Unfortunately, there are new cases involving fraud almost every day. In fact, if you Google “Fraud in the News” and go the actual news stories, you’ll find an astounding 176,000,000 results. While it is obviously not possible to look at all of those stories, I thought it would be worthwhile to briefly discuss three cases I found interesting. As you will see, it is a reminder of fraud’s broad reach across many facets of our society.
Instagram Influencer Fraud
According to influencer marketing measurement firm Instascreener, fake engagement on Instagram is on the rise again. For us less tech-savvy folks (myself included), what does that mean? Well, in 2019, companies spent $1.9 billion on influencer marketing in the U.S. and Canada, with $1.4 billion being spent on Instragram influencers alone. That is, paying popular Instagram users (influencers) to promote or use a company’s products or services in posts.
However, some of these Instagram accounts have fake followers and have even identified ways to demonstrate fake engagement (i.e., interaction with the accounts via likes, comments, etc.). This makes it difficult for marketers to be sure that their $1.4 billion in spending is reaching real consumers – Instascreener indicated as much as $255 million was spent on Instagram accounts with fake followers. Imagine if Fox were able to inflate the number of viewers for the Super Bowl to convince companies to pay more for its ads?
Robert Gorodetsky, known as “BigRobStyle” on social media, was recently charged with fraud for allegedly stealing $9.6 million from one victim. According to prosecutors, Mr. Gorodetsky promised significant returns on the $9.6 million, but lied about how he would use the money and then lied about the actual returns. Instead, the money was allegedly spent on living, travel, and entertainment expenses.
Mr. Gorodetsky had been previously profiled by USA Today regarding his “unique” sports gambling, which apparently involved his gut more than any specific analysis and making massive $100,000 bets (even betting $1.5 million in a single day).
Reading this story reminded me that wealth management should probably not be done with someone who is known as “BigRobStyle.” Rather, I suggest working with a wealth manager who is a Registered Investment Advisor (RIA) with the SEC and who has a fiduciary duty to act in the best interest of his or her clients (https://www.sdwealthmanagement.com/).
Seth Lookhart, an Anchorage, Alaska dentist, was recently found guilty of “unlawful dental acts,” reckless endangerment, and Medicaid fraud. What constitutes an unlawful dental act? Dr. Lookhart performed a dental procedure on a sedated patient while riding a hoverboard and, of course, videotaped it and sent the video to friends.
The hoverboarding video apparently led to additional scrutiny, and investigators also found that he committed Medicare fraud by needlessly sedating patients and charging Medicaid $10,000 for the procedures.
What to make of this? Well, be on the lookout for any hoverboards on your next trip to the dentist. And if you find one, should you worry that the dentist is committing Medicaid fraud? Is there a correlation between hoverboard riding dentists and fraud? Causation? For now, the sample size is way too small (thank goodness) to make any conclusion, but I’m sure if any statistically valid trends start popping up, Schneider Downs’ analytics team will be all over it (https://schneiderdowns.com/data-analytics).
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