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NY's new AG creates anti-fraud unit

New York Attorney General Eric Schneiderman Attorney General

New York Attorney General Eric Schneiderman Attorney General Eric Schneiderman is announcing a new anti-fraud unit. (Nov. 3, 2010) Credit: Charles Eckert

Attorney General Eric Schneiderman is announcing a new anti-fraud unit that as explained, so far, would essentially expand on successful Medicaid anti-fraud efforts and apply them to different areas. He gave a preview yesterday in a speech picked up on here by Edward-Isaac Dovere on the City Hall News Web site

UPDATE: Here's text from the Schneiderman announcement

With the state facing a budget crisis and a loss of confidence in its government, Attorney General Eric T. Schneiderman today announced an aggressive plan to root out fraud and return money illegally stolen from New York taxpayers and their government. Schneiderman's initiative consists of a one-two punch, establishing a new "Taxpayer Protection Unit" (TPU) to target corrupt contractors, pension con-artists, and large-scale tax cheats who rip-off New York State government and its taxpayers -- and bolstering his office's award-winning Medicaid Fraud Control Unit with dozens of additional prosecutors, investigators, and auditors, using federal funds and increased recoveries, an initiative that will pay for itself and cost state taxpayers no additional money.

"Those of us who believe in government as a force for good must be the very harshest critics when it comes to waste, fraud, and corruption in the public sector,” Attorney General Schneiderman said today. “Today's announcement is a signal to anyone thinking of ripping off New York taxpayers: We will go after you with every tool we have, and you will pay the price for these crimes. The taxpayers of this state deserve nothing less.”

“Recouping taxpayer dollars illegally siphoned from state coffers is critically important,” Governor Andrew M. Cuomo said. “In the Attorney General’s Office we aggressively pursued these recoveries and I commend Attorney General Schneiderman for bringing fresh ideas and new approaches to build on this record of success.”

The launch of Schneiderman's new initiative comes as New York State must close a looming $10 billion gap in next year’s $136 billion budget, and projected deficits of $14 billion and $17 billion in the following years.

Specifically, Schneiderman’s plan entails:

(1) Establishing a new "Taxpayer Protection Unit" (TPU) to crack-down on targets including: firms that rip-off government pension funds, contractors that over-bill taxpayers, and large-scale tax cheats; and encourage and work with whistle-blowers to expose corruption.

Attorney General Schneiderman announced today he will devote a new unit in the Office of Attorney General (OAG) to conduct civil investigations and prosecutions against contractors and public officials who make or use false or fraudulent claims, records, or statements to obtain government money. The new unit will not require any additional hires, and will instead assign several existing prosecutors to this new unit.

In 2007, New York passed the False Claims Act — a powerful law that empowers the Attorney General, local governments and whistle-blowers to bring actions against anyone that defrauds the government Critically, defendants must pay the government triple damages and civil penalties — the highest civil penalties of any New York statute. This law resulted in the recovery of hundreds of millions of dollars in stolen funds for taxpayers; the vast majority of those recovered monies have been stolen Medicaid funds, with relatively few recoveries involving non-Medicaid fraud cases.

However, a very recent enhancement of the False Claims Act, called the Fraud Enforcement and Recovery Act (FERA), was authored by Attorney General Schneiderman and makes New York the first state in the nation to expand its False Claims law in many ways, including by adding the power to crack down on large-scale, multi-state corporate tax fraud schemes, expanding whistle-blower protections, and closing loopholes that made it hard to prosecute corrupt subcontractors.

Working with whistleblowers, Attorney General Schneiderman will assign attorneys to use this revenue-generating statute to recover much-needed revenue for the state and its taxpayers. This new unit will increase the potential for the state to recover frauds committed by state contractors, who collectively receive $13 billion in funding from New York taxpayers, and billions more in contracts with local governments.

Schneiderman will also enhance the office's focus on corruption and fraud against local governments, by having the Taxpayer Protection Unit train local governments in fraud detection and fraud prosecution efforts.

(2) Bolstering the Attorney General's Medicaid Fraud Control Unit (MFCU), by assigning more prosecutors to the unit devoted to recovering taxpayers' money -- without using additional state taxpayer funds.

A revenue-generating agency that recovers taxpayer money through successful fraud prosecutions, the Attorney General’s Medicaid Fraud Control Unit has civil and criminal jurisdiction to investigate and prosecute Medicaid fraud. The unit targets, among other things, large-scale frauds involving overbilling, kickbacks, substandard drugs and medical equipment, and “Medicaid mills” run by organized criminals. It also contains a patient protection unit that safeguards elderly New Yorkers from abuse and neglect.

Schneiderman's new enhancement to MFCU -- the addition of dozens of new prosecutors, investigators, and auditors, devoted to cracking down on Medicaid fraud -- will not cost New York State anything. The initiative will be funded by using money the unit itself recovers, as well as a federal program which will provide the unit with 3:1 matching funds. Through the federal program, Schneiderman will receive enough to fund dozens of new prosecutors, auditors, and investigators, vastly bolstering the capabilities of the unit, without costing additional state taxpayer funds.

In previous years, there has been a direct relationship between the number of prosecutors in the MFCU and the number of Medicaid fraud recoveries the unit has obtained, meaning the enhanced unit could recover millions more to the taxpayers of New York State.


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