Fraud Story Archives - West Virginia Public Broadcasting

State Recovers Nearly $1 Million From Check Fraud Scheme

State officials report that more than $1 million was stolen from the Department of Health and Human Resources in a check fraud scheme. Roughly 85% of the stolen funds have been recovered so far.

State officials recovered more than $966,000 from a fraud scheme involving paper checks and a state agency, according to state Auditor JB McCuskey during a Friday press conference.

After the Department of Health and Human Resources (DHHR) sent more than $1 million in checks to a Texas vendor, it was soon intercepted as part of a fraud scheme.

Fraudsters now under investigation used a chemical agent to remove the vendor’s name from the DHHR’s checks and redirect the funds to their own accounts.

Details on the incident — like the individuals responsible, and a timeline on when the fraud and investigation occurred — remain scarce, because McCuskey said the investigation remains ongoing.

So far, approximately 85 percent of the stolen funds have been recovered by McCuskey’s office, alongside investigators with the state treasurer’s office, the U.S. attorney’s office, the governor’s office, the West Virginia State Police and Truist Bank.

Agencies involved in the investigation described the recovery of stolen funds as a success story, but one that points to deeper concerns.

“Unfortunately, in the world we live in, there are a lot of fraudsters. They are very creative,” said Truist Regional President Patrick O’Malley. “It continues to be the number one risk in the banking industry.”

McCuskey said that particular risk to the state comes from the use of paper checks to transfer large amounts of money. These can be more easily redirected by outside parties, he said.

Since taking office in 2017, McCuskey said he has made a concerted effort to reduce the number of paper checks sent by state agencies. On Friday, he urged current state officials to consider opting for electronic forms of payment instead.

“If you haven’t signed up for electronic funds transfer, please do so,” he said. “You’re actually doing yourself a favor. But more than that, you’re doing the taxpayers of West Virginia a favor because it makes our jobs in finding fraud much, much easier.”

United States Attorney for the Southern District of West Virginia Will Thompson said that instances of check fraud have been growing nationwide.

“It’s happening with obviously the state of West Virginia, but it’s also happening in private industry and private individuals,” he said. “I want to make people aware of it.”

Thompson said his office will continue to pursue a criminal investigation into the perpetrators of the fraud. He has not yet provided a timeline for the investigation or said what charges will be filed.

Former DHHR Official Pleads Guilty In COVID Test Fraud Case

A West Virginia man pleaded guilty to making false statements to federal investigators while he was an official with the West Virginia Department of Health and Human Resources.

Timothy Priddy, 49, of Buffalo, pleaded guilty Monday in federal court to making a false statement. Priddy admitted that he lied to federal investigators about the verification of invoices for COVID-19 testing that he certified while an official with the West Virginia Department of Health and Human Resources (DHHR).

According to court documents and statements made in court, Priddy was interviewed by federal agents on Aug. 2, 2022 while he was the director of the DHHR’s Center for Threat Preparedness.

In his previous position as Deputy Director, his duties included reviewing and verifying the accuracy of certain invoices submitted to the DHHR by vendors supplying COVID-19 testing and mitigation services before certifying the invoices for payment.

The agents asked Priddy about invoices submitted by a particular vendor that had billed the state of West Virginia tens of millions of dollars for COVID-19 testing and related services.

One series of invoices of interest to the federal investigation related to a COVID-19 testing program for K-12 students, faculty and staff returning to school after the winter holiday break.

Priddy certified the K-12 testing program invoices without making any effort to verify their accuracy. Priddy falsely told the agents that he certified the invoices only after two individuals working with the K-12 testing program verified the invoices involved.

Priddy admitted that he knew that statement was false.

William Thompson, the United States Attorney for the Southern District of West Virginia, said this case is unique in COVID-19 fraud cases he is trying in that Priddy stood nothing to gain financially in committing his crimes.

“He just basically cost the state quite a bit of money by not doing his job and not following through on it,” Thompson said.

Priddy is scheduled to be sentenced on May 9, 2024, and faces a maximum penalty of five years in prison, three years of supervised release, and a $250,000 fine.

Chief United States District Judge Thomas E. Johnston presided over the hearing. Assistant United States Attorneys Joshua Hanks and Holly Wilson are prosecuting the case.

Priddy-Plea Download

Priddy-Indictment Download

WVU Professor Indicted For Fraud

Forty-one-year-old Xinjian “Kevin” He is accused of embezzling federal grant funds from WVU’s management and industrial systems engineering department where he worked as an assistant editor.

A former West Virginia University (WVU) professor has been indicted on two counts of federal program fraud for embezzling university grant money.

Forty-one-year-old Xinjian “Kevin” He is accused of embezzling federal grant funds from WVU’s management and industrial systems engineering department where he worked as an assistant editor.

He is alleged to have used the money for his personal use to buy clothing, furniture, electronics and other items.

According to U.S. Attorney William Ihlenfeld, He embezzled $8,360 between March and November 2018 and $16,997 between November 2018 and November 2019.

The indictment was originally returned in 2020 but it was sealed by authorities after He fled the country. The former WVU professor was arrested this year on Sept. 26 in New York after he was caught entering the U.S. from Canada.

If convicted, He faces up to 10 years in prison on each count of fraud.

DHHR Warns Of SNAP Scams

The U.S. Department of Agriculture and the DHHR have received recent reports of card skimming, phishing, or cloning scams targeting the SNAP using Electronic Benefit Transfer (EBT) card fraud and stolen benefits.

The West Virginia Department of Health and Human Resources is warning recipients of the Supplemental Nutrition Assistance Program (SNAP) to stay vigilant against scams.

Janie Cole, the DHHR’s Commissioner for the Bureau of Family Assistance, said SNAP benefit theft victimizes low-income individuals who rely on those benefits to care for their families.

“Card skimming can happen to anyone who uses a credit, debit, or EBT card, including SNAP participants,” Cole said. “SNAP benefit theft victimizes low-income individuals who rely on these benefits to feed their families, and it will not be tolerated.”

Theft of SNAP benefits is punishable by federal and state law and can include imprisonment and financial penalties. If a recipient of SNAP benefits is convicted of benefit theft, penalties may include being banned from participating in the SNAP program.

DHHR can replace stolen EBT benefits lost due to card skimming, cloning, or phishing, retroactively to October 1, 2022, and through September 30, 2024.

West Virginia residents who receive SNAP benefits and believe benefits have been stolen, should contact their local DHHR office or contact the DHHR Customer Service Center at 1-877-716-1212 to file a claim.

West Virginians Reminded To Use Caution This Tax Season

Consumers are being warned to be cautious and to protect personal information when preparing and filing their taxes.

With the April 18 tax deadline just over a month away, Attorney General Patrick Morrisey is reminding West Virginians to be careful with sensitive data such as Social Security numbers, birth dates and bank accounts. They are at greater risk from scammers.

Individuals should be mindful of how they handle tax information and who processes tax-related documents on their behalf.

If working with a preparer, research them beforehand and ask for their Preparer Tax Identification Number (PTIN) and check the IRS list.

When sending or submitting tax-related information, use a secure internet connection, and never file returns via publicly available WiFi.

Taxpayers who file through traditional mail should consider taking the mail to a local post office, as tax identity thieves have been known to steal tax documents from mailboxes.

Consumers can reduce the risk of fraud by filing their return well before the April 18 deadline. This gives thieves less time to file a false return since IRS records would show a filed return in the consumer’s name.

Individuals and households who make $60,000 or less a year can also get free help preparing basic tax returns from the IRS’s Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.

Consumers who believe they may be the victim of tax-related identity theft should contact the Attorney General’s Consumer Protection Office at 800-368-8808, or file a complaint online at www.ago.wv.gov.

State Medicaid Fraud Office Expansion To Include CHIP Fraud Investigations

The Attorney General’s Medicaid Fraud Control Unit is expanding to include investigations of Children’s Health Insurance Program (CHIP) fraud across the state.

CHIP offers health insurance to children whose families earn too much money for Medicaid.

Attorney General Patrick Morrisey said this expansion puts West Virginia’s fraud unit more in line with the majority of states and that investigating claims of CHIP fraud will save taxpayers more money.

“I just view that if you have the ability to save an extra dollar more with really not much effort, why wouldn’t you do that for the taxpayers and for the beneficiaries of the program?” Morrisey said.

The expansion was announced during a Tuesday press conference scheduled by Morrisey, who touted the successes of the fraud control unit under his office over the past three years. During that time the unit was expanded from 12 individuals to 21 with the average amount of civil recoveries from fraud per year climbing 268 percent.

Investigations of Medicaid fraud were previously housed under the West Virginia Department of Health and Human Resources before being placed under the jurisdiction of the Attorney General’s office in 2019.