I was reminded of this student’s clever ploy when Frederik Joelving, a journalist with Retraction Watch, recently contacted me about a published paper written by two prominent economists, Almas Heshmati and Mike Tsionas, on green innovations in 27 countries during the years 1990 through 2018. Joelving had been contacted by a PhD student who had been working with the same data used by Heshmati and Tsionas. The student knew the data in the article had large gaps and was “dumbstruck” by the paper’s assertion these data came from a “balanced panel.” Panel data are cross-sectional data for, say, individuals, businesses, or countries at different points in time. A “balanced panel” has complete cross-section data at every point in time; an unbalanced panel has missing observations. This student knew firsthand there were lots of missing observations in these data.
The student contacted Heshmati and eventually obtained spreadsheets of the data he had used in the paper. Heshmati acknowledged that, although he and his coauthor had not mentioned this fact in the paper, the data had gaps. He revealed in an email that these gaps had been filled by using Excel’s autofill function: “We used (forward and) backward trend imputations to replace the few missing unit values….using 2, 3, or 4 observed units before or after the missing units.”
That statement is striking for two reasons. First, far from being a “few” missing values, nearly 2,000 observations for the 19 variables that appear in their paper are missing (13% of the data set). Second, the flexibility of using two, three, or four adjacent values is concerning. Joelving played around with Excel’s autofill function and found that changing the number of adjacent units had a large effect on the estimates of missing values.
Joelving also found that Excel’s autofill function sometimes generated negative values, which were, in theory, impossible for some data. For example, Korea is missing R&Dinv (green R&D investments) data for 1990-1998. Heshmati and Tsionas used Excel’s autofill with three years of data (1999, 2000, and 2001) to create data for the nine missing years. The imputed values for 1990-1996 were negative, so the authors set these equal to the positive 1997 value.
A paper on green innovation that drew sharp rebuke for using questionable and undisclosed methods to replace missing data will be retracted, its publisher told Retraction Watch.
Previous work by one of the authors, a professor of economics in Sweden, is also facing scrutiny, according to another publisher.
As we reported earlier this month, Almas Heshmati of Jönköping University mended a dataset full of gaps by liberally applying Excel’s autofill function and copying data between countries – operations other experts described as “horrendous” and “beyond concern.”
Heshmati and his coauthor, Mike Tsionas, a professor of economics at Lancaster University in the UK who died recently, made no mention of missing data or how they dealt with them in their 2023 article, “Green innovations and patents in OECD countries.” Instead, the paper gave the impression of a complete dataset. One economist argued in a guest post on our site that there was “no justification” for such lack of disclosure.
Elsevier, in whose Journal of Cleaner Production the study appeared, moved quickly on the new information. A spokesperson for the publisher told us yesterday: “We have investigated the paper and can confirm that it will be retracted.”
The New York Times reported recently about a sharp spike in Medicare spending on catheters, amid numerous signs that scammers have targeted that benefit to bilk the government out of taxpayer funds. With Medicare rapidly approaching insolvency, the problem is twofold: Criminals still consider the program such an easy source of cash — because the feds do such a poor job at finding and catching the crooks.
Times reporters interviewed several seniors explaining how they had been billed for catheters they never received and do not need or use. It also noted that the number of Medicare beneficiary accounts billed for catheters rose roughly nine-fold last year, from 50,000 to 450,000.
The pattern of Medicare spending on catheters echoes the increase in beneficiaries billed. Based on this graph from the Times story, it doesn’t take a doctorate in economics to realize that something fishy has happened regarding payments for catheters — and that, assuming most or all of the increase is due to fraud, Medicare has already given the scammers billions of dollars.
Over and above whether and when the feds can catch the scammers, the real question is: How did this happen? Or, given the federal government’s history of permitting fraud in federal health care programs, how does this keep happening?
A Pennsylvania man who stole $194,000 of retirement benefits paid to his deceased father was sentenced today to five years in prison and ordered to pay full restitution, New York State Comptroller Thomas P. DiNapoli, the United States Attorney for the Eastern District of Pennsylvania Jacqueline C. Romero, the Inspector General for the Social Security Administration Gail S. Ennis, the United States Postal Inspection Service and the Federal Bureau of Investigation announced.
From October 2017 through October 2022, Timothy Gritman, 57, stole $110,897 in pension benefits from the New York State and Local Retirement System and $83,188 in Social Security benefits. He pleaded guilty to wire fraud and Social Security fraud charges in February.
New York state pensioner Ralph Gritman retired from the Nassau County Clerk’s Office in 1992 and moved to Wyoming from Pennsylvania with his son, Timothy Gritman, in August 2017. In September 2017, Medicare records showed he went to a hospital emergency room in Wyoming. This was the last existing record of the father.
The father and son shared a joint bank account where Ralph’s retirement benefits were electronically deposited. Both Ralph Gritman’s pension and Social Security benefits were to cease upon his death, but Timothy Gritman concealed his father’s death in order to continue to receive his retirement benefits. In his attempts to impersonate his deceased father, he used makeup to whiten his hair and eyebrows.
Publication Date: 14 Feb 2024
Publication Site: Office of the NY State Comptroller
Some of the most chilling examples of insurance fraud are grisly affairs revealing the darkest of humanity’s dark side:
John Gilbert Graham placed a time-release bomb on a plane in which his mother was traveling, for the life insurance payment. The bomb exploded. In addition to Graham’s mother all 43 other passengers and crew perished.
Utah physician Farid Fata administered chemotherapy to hundreds of women who did not have cancer. Fata submitted $34 million in fraudulent claims to Medicare and private insurance companies.
Ali Elmezayen staged a freak car accident which took the lives of his two autistic children and nearly drowned his wife. He collected a $260,000 insurance payout, but his crime was discovered. He was sentenced to 212 years in prison.
A Chicago federal grand jury charged 23 defendants with participating in a fraud scheme swindling $26 million from ten life insurers. The scheme featured submission of fraudulent applications to obtain policies, and misrepresenting the identity of the deceased.
There are thousands of other equally horrific insurance fraud stories. The annual Dirty Dozen Hall of Shame report describes some of the most egregious, and contributes to an understanding of how far fraudsters will go to cheat insurance companies.
Improvements in predictive modeling and the introduction of artificial intelligence (AI) have strengthened insurers abilities to identify, and ultimately investigate, submitted claims that may be fraudulent. At the same time, however, AI is also being used as a weapon to penetrate insurers’ fraud detection systems. Techniques being used include AI-created fake photographs of cars of a particular make and model showing damage that is not real, but used to extract a claims payment. Some insurers are no longer accepting photos because they may be doctored, and are returning to adjustors physically visiting the allegedly damaged car. A nefarious life insurance scam includes AI-enabled manipulation of ones voice so that a criminal third party gets past insurers’ voice recognition technology, and initiates a policy being surrendered to a non-policyholder, non-beneficiary. It seems that for every additional layer of protection insurers introduce, the criminals are keeping up, if not forging ahead.
Franklin, who was a printer, among his other roles, was known for marking his early paper money with images of intricately veined leaves that were nearly impossible for counterfeiters to copy, using a variety of fonts, some available only to him, and intentionally lacing the text with misspellings.
But scientists say Franklin took things a step further to stave off fraudsters. Other distinguishing characteristics of Franklin’s money—the new research revealed through advanced atomic-level imaging methods—were more subtle. He used a unique black ink. His paper glimmered. Blue threads decorated the surface, and finer fibers were woven throughout.
Researchers detailed the innovations in a paper published Monday in the journal Proceedings of the National Academy of Sciences. The findings describe previously unknown methods Franklin developed to safeguard printed money notes against counterfeiting.
State Comptroller Thomas P. DiNapoli, United States Attorney for the Northern District of Georgia Ryan K. Buchanan and Inspector General for the Social Security Administration Gail S. Ennis today announced that Sandra Smith, a resident of Georgia, has pleaded guilty to the federal crime of theft of government funds and must pay back $459,050 in New York state pension and Social Security payments that were issued to her deceased mother-in-law.
“Exploiting the death of a family member for personal profit is a heinous crime,” DiNapoli said. “The defendant took advantage of our state pension fund and the Social Security Administration but as a result of our joint investigation her crimes were discovered. She now faces the consequences of her actions. My thanks to U.S. Attorney Buchanan and the Social Security Administration Office of the Inspector General for their partnership in ensuring justice was served and restitution was made in this case.”
Smith pleaded guilty to two counts of theft of government funds. Under her plea agreement, she will pay $264,699 in restitution to the state pension system and $194,351 to the SSA.
The defendant’s late-mother-in-law, Minnie Smith, was an employee of the New York State Insurance Fund for 20 years until retiring in 2005. To be closer to family, she moved from Brooklyn to Georgia afterward and passed away there on Sept. 14, 2006.
As her mother-in-law’s caretaker, Sandra Smith had access to her bank account, which she kept open after her mother-in-law’s death to enable the theft of continued payments from the New York state pension system and Social Security. The thefts were discovered and investigated by the Comptroller’s Division of Investigations and the SSA-OIG.
Smith, 49, pleaded before Judge Eleanor Ross of the United States District Court for the Northern District of Georgia.
Author(s): press release
Publication Date: 11 July 2023
Publication Site: Office of the NY State Comptroller
The 52-year-old executive [Greg Lindberg] was indicted last month on federal charges that he defrauded his insurers by lending $2 billion of their funds to companies in his private conglomerate, while allegedly siphoning off huge sums to finance his lavish lifestyle. He has pleaded not guilty and is out on bail.
Until last July, Mr. Lindberg was in federal prison on bribery charges related to the insurers. He was released after 21 months when an appeals court overturned the conviction. A retrial is scheduled for November.
What rankles Mr. Zintel and others is that they believe Mr. Lindberg is using their money to fight his legal entanglements, allowing him to continue living extravagantly even as they cut back. Among the alleged extravagances: The divorced executive has spent millions of dollars on gifts for women, according to court documents, including paying some women to produce offspring for him.
Some 70,000 holders of annuities totaling $2.2 billion are unable to withdraw their money, filings show. Many are retirees or conservative investors who bought five- to seven-year annuities in 2017 and 2018. Financial advisers typically marketed them as a safe, higher-yielding alternative to bank CDs.
And yet, nothing in the series leads the viewer to the conclusion that the SEC needed a bigger budget to catch Madoff. In fact, outsiders were sounding the alarm without access to government funding or regulatory muscle. In 2001, Barron’s journalist Erin Arvedlund reported that many Wall Street investors were suspicious that Madoff was engaged in foul play.
And the SEC received its first complaint that Madoff was running “an unregistered investment company” “offering ‘100%’ safe investments” in 1992. In 1999, a derivatives expert named Harry Markopolos, who worked at a competing firm, started to alert the SEC that Madoff’s investment returns were virtually impossible. In 2005, Markopolos sent the agency an infamous 25-page memo explaining why “The World’s Largest Hedge Fund is a Fraud.” The SEC opened an investigation in 2006, and then closed it the following year because the “uncovered violations” were “remedied” and “those violations were not so serious as to warrant an enforcement action.”
So how is this tale of epic failure on the part of a government agency the fault of deregulation?
Instead of making lazy allusions to the evils of free market capitalism, to better understand the lessons of the Madoff saga, director Joe Berlinger should have consulted the work of the free market economist George Stigler, who won the Nobel Prize in part for his work on “regulatory capture.”
Author(s): ZACH WEISSMUELLER AND DANIELLE THOMPSON
More than a third (34%) of companies reported increases in account takeover attempts in 2021 as compared to the previous year, according to LIMRA. Account takeovers occur when someone takes ownership of an online account without the owner’s knowledge, often with stolen credentials. In addition to account takeovers attempts, 34% of companies saw increases in company impersonation and 31% had increases in claims fraud.
A LIMRA report showed that fraud incidents increased in 2021 in all but two categories of fraud. (Please note that fraud “incidents” shown in the chart below are attempts and do not indicate that the account takeover attempts were successful.)
The Charitable Corporation was established in London in 1707 with the noble mission of providing “relief of the industrious poor by assisting them with small sums at legal interest.”
Essentially, it sought to provide low-interest loans to poor tradesmen, shielding them from predatory pawnbrokers who charged as much as 30% interest. The corporation made loans available at the rate of 5% in return for a pledge of property for security.
The Charitable Corporation was modeled on Monti di Pietà, a charitable institution of credit established in Catholic countries during the Renaissance era to combat usury, or high rates of interest.
Unlike the Monti di Pietà, however, the British version – despite its name – wasn’t a nonprofit. Instead, it was a business venture. The enterprise was funded by offering shares to investors who, in return, would make money while doing good. Under its original mission, it was like an 18th century version of today’s socially responsible investing, or “sustainable investment funds.”
There are several key characteristics that stand out in the collapses of both the Charitable Corporation and FTX. Both companies were offering something new or venturing into a new sector. In the former’s case, it was microloans. In FTX’s case, it was cryptocurrency.
Meanwhile, the management of both ventures was centralized in the hands of just a few people. The Charitable Corporation got into trouble when it reduced its directors from 12 to five and when it consolidated most of its loan business in the hands of one employee – namely, Thomson. FTX’s example is even more extreme, with founder Sam Bankman-Fried calling all the shots.