Organized crime behind social assistance fraud

Posted by: Maria Celander February 21, 2013

Organized crime behind social assistance fraud

New rules will halt billions in waste

By Maria Celander

During recent years the Swedish social assistance compensation system has suffered one scandal after another. Fraud cases involving millions of Swedish kroner (€ 1 = Skr 8.43) have been discovered, most recently when two siblings in mid-Sweden were suspected of obtaining 20 million kroner by illegally tampering with the system. The siblings, however, are not representative of the largest group of swindlers, the organized criminals.

“This is frequently about foreign businessmen living in Sweden, who are deeply involved in organized crime. Besides his usual criminal activities, an entrepreneur would also run a business that claims to have a number of employees, but in reality has significantly fewer than stated,” says Karl-Arne Ockell, a former commissioner of the regional criminal investigators in Halland.

He has been leading several of the most significant investigations of fraud within the assistance system, including the case of the so-called “Rabbit Dancer” – a man, then aged 33, who pretended to be paralyzed, but was revealed on video dancing with Lisebergskaninen [an entertainment park mascot]. That was in 2009, and can be seen as the opening shot in a wave of investigations and revelations of fraud.

“At that time we were entirely perplexed, we knew nothing of this fraud. There was no control. But that case taught us how to approach it, how to break down he details, and provided a manual for dealing with this. Later, the police developed a close cooperation with the tax authorities and insurance companies, which has made us much better at revealing fraudsters,” says Ockell.

The methods used for fraud are different between Swedish-born and foreign-born persons. A person born abroad will often lack certificates for his disabilities, which permits him to fake brain damage, for instance, not an option for a person born in Sweden.

“But what is common to all of these persons is that they are very, very good actors,” says Karl-Arne Ockell.

But now the rules for obtaining compensation for assistance will be tightened up, in order to close loopholes and options for fraud. From the 1^st of July this year, the insurance company Försäkringskassan will be permitted to make unannounced visitations at the homes of persons who have hired family members as assistants, and employers will have the duty to provide information about their hired assistants to the municipality and Försäkringskassan, and even people other than the directly insured person may be forced to pay compensations..

The tightened rules came after a very critical report, Åtgärder mot fusk och felaktigheter med assistansersättning (“Measures to combat fraud and misconduct in assistance compensations”), written by Susanne Billum, justice at the Supreme Administrative Court. In that report it was estimated that between 9 and 15 percent of all assistance compensations were based on fraud and mistaken payments, and a further 13-18 percent were based on over-exploitation and passing on of payments from municipal and regional sources. In that case, the amounts wrongfully paid would reach billions. Försäkringskassan, however, is more moderate in its estimate of the scope of fraud, and believes that Billum’s figures are very uncertain. But adds that nobody really has an idea about the size of the unreported numbers.

“During 2011, we identified some 280 million Swedish kroner in erroneous compensations, but one needs to keep in mind that the assistance compensations constitute only a small fraction of that amount. The dominant part is about compensations for disease, what is also known as early retirement,” says Daniel Johansson, the department manager of control at the main office of Försäkringskassan.

Försäkringskassan has some 150 persons working full-time on the so-called control investigations, that is, identifying fraudsters. During an average year, some 20,000 control investigations take place, and some 8,000-9,000 tips come in from the public. Approximately 10 percent of the hints lead to further investigation. Irregularities can also be discovered by the tax authorities or by individual administrators at Försäkringskassan.

“This activity has developed significantly over the past few years. It is my understanding that the level of fraud being committed is not increasing, but that we have become better at discovering the fraud,” says Daniel Johansson.

Much effort is put into pattern analysis and attempts to identify risk factors, for instance if a person works and at the same time receives sickness benefits. According to Daniel Johansson, there is much focus on assistance compensations, as fraud with these is so well-organized and the amounts paid out are quite significant.

“An average sickness benefit may be at the level of 10,000 to 15,000 Swedish kronor a month, while the same person may receive Skr. 100,000 monthly in assistance compensation; it adds up real fast. So it’s clear that here is an incentive for fraud,” he says.

“Even though almost everyone is doing the right thing, it is important for public confidence that we deal with the fraud.”

FACTS/Assistance compensations

Year	Number of completed investigations	Number of cases reported	Wrongly paid sums, millions of Swedish kroner	Savings related to stopping future payments, millions of Swedish kroner
2008	146	6	5	12
2009	220	13	25	28
2010	234	9	19	36
2011	321	53	42	32
2012 q1-q3	435	27	21	23