15. Further, Shamsabadi failed to report the proceeds of his insurance fraud as taxable income. In 2010, Shamsabadi failed to report $170,000 of unreported income and in 2012, he failed to report $247,156 in unreported income. Also, in each of these years, Shamsabadi filed tax returns under two different social security numbers creating a total Tax Loss of $82,381.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.