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Fact Pattern A: John and the Food Stamps

Johnwas a divorced father of four. He made a lot of poor business choices,and as a result, he ended up losing his business. Further, creditorssought payment from loans he had taken out when his business wasrunning. They won judgments against him in amounts over $190,000. He wasworking as an admissions counselor at a small community college whenhis checks started being garnished. He decided instead to enroll inschool and stop working. He thought he could get money from federalgrants in his role as a student to live on. He did get some money, butit wasn’t enough to pay his bills. Instead, he decided to try to getsome welfare aid, including food stamps and money from the state helived in. His custody agreement permitted him to have his kids everyweekend. However, in filling out the government welfare forms, heclaimed he had full custody of his children. This allowed him to receivemore aid in food stamps and other monetary funds from the state, sinceit was for five people instead of one. After doing this for ayear, he started to get nervous he would be uncovered. He decided toseek full custody of his children from their mother. During the process,mother’s attorney discovered John was claiming the children as hisdependents when they were not living with him. Attorney reported him toState Agency. State Agency contacted John, and he stated again thatchildren were living with him full- time. He signed a legal documentstating the same. State Agency turned the matter over to StatePolice. On Thursday afternoon, police went to John’s house, where he wasoutside reading a book. Police began to ask John questions, includingwhere the children were. Unaware what they were investigating, Johnanswered, “They are at their mother’s.” Officer Smith asked John who hadcustody of the children. John stated, “Their mother does.”

These statements were used against him in a criminal welfare fraud trial.

Fact Pattern B: Mary and the Shipping Department Practices

Maryworks in the shipping department at a local office supply company,Paper Company. There is a lot of pressure to keep sales up, especiallyin this down economy. Mary is training a new employee, Mike. She sayscustomary practice is to send orders to customers consistently, evenwhen they haven’t ordered anything, unless they complain. Mary explainsto a co-worker that most of the time, the companies think they haveordered the materials. Many customers have their credit cards on filewith Paper Company, and Mary charges the cards as the shipments are sentout without the requisite approval. Mike isn’t comfortable withthis policy, but Mary explains, “Hey, the last person was let go becauseshe wasn’t sending out enough orders. I have 3 kids to feed and I’m asingle mom!” Still uncomfortable, Mike approached the company CEO,Scott. Mike recounted every detail, to which Scott replied “Hmm. Okay,thanks, Mike. I’ll look into it.” In truth, Scott was notbothered by the practice and did not want it to stop. He received a bigbonus the last two years, likely stemming from Mary’s shippingpractices, he now realized. Two months later and without anychange to the shipping practice, Mike reported the practice to the localpolice. Police arrived on the scene to question Mary. Mary refused toanswer any questions. Frustrated, the police arrested her. At the policestation, Mary was read her Miranda rights, and she immediately demandedan attorney.

The case was forwarded to the district attorney’s office. They promptly filed charges against Mary, Scott, and Paper Company.

Fact Pattern C: Dr. Pointer and the Sweaty Palms Surgeries

Dr.Pointer, a plastic surgeon, was accustomed to living an expensivelifestyle. He had houses in several states and took internationalvacations several times a year. However, the recent downturn in theeconomy produced significantly fewer clients than in years past. He washaving difficulty paying all his bills, much less doing the expensivethings he liked to do. He realized that people might be in needof money and started advertising for “sweaty palms” surgery, where hewould “fix” their sweaty palms issues without any cost to them as theirinsurance would cover it. In fact, in person, he promised patients hewould give them $500 for having the minimally invasive surgery. Manydidn’t have a legitimate “sweaty palms” issue, but Dr. Pointer assuredthem what he was going to do wouldn’t make much difference. They wouldagree to a minimally invasive procedure, and Dr. Pointer wouldovercharge insurance companies by $2500 a patient, then pay out $500 toeach patient.

On top of that, he kept minimal records on each patient and didn’t do any follow-up visits.

Sometimes,patients expressed hesitation. They didn’t really think they had asweaty palms issue. Dr. Pointer started submitting false invoices toinsurance companies on these people as he now had their insuranceinformation. One such person, Beth, received a confusingstatement from her health insurance company regarding sweaty palmssurgery with Dr. Pointer. She had met with him but opted not to have thesurgery. She called the police and reported the matter to them. Localpolice went to Dr. Pointer’s office to investigate. His assistant toldthe police he wasn’t there. The police demanded his office files. Theyoung assistant didn’t know what to do. She said, “No, I don’t think Ican turn them over to you. I haven’t seen any legal documentation thatyou are allowed to do that.” However, the police raided the officeanyway. The police found Beth’s file, which indicated herinsurance company was billed for a surgery she said she never had. Thepolice turned the matter over to the district attorney, who decided toprosecute. The DA got a warrant for Dr. Pointer’s arrest and gave it tothe police. The police went to Dr. Pointer’s house. The door wasopen, and they went inside without knocking. They saw him sitting in hisback pool and arrested him.

Fact Pattern D: Bill’s Investment

Billlived in Denver and was always careful with money. However, he realizedhe could make his money grow by investing it. He researched a fewoptions, but nothing sounded good to him until he was approached in alocal bar by Amy. She started talking to him about “Western Tool andEquipment Repair and Investment Services” (hereafter, “Western Tool”).She gave him her card with that business name on it and with the titleof “Investment Manager.” She explained that the purpose of Western Toolwas to use invested funds to purchase used tractor-trailers. They wouldbe reconditioned and sold for profit to large corporations, like K-Martand Wal-mart. They would also be sold internationally. Sheexplained that they operated at a distant plant out of state in Texasbut that there was a local headquarters nearby in Boulder, CO. Shestated that investors made a 36% profit within the first year and thatinvestment checks were distributed every 6 months. Bill thoughtthis idea sounded great. He asked for some documents to review, whichAmy provided by e- mail. The numbers were too good to be true! Hedecided to invest $20,000 at the start. Six months in, Billreceived a check for $259 from Western Tool. He thought this wassignificantly lower than he was supposed to receive based on the numbersAmy provided him. He contacted Amy, who stated Bill needed to bebringing in other investors to reach those higher numbers. Amy said shewould get him the information to bring others in, including somebusiness cards and updated files. A week later, Bill receivedbusiness cards with his name on them and the title of “InvestmentManager.” Bill was confused because he was not an investment manager.However, he believed in the goals of the company and set out to bringmore people into the business. He connected three individuals with Amy,and each person invested $5000. When Bill received his next investmentcheck six months later, it was for $98. Now he was confused and angry.He managed to get other people to invest, and his investment proceedsdecreased, contrary to what Amy told him. At this point, he askedAmy for a face-to-face meeting because he wanted his money back. Hesuspected something was not right with this investment arrangement. Helast saw her in the local bar and never went to headquarters in Boulder.Amy never responded to his e-mails or phone calls. Bill drove tothe address listed as headquarters in Boulder; but when he got there,it was a P.O. Box.

He hired a private investigator to find out more information. It turns out the Texas plant address didn’t exist.

Oneof the people whom Bill managed to get to sign up, Dan, called thepolice after his own small investment check for $27 came in the mail.Dan thought this was some kind of fraud. He explained the details as heknew them to the police. Bill never hid any information about himself,so Dan had Bill’s home address. Police went there to talk to Bill. Billwanted to be helpful to the police. He answered the door and let themin. They began asking him about Western Tool. This was not the firsttime they had heard about the company, but Bill was the first person toprovide significant information. With all the information Bill provided,the police forwarded the matter to the DA. Case Name (e.g.,
People v. John)
John v. Food
Stamps
Mary v. Shipping
Department
Dr. Pointer and the
Sweaty Palms
Surgery
Bill’s Investments
Type of Fraud at
issue (list
definition of the
specific type of
fraud)
Criminal Welfare
Fraud
Piece of Evidence
Applicable Federal
Rule of Evidence (list
by rule number, e.g.,
FRE 404, and a
summary of the rule).
How FRE applies to evidence
and proves or disproves the
alleged fraud