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Fraudsters eye huge stimulus boodle, consultant says
Swindlers, con men, and thieves could siphon off as much as $50 billion of the government's planned stimulus package as the money begins flooding the economy in coming months, according to David Williams, who runs Deloitte Financial Services Advisory and counsels clients on fraud prevention.Williams predicted that about $500 billion of the total $787 billion stimulus would be channeled into the traditional procurement network for government contracts, while the rest will be spent directly by the government or outside the corporate network. "The rule of thumb typically is that of the about $500 billion worth of money that's going to run through the procurement process, somewhere between 5% and 10% of that usually finds it way into potential problems," Williams said. "That's sort of the benchmark that I use." Companies will face increased pressure to try to stem the tide, and need to be prepared to safeguard data as well as the cash, according to Williams. Williams said this week that the money flowing from the current stimulus package is particularly vulnerable to fraud because almost all movement of money is now done electronically. "We're telling our clients to be very careful and to make sure their firms are resilient in terms of dealing with the potential opportunities for fraud and waste," Williams said. That means keeping an eye out for the traditional scams such as billing for services not performed. But it also means firms must become even more diligent about electronic records and network security. "It becomes ever more important that firms remain diligent about their data," Williams said. Stimulus Funds Susceptible to Fraud As much as 10% of the federal government's stimulus money is likely to get lost to fraud, says David Williams, chief executive of Deloitte Financial Advisory Services. MarketWatch's Greg Morcroft reports. Earlier this month, FBI Director Robert Mueller warned the nation to brace for a potential crime wave involving fraud and corruption related to the economic stimulus package. "These funds are inherently vulnerable to bribery, fraud, conflicts of interest, and collusion. There is an old adage, that where there is money to be made, fraud is not far behind, like bees to honey," Mueller said. See full story. Earlier this month, Vice President Joe Biden said some stimulus-related scams had already happened and that some mistakes were inevitable. President Barack Obama said Monday that the White House is trying to make sure the stimulus money isn't being ill-spent. He said many of the safeguards and transparency measures "so far seem to have worked" but added his administration will have to stay vigilant. "At a time when everybody is tightening their belts, the last thing the American people want to see is that any of this money is being wasted," Obama said. Potential damage Williams suggested that the fraud and theft losses from the roughly $787 billion stimulus package approved earlier this year could reach about $50 billion. Williams said firms would be well advised to beef up monitoring of their transaction systems, and that his firm is helping clients develop software and computer systems to predict and catch fraud before it gets started. Posted by: 2009-06-13 |
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