- Medicare Annual Waste - $70 to $90 billion
- Medicaid Annual Waste - $40 to $60 billion
- Social Security Waste - $125 billion
- On Federal Unemployment Benefits Program - $19 billion
- Food Stamp Program - $2-3 billion (conservatively)
- Tax Evasion That The IRS Does Not Prevent - $385 billion
- Annual ttal from just these six Federal programs - $641 - $683 billion
- This comes out to upwards of just under $6,000 a year for every U.S. household. Imagine how much true economic stimulus and growth could be created if every household had an extra $6,000 or so in its pockets, year in and year out?
How does this money and wealth get abused? Consider two typical examples that we have already reviewed in this blog:
1) An Associated Press article late last year reported on a Seattle area married couple that had been having a grand time defrauding the Federal government, and the American taxpayer, over the past few years. The article reported that:
•The married couple lived in a 2,300 square foot, $1.2 million house in the Seattle area.
•The article cites the probability that the couple also owned an expensive Jaguar automobile since investigators found it constantly parked in their driveway.
•Over the past eight years the couple had taken vacation trips to Moscow, Paris, Israel, Turkey, Mexico, and the Dominican Republic.
•During this same time period, the couple had collected over $100,000 in Federal welfare payments.
•Finally, after eight years, the local U.S. Attorney General's office is going after the couple in an attempt to recover $135,000 in Federal housing assistance and additional fines and penalties.
•Apparently, the wife applied for the government assistance by claiming that she was a single mother with two kids and assets worth less than $5,000 even though she was still married, according to the information and proof cited in the article, and was living in the $1.2 million home with her successful, chiropractic practicing husband.
Just one example of the types of fraud that is used against the Federal government everyday.
2) But this couple were small time fraudsters compared to the following doctor as reported in the October, 2011 issue of Reason magazine:
•Fred Dweck, a surgeon in two Broward County, Florida worked at two hospitals and also ran his own health care business in Miami.
•Last year, Mr. Dweck pleaded guilty to Medicare fraud since for the four years before he was arrested, he cheated Medicare out of at least $24 million or about $6 million a year, an amazing $500,000 a month, on average.
•He put in claims for prescription drugs, insulin injections, in-home visits by nurses, and many other treatments for 1,279 patients, none of whom actually needed any of these treatments that the good doctor was reimbursed for.
•He had five nurses conspire with him to create fake patient records and payment forms and benefit from the scamming of taxpayer Medicare dollars.
•One would have hoped that someone in the Medicare organization would have grown suspicious of this one doctor generating so much work over the years or the $500,000 a month he was billing. Unfortunately, it took many years to figure out this one scam, too many years.
As these two examples show, fraud exists in a variety of wasteful schemes and at various levels of dollar values.
But we do not believe it has to be this way, where taxpayer wealth is wasted with no regard to the hard work that went into creating the wealth and the economic inefficiency of allowing criminals and criminal syndicates abuse it. Back in May, 2012 we proposed a common sense, highly leveragable solution to the problem called the National Bounty System (NBS). The details of the process can be found at the following link:
http://loathemygovernment.blogspot.com/2012/05/national-bounty-system-fixing.html
The basic premise of the process comes from the local police tip line concept that has been used for decades to gather intel on the potential whereabouts of rapists, murders, robbers, etc. While the defrauding of government spending and programs is more of a white collar crime, the basic premise remains the same: mobilize citizens to report potential criminal activity such as fraud and allow them to participate in the recovery of taxpayer wealth. The basic tenets of the NBS include the following:
•A independent process would be established to gather, sort, prioritize, and track tips on fraud and tax evaders by a task force established within the Justice Department, with representatives from the IRS, Medicare, Social Security, Congress, the FBI, HHS, and others.
•Citizens could report their tips via email or snail mail, with the earliest date of receipt being given the bounty opportunity to collect a reward if the tip results in the retrieval of ill gotten fraudulent gains or the collection of unpaid taxes.
•The amount of the bounty would be 10% of the money recovered.
•Following the lead of the Italian government that we reported on, the task force would correlate new car and boat/yacht registrations with income tax returns to identify those people that reported low income but had high value purchases.
•The same correlation analyses would be done by crossing high end home purchases with tax returns.
•The program would be tested in one or two states in order to work out the bugs in the processes before a nation wide rollout.
•In advance of actually cracking down on felons and tax evaders, a well publicized amnesty period would be extended to all who would be likely targets of the task force. The amnesty period would allow anyone to come forward and confess their wrong doings and avoid jail time.
•However, they would still have to repay what they stole and owed in full.
•Those caught after the amnesty period ended would not only face jail time, if appropriate, they would have to pay back what they stole and the appropriate fines, penalties, and interest.
•The amnesty period would not only be in the one or two trial states, it would be nationwide. The trick is to make sure that those who are guilty know that their neighbors, their customers, and their work associates might be tempted to turn them in for the bounty and make them think twice of doing the right thing, turning themselves in, before the task force reaches their states.
•From an accounting perspective, half of the recovered money from the program would be used to pay down our national debt and the other half would be returned to taxpayers in the following year when they filed their own taxes. Under no circumstances would the recovered wealth be put under the control of the political class and likely wasted again.
•A similar process would be established for Federal employees, as outlined in "Love My Country, Loathe My Government," to identify fraud and waste within the Federal bureaucracy.
Think about the possibilities this process could open up:
•Would a neighbor or office worker of the Seattle chiropractor discussed above have come forward sooner if they could have received 10% of the hundreds of thousands of dollars that couple embezzled from the government?
•Would a nurse or patient in the office of Dr. Dweck have come forward sooner if the opportunity to receive 10% of up to $24 million, assuming that all of the ill gotten gains were recovered, and possibly receive a hundreds of thousand dollars or more?
•Would someone now be tempted to turn in an obnoxious neighbor who continually brags how they are receiving government unemployment checks while getting paid under the table for work the neighbor is actually doing if they could get rewarded for doing so?
•Would a Federal worker be more likely to turn in coworkers who are illegally selling food stamp benefits if they could partake in the reward of a prosecution?
•Would a Medicare patient turn on a crooked doctor who was using their Medicare number to rip off the system if that patient got paid for their trouble.
By deputizing the entire taxpayer base, I believe a lot more criminal activity would be uncovered, taxpayer recovered, and future fraud curtailed.
I thought that this was an original idea but it turns out the IRS is already doing something of the sort. According to a recent Washington Post article:
- A former banker at the Swiss based bank, UBS, named Bradley Birkenfeld turned whistle blower and “provided information on taxpayer behavior that the IRS had been unable to detect” in regards to a $20 billion offshore banking scheme.
- As a result of his information, insights, and testimony, and the collection of a large amount of fines from the offending institutions, the IRS rewarded Mr. Birkenfeld with a bounty of $104 million, a fraction of the wealth that authorities are collecting and will collect as a result of his whistle blowing.
- Mr. Birkenfeld’s attorneys issued a statement in which they said: “The IRS today sent 104 million messages to whistle blowers around the world — that there is now a safe and secure way to report tax fraud and that the IRS is now paying awards. The IRS also sent 104 million messages to banks around the world — stop enabling tax cheats or you will get caught.”
- His information as so far led to fines of nearly $800 million, more than enough to warrant the compensation money he was awarded.
- The IRS was gushing in the support and information he provided to bring down the criminal activity: “The comprehensive information provided by the whistle blower was exceptional in both its breadth and depth. While the IRS was aware of tax compliance issues related to secret bank accounts in Switzerland and elsewhere, the information provided by the whistle blower formed the basis for unprecedented actions against UBS AG.”
- Senator Charles E. Grassley of Iowa also had high praise for the bounty-like IRS process: “An award of $104 million is obviously a great deal of money, but billions of dollars in taxes owed will be collected that otherwise would not have been paid as a result of the whistle blower information. Unfortunately it has taken the IRS nearly four years to settle this whistle blower case. If the IRS is serious about encouraging future whistle blowers, it needs to continue to honor the spirit and intent of the law and issue awards in a timely manner.”
The local police tiplines over time prove that this process and approach work. The IRS and Mr. Berkenfeld prove this process and approach work. With our national debt now above $16 TRILLION and rapidly rising every minute, there is not a minute to waste getting the National Bounty System in place for every government function and organization, not just the IRS.
Note: Tomorrow we will look at some extensive identity theft fraud that is occurring in my metro area of Tampa and how this process could be used to shut it down.
We invite all readers of this blog to visit our new website, "The United States Of Purple," at:
http://www.unitedstatesofpurple.com/
The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.
The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.
Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment
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