PFD - Fighting PFD fraud

Fraud section takes folks to court if they try to steal a dividend

Posted: Sunday, October 09, 2005

Early last month, Paul E. Kent pleaded guilty to federal charges of wire fraud when he obtained more than $17,000 in Alaska Permanent Fund dividends for himself and his three children.

Kent, a 38-year-old former soldier who once was stationed at Fort Richardson near Anchorage, was charged with falsifying documents after he left the Army. Kent was eligible to collect his PFD checks when he was first transferred in 1998 to an Army post in Oklahoma, but he lost his eligibility three years later when he left the military and moved to Georgia.

According to Permanent Fund Dividend Division chief fraud investigator Dan Boone, Kent kept filing for his PFD checks, but he altered paperwork to try and make it appear that he was still in the Army, which is an allowable absence from the state. An employee at the division's office happened to notice that the typefaces used on the military documents Kent submitted to back his residency claim didn't match and the investigation revealed a cut-and-paste job. Boone said Kent had his PFD checks ddirectly deposited to an account with an Alaska bank, then he wired the money to an account in the Lower 48.

"He'll be sentenced on Jan. 5," Boone said of Kent's case. "He faces up to 20 years in prison and a fine of $250,000."

This was one of this year's higher-profile cases for the Permanent Fund Dividend Division's fraud section, the group charged with making sure only eligible Alaskans are able to receive PFD checks. The fraud section has two units, one that audits applications to make sure everybody's eligible and an investigations unit that checks out fraud claims and then pursues the cases in civil and criminal courts.

Boone said the fraud division is doing more audits of PFD applications these days, and that's led to more people getting caught. He said in 2003 the section recovered, denied or assessed $1.2 million in claims. Last year that figure was up to $1.4 million.

"We're doing more audits, so I think it will be a little more this year, about $1.6 million," Boone said.

The fraud section checks state records, such as driver's and fishing licenses, for many of its audits, and the Alaska Court System forwards the names of all people asking to get out of jury duty because they claim not to live in Alaska. The section also checks applications for out-of-state postmarks or IP addresses (which can tell the section where the computer server is located that handled an application).

In recent years, the fraud section has subpoenaed records from private mailbox companies and canneries for audits. Students and those in the military also may be subject to audit if they file from out of state.

If someone is caught fraudulently applying for a PFD, the person faces a possible jail term, a fine of up to $5,000 or both. Also, the person is required to pay back any fraudulently obtained PFD checks and loses the right to apply for future checks for anywhere from five years to a lifetime ban on eligibility.

Boone said the Alaska public plays a big part in letting the fraud section know when people might be getting a check they don't deserve. He said last year the section received more than 1,500 fraud tips to its hotlines (465-2654 in Juneau, 269-0385 in Anchorage or by e-mail at pfdfraud@revenue.state.ak.us). He said 48 percent of the tips turned out to be valid, what he considered a high percentage.

"I can't emphasize enough the importance of the tips we receive," Boone said. "We need the public's continued support. They know who's getting a check and doesn't deserve it, who's having applications mailed to them out of state. The public really helps us fight fraud."

Some of the tips lead to administrative actions, where the application is denied and no charges are filed. The section saves the worst cases for civil and criminal action, with most cases going to federal court because the people committing the fraud live out of state.

But this summer, the section got its first state court indictment. In June, Sabrina M. Ruffin, 41, of Lawton, Okla., was indicted with one count of first-degree theft and four counts of unsworn falsification. According to a press release from the state's Department of Law, Ruffin left Alaska in 1998 but continued to apply for PFDs for herself and her children in every year since 2000.

According to the press release, Ruffin falsely claimed to be "in Alaska today," and she was "not gone from Alaska for more than 90 days total." Ruffin allegedly used her parents' Anchorage address and not her true Oklahoma address, and the applications were mailed from the Anchorage address. According to the press release, Ruffin and her children received more than $29,000 in PFD checks in 2000-04.

"When the PFD investigators detect fraud, it will be agressively prosecuted," Assistant Attorney General James Fayette said in the release.

Boone said the fraud section does have to "pick and choose" which cases it decides to prosecute and "we really have to have the case sealed." But if the case warrants it, "we'll prosecute."

"Most of the cases are black-and-white, because we're dealing with intent issues," Boone said.



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