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The Changing Face of Fraud – How Much More Can America Take?

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The Changing Face of Fraud

How Much More Can America Take?

The growing need to provide for oneself in a time of economic turmoil has resulted in an altered mindset toward right and wrong across the United States.

Learn the why behind the headlines.

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“If you are not cheating, you are not trying!” This phrase is heard in the sports world as athletes go to great lengths to gain a competitive advantage. However, it can also be seen as a mantra for growing numbers of Americans attempting to gain an edge over financial systems.

To combat tax fraud, the United States Internal Revenue Service has implemented tougher penalties and punishments. Yet this has had little impact on unscrupulous individuals intent on breaking the law. According to Reuters, “…tax return fraud is an increasing problem that the agency is struggling to keep up with.”

In a transcript of a congressional hearing from the news organization, U.S. Congressman Darrell Issa stated: “The IRS is clearly [lagging] behind the thieves…Why rob a bank, when you can rob…the IRS?”

Fraud (along with bloated bureaucracy) plagues the world of government contracting, which involves agreements, typically made with the private sector, related to spending on goods and services. The nonprofit Center for Effective Government estimated that the U.S. government spent $536.8 billion on specialized items and skills during the 2011 fiscal year. These funds represent relatively “easy money” for those who greedily overcharge on federal contracts. The stories of “$500 toilet seats” and “$1,000 Pentagon hammers” have managed to diminish from the headlines, but not from day-to-day operations.

Average citizens are also targets, as evidenced by rising reports of credit card fraud and identity theft. A 2012 ACI Payment Systems report showed that 42 percent of cardholders in the U.S. have been impacted by fraud while, according to the ABA Deposit Account Fraud Survey Report 2011, financial institutions saw $955 million in losses due to debit card fraud alone in 2010—a 21 percent increase from the $788 million in losses seen during 2008.

America is wobbling under the constant pounding of these and other instances of bald, outright deception and dishonesty. Yet, in many ways, the country still appears prosperous.

Because of this, many see the emerging fraud crisis as isolated—actions perpetrated by a small number of greedy, criminal types. In their eyes, being victimized is a problem for “government regulators” or an “unlucky few.”

The reality is that the fraud problem is much more common than most realize.

Continuing Spread

Federal assistance programs such as Medicare and Social Security—aka “entitlement programs”—represent additional areas where fraud runs rampant. These were developed in the spirit of the majority helping out the disadvantaged few.

Throughout the years, such programs have grown gargantuan. According to a U.S. News & World Report summary of the book A Nation of Takers: America’s Entitlement Epidemic by Nicholas Eberstadt, “Spending on entitlements is the highest in American history. In 2010, entitlement spending had grown to be almost 100 times higher than it was in 1960; it has increased by an explosive 9.5 percent per year for 50 straight years.

“Entitlement transfer payments to individuals (such as for income, healthcare, age, and unemployment) have been growing twice as fast as per capita income for 20 years, totaling $2.2 trillion in 2010 alone—which was greater than the entire gross domestic product of Italy and roughly the same as the GDP of Great Britain.”


As these systems grow, regulating them becomes increasingly difficult. Instead of only “helping those in need,” many people decide to “help themselves” to what they see as easy government money. This is done by stretching their circumstances to meet eligibility requirements—or worse, being fundamentally dishonest.

For example, thousands of Americans routinely defraud state unemployment compensation programs. One way they do this is by voluntarily resigning from a position and then falsifying the reason they separated from an employer—all to receive benefits.

Another ploy is for people to continue receiving benefits after returning to work. These are known as “concealed earnings,” a term used by economists David L. Fuller, B. Ravikumar, and Yuzhe Zhang in a report released by the Federal Reserve Bank of St. Louis. According to these researchers, this type of behavior accounted for an estimated $2.2 billion or about two-thirds of the total losses of unemployment compensation fraud in 2011.

Unemployment compensation is not the only program subject to fraud: Medicaid, Medicare, Social Security, welfare and disability insurance are also targets.

The news program 60 Minutes aired a segment on the Federal Disability Insurance Program. According to the report, the U.S. disability program has become “a secret welfare system.”

On the program, United States Senator and physician Tom Coburn acknowledged that the $135-billion-a-year program is being “gamed pretty big right now.” Dr. Coburn “randomly selected hundreds of disability files and found that 25 percent of them should never have been approved—another 20 percent, he said, were highly questionable.”

Preventing abuse of such programs is complicated, according to 60 Minutes. Some lawyers and their clients have effectively widened the definition of a qualifying disability. Ailments such as backache, depression and fibromyalgia (joint and muscle pain) are hard to prove since there is no definitive diagnostic test for any of these disorders.

“People run out of unemployment insurance,” Marilyn Zahm, one of the nation’s 1,500 disability judges, stated during the program. “They are not going to die silently. They are going to look for another source of income. It is not unusual for people, especially people over 40, to have some sort of an ailment or impairment. So they will file for disability benefits based upon that. For many of these people, the plant closed. There are no jobs in their communities. What are people supposed to do?”

Meanwhile, the buckling program is a major economic resource for some of the poorest areas of the country. Local grocery stores, restaurants and other retail establishments benefit greatly when monthly checks go out—as do their employees.


“[Disability benefits] are a vital part of our economy. A lot of people depend on them to survive,” a regional social security office employee told the news outlet while describing the local town where the office is located.

Is the abuse of these and other programs somehow justified? Do the ends justify the means?

Regardless of moral grounds, the price tag for these programs is outpacing the growth of federal revenue and is becoming a blight threatening the entire national budget.

“The Unemployment Thing”

More people are using these assistance programs and others that involve taxpayer dollars as mere economic options.

At a dinner party, a young man in his early 20s mused about how after having worked for the government for a while and graduating college, he was thinking about “doing the unemployment thing” until he figured out what he wanted to do.

Another 20-something, a personal trainer and seasonal landscape worker, commented in a different setting that instead of finding full-time work elsewhere during the winter, he collected unemployment to supplement the income he received from the gym.

This mentality has cemented itself in the public psyche. The Pennsylvania newspaper Reading Eagle reported about a builder who “gets paid pretty well when he’s working, but once a project ends he has to collect unemployment, which amounts to about half of his regular pay.”

“‘It only takes so long to build something, so you work yourself out of work,’ he said.”

It has also become common for jobless adults in their 20s and 30s to cash out on pensions early or use unemployment as a way to get more out of life.

The Los Angeles Times reported about some of these people who consider themselves “funemployed”: “While millions of Americans struggle to find work as they face foreclosures and bankruptcy, others have found a silver lining in the economic meltdown. These happily jobless tend to be single and in their 20s and 30s. Some were laid off. Some quit voluntarily, lured by generous buyouts.

“Buoyed by severance, savings, unemployment checks or their parents, the funemployed do not spend their days poring over job listings. They travel on the cheap for weeks. They head back to school or volunteer at the neighborhood soup kitchen. And at least till the bank account dries up, they’re content living for today.”

“‘I feel like I’ve been given a gift of time and clarity,’ said [one woman] of Franklin, Tenn., who was laid off from her job as a tea shop manager…After sleeping in late and visiting family in Florida, she recently mused on Twitter: ‘Unemployment or funemployment?’”

It seems the shame of not having a job has nearly been erased. One 30-year-old substitute teacher who has been on unemployment several times to supplement her income wrote on a blog: “I’ve hit what I feel like is the end of an unemployment honeymoon…For a while, it was nice to sleep in late (until 8am sometimes!) and not have to worry about rushing around. But now I’m at a point where I’m working on trying to find things to do.”

“Sometimes it’s easy like going to Disneyland, but some days it’s tough. Yesterday, I had nothing that had to be done. No errands, no friends to meet up with, nothing.”

Thanks to unemployment benefits, she said, she will be able to pay all her bills—even though she did not earn a paycheck that month.

Scott Olson/Getty Images
Voicing opposition: Protesters call for an increase on taxes for the wealthy and speak out against cuts in Social Security, Medicare and Medicaid during a demonstration at the Federal Building Plaza in Chicago, Illinois (Dec. 6, 2012).

What many do not take into account is when they use these systems, the money does not originate with the government. Taxpayers, who themselves are employed, actually pay for them. Accepting and defrauding entitlements means taking money from those who are working hard and trying to pay their own bills.

The Heritage Foundation released figures showing that, as of 2010, over 70 percent of federal spending went to 47 governmental dependence programs. The dramatic increase of this percentage over the last 50-plus years goes beyond the effects of population growth and inflation. Growing numbers are fraudulently benefiting from these programs simply because they can get away with it.

The “unemployment thing” reveals a lot about America’s shifting national character.

Generation of Character

A person’s true character becomes obvious when times are tough. A nation’s character is the same.

This principle was readily apparent during the Great Depression, which produced “The Greatest Generation.” The challenging decade of the Depression solidified a powerful inner strength, fortitude and conviction in those who weathered the storm.

Those alive during that time abided by a set of values vastly different from those prevalent today. An excerpt from the book, Hard Times: An Oral History of the Great Depression by Studs Terkel, gives a look into the life of one man who suffered: “I’d get up at five in the morning and head for the waterfront. Outside the [gates of a refinery], there would be a thousand men. You know [very] well there’s only three or four jobs. The guy would come out…[and then say] ‘I need two guys for the bull gang. Two guys to go into the hole.’ A thousand men would fight like a pack of Alaskan dogs to get through there. Only four of us would get through.”

Picture this today! Imagine one thousand men gathering daily with the hope of being one of four men to find work. The mere thought of this is preposterous to modern thinking.

Yet the Depression forged the Greatest Generation. They drastically scaled back their lifestyles, learned to do without, and clearly made the distinction between “needs” and “wants.”

While people were not perfect during the tumultuous Depression years, for the most part they did pull together. Instead of focusing on what they could get and take, many did everything they could to give and help.

In a video from the Great Depression Curriculum Interview series, funded by the Federal Reserve Bank of St. Louis, a Missouri woman recalled that her parents constantly assisted others during the Depression. Her father allowed an out-of-work man, who lived nearby, to hunt on his land and hired the neighbor’s sons when they were old enough to work.

She remembered her mother invariably gave vagrants food, but required them to chop wood for it. Even when providing support, the values of this generation were evident.

Subsequent decades of prosperity—and eventually excess—have softened many Americans. The hardened people of the bygone era are slowly dying off—and so are their tales and lessons of surviving difficult times.

People in modern times would be completely unrecognizable to those of the 1930s.

Time Foretold

Many of the admirable characteristics of the Greatest Generation—hard working, humble and honest—are based on biblical principles. Yet the Bible also references a time when extremely prosperous nations would begin to collapse into selfishness and excess.

The apostle Paul listed character traits and behaviors that would be prevalent during that time: “For men shall be lovers of their own selves, covetous, boasters, proud, blasphemers, disobedient to parents, unthankful, unholy, without natural affection, trucebreakers, false accusers, incontinent, fierce, despisers of those that are good, traitors, heady, highminded, lovers of pleasures more than lovers of God” (II Tim. 3:1-4).

This list perfectly describes today’s society and there is a reason for this: it is describing our time! The first two qualities listed, “lovers of their own selves” and “covetous” point directly to what makes today’s society different from that of the early 20th century. They describe selfish people who care only about getting.

Greedy, self-centered people have always existed, but today’s level of dishonesty and deceit goes well beyond that of the past.

Biblical text describes the end result of the modern trend of dishonesty and fraud: “For from the least of them even unto the greatest of them every one is given to covetousness; and from the prophet even unto the priest every one deals falsely” (Jer. 6:13).

Many more now are willing to engage in fraud in the pursuit of goods—only thinking of themselves and not the people harmed in the process.

Obviously, the God of the Bible is not pleased with this conduct. Notice: “And they bend their tongues like their bow for lies: but they are not valiant for the truth upon the earth; for they proceed from evil to evil, and they know not Me, says the Lord” (9:3).

The Creator God abhors the selfish way of get. While He desires all of mankind to live prosperous, abundant lives, He wants it to be through the way of give—selfless outflowing concern for others.

Ancient Example

God’s overall plan ultimately involves working with all of mankind. Yet the early stages of it involved Him directly interacting with a small tribe of people to demonstrate to the entire world the benefits of following His ways.

This people, ancient Israel, descended from a man named Abraham, whom God found to be faithful. His faith led to God promising Abraham that his future offspring would be greatly multiplied and given tremendous prosperity, power and wealth.

The Creator worked with Israel as this model nation. As their leader, God established civil laws and rules of conduct for them to follow for their benefit. The Ten Commandments alone show the importance of honest dealings.

On multiple occasions, His laws addressed supporting those who fell on tough times. One such statute was related to ensuring the poor had enough food to eat: “And when you reap the harvest of your land, you shall not wholly reap the corners of your field, neither shall you gather the gleanings of your harvest. And you shall not glean your vineyard, neither shall you gather every grape of your vineyard; you shall leave them for the poor and stranger: I am the Lord your God” (Lev. 19:9-10).

God instructed those with crops to not gather all the way to the corners of their fields or pick up the crops that fell to the ground. They were to leave these crops behind for those experiencing hard times.

Notice crops were left behind for the poor to gather for themselves. They were not to just sit around and wait for someone to bring the food to them. They were to work for it! Though assistance was available, they still had to earn it. This is a far cry from how many see the aid programs of today!

The law also clearly stated how God felt about fraud: “You shall not steal, neither deal falsely, neither lie one to another. You shall not defraud your neighbor, neither rob him…” (Lev. 19:11, 13).

The consequences for violating these rules ranged from making restitution for what was taken all the way to the death of the offender.

Over the centuries, Israel struggled with keeping these and other laws. They often did things their own way. Their disobedience led to them eventually being conquered as a people and taken into slavery. They soon lost their identity as a nation. (Judah, which came out of Israel and became the modern Jews, is the exception.)

Some of their descendants—who are commonly called the lost tribes of Israel—went on to become “a nation [America] and a company of nations [Great Britain]” (Gen. 35:11). This was a fulfillment of God’s promise to Abraham.

Yet the Creator’s obligations to these nations have now been fulfilled and that prosperity is fading away.

Think. The incredible economic powerhouse that is the United States is unique throughout all history. What other nation could shoulder $17 trillion in debt, spend trillions in defense money to ensure a stable world, and shoulder the burden of wanton fraud across the land? The ability to do so speaks to the incredible power of God’s blessings on America—even as it “runs on the fumes” of its prosperity.

Mercifully, God has not allowed America to suffer sudden and complete economic collapse despite its severe economic obligations and constraints. This will soon change, however. To learn more, read David C. Pack’s extraordinary book America and Britain in Prophecy.

While the United States—and its national character—is on the decline, individuals can choose to be exceptions.

Building Godly Character

God understands there is a void in man. His Word states, “…the way of man is not in himself: it is not in man that walks to direct his steps” (Jer. 10:23). In other words, man needs guidance to live the way God intended. The current culture of fraud runs counter to this and is a prime example of the inability of man “to direct his steps.”

The Creator’s ultimate goal for man is for him to build godly character.

It is said that the character of a man is what he does when no one is watching. To paraphrase Herbert W. Armstrong, founder and publisher of this magazine’s predecessor, The Plain Truth, true character is (1) the ability to know right from wrong, (2) the willful desire to choose right over wrong, and (3) doing what is right and rejecting the wrong, even in the face of overwhelming trials, pressures and temptations to do otherwise.

Many have their own standards of “right and wrong.” The Creator issues a stern warning concerning this, “Woe unto them that are wise in their own eyes, and prudent in their own sight!” (Isa. 5:21). It is God and God alone who ultimately determines what is right and wrong.

But God cannot give His character to a person by divine fiat. He cannot place it into a person the way he places “instinct” into an animal. Man, as a free moral agent—a being of free choice—must choose to allow God to build this character in him.

This kind of character takes a lifetime to develop. There are ups and downs, but those who remain on course can succeed. In the end, man can have perfect character like God.

Building this character begins in part with following the right habits. It involves living by a set of “laws” and “guides” based on biblical principles. Following these behaviors provides an alternative to relying on schemes and defrauding people and the government.

People have followed these concepts and realized amazing success in their personal and professional lives. To learn these foundational principles, read Mr. Pack’s booklet The Laws to Success.

If practiced daily, they will change your life! 

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