Cryptocurrency ATMs — also called “virtual currency kiosks” or “Bitcoin ATMs” — are becoming a growing channel for fraud. In recent months, federal and state regulators have issued new advisories highlighting the risks, scam patterns, and compliance expectations tied to these machines.

For Certified Fraud Examiners (CFEs), understanding these developments is essential. Victims are being directed to use crypto ATMs at alarming rates, and financial institutions face increasing pressure to recognize red flags and intervene before losses occur.

Key Recent Alert's

• FinCEN Notice (FIN-2025-NTC1)
  In August, FinCEN issued a notice warning that many crypto ATM operators are failing to comply with AML/CFT rules. The notice highlights how scammers coach victims into withdrawing cash, scanning QR codes, and depositing funds into crypto ATMs — effectively laundering money into anonymous wallets.
• California DFPI Guidance
  The California Department of Financial Protection & Innovation issued consumer guidance on “Crypto ATM Scams.” The DFPI notes that state law caps ATM transactions at $1,000 per person per day and stresses that many scams involve urgency, impersonation, and the use of QR codes.
• NASAA Investor Advisory
  The North American Securities Administrators Association (NASAA) cautioned investors that Bitcoin ATMs often lack meaningful fraud protections, charge high fees, and provide no recourse for victims once funds are sent.
• State Enforcement & Awareness
  
• • The District of Columbia Attorney General sued Athena BTM, citing that 93% of deposits were linked to scams with a median victim loss of $8,000. Victims’ median age: 71.
  • North Carolina launched a statewide education campaign to warn residents about crypto ATM fraud.
  • States including Nebraska and others have passed new laws limiting transaction amounts, requiring operator licensing, and mandating refunds for fraud victims.
• International Developments
  Australia’s financial intelligence unit, AUSTRAC, found that many of the top crypto ATM users are actually scam victims, not criminals. One case involved a victim in their 70s who deposited over A$430,000 into kiosks.

Common Red Flags in Crypto ATM Fraud

• Unsolicited contact (phone calls, texts, or emails) directing victims to an ATM.
• Impersonation of government agencies, banks, or family members in crisis.
• Use of QR codes or wallet addresses provided by the scammer.
• Pressure or urgency (“your account will be frozen,” “you must pay bail immediately”).
• Step-by-step coaching by the scammer, including directions to specific ATM locations.
• Older victims disproportionately targeted, often with devastating financial impact.

What CFEs Can Do

For fraud examiners, these advisories underscore the importance of

• Training front-line staff to recognize victim behaviors, such as confusion at ATMs or unusual cash withdrawals followed by kiosk deposits.
• Enhancing transaction monitoring to detect patterns consistent with crypto ATM fraud (structured cash withdrawals, recurring transactions near kiosks, etc.).
• Partnering with law enforcement and regulators to share intelligence on ATM-based fraud typologies.
• Educating clients and communities — particularly seniors — about the risks of crypto ATM scams and the irreversibility of such transactions.

Closing Thoughts

As regulators tighten oversight and fraudsters adapt their tactics, CFEs are uniquely positioned to help organizations stay ahead. Crypto ATMs may look like a modern convenience, but for too many victims, they are the entry point into devastating financial loss.

By understanding the latest advisories, recognizing the red flags, and strengthening institutional defenses, fraud examiners can play a critical role in protecting both organizations and individuals from this fast-growing fraud channel.

Tech Support Scams: The Basics

Tech support scams typically begin with alarming pop-ups or unsolicited calls claiming a device is infected or has critical errors. Victims are urged to install remote-access software—like TeamViewer or AnyDesk—granting scammers control over their systems. From there, the fraudster fabricates problems and charges victims to “fix” non-existent issues, often demanding payment via gift cards, cryptocurrency, or bank transfers  . These scams disproportionately impact older adults and seniors, who are more susceptible to social engineering and often lose substantial sums  .

When Tech Support Scams Meet Money Laundering

As tech support scams proliferate, fraud networks have increasingly turned to money laundering to move and conceal illicit proceeds. Criminals often use shell companies, crypto platforms, and informal systems like hawala to obscure transaction trails.

A powerful recent example comes from India: the Enforcement Directorate executed a major raid in Chandigarh and the Tricity region, shutting down several fake IT firms pretending to be global tech brands like Microsoft and HP. These operations leveraged shell companies and foreign payment gateways to launder funds globally, including via hawala—highlighting the transnational and sophisticated nature of such crimes  .

U.S. Cases That Illuminate the Threat

• Massachusetts Tech Support Scam Surge (2025): Reported losses for the state skyrocketed from under $1.2 million in 2019 to more than $50 million in 2024—underscoring how lucrative money laundering through these scams can be  .

• Federal Seizure via Tether (2024): Cryptocurrency firm Tether froze $1.4 million of scam proceeds at the behest of U.S. law enforcement, demonstrating the effectiveness of blockchain cooperation in suspending criminal flows  .

• Victim Recovery and Forfeiture (2025): In a tech support scam case involving a Microsoft impersonation, authorities reversed $221,000 of illicit transfers and recovered an additional $328,573—highlighting the success of rapid investigative and enforcement response  .

What CFEs Should Know and Do

As Certified Fraud Examiners, you’re well-positioned to spot and disrupt these laundering channels:

1. Map the Payment Path

   Trace payments through domestic and international routes—watch for gift cards, crypto wallets, offshore payment processors, or hawala networks.

2. Collaborate with Crypto Partners

   Leverage resources like Tether and blockchain analytics to freeze and trace illicit crypto payments.

3. Identify Corporate Fronts

   Tech support scams often use shell call centers or fake entities posing as well-known brands—regulatory filings, website registration info, and operational documentation can reveal inconsistencies.

4. Monitor Victim Patterns

   Older victims often show patterns of emotional processing—not fraud. Be alert to repeated, high-value transfers for “repairs,” purchases of prepaid instruments, or sudden crypto usage.

5. Engage Authorities Swiftly

   Work with the FBI, FTC, state agencies, and foreign counterparts when funds move across borders or through unregulated channels.

6. Public Education & Prevention

   Educate communities about the scams, warning signs (e.g., unsolicited calls, remote access requests), and safe payment practices.

In Summary

Tech support scams are no longer just about stolen data or one-off extortion—they’re now sophisticated laundering operations exploiting technological gaps, jurisdictional complexity, and vulnerable populations.

By combining forensic accounting, cyber intelligence, blockchain tracing, and cross-agency collaboration, CFEs can identify and dismantle these fraud pipelines—protecting victims and upholding financial integrity.

In recent years, a wave of sophisticated online investment frauds has emerged, often masked as romance, crypto, or “get rich quick” schemes. One of the most insidious is the pig butchering scam—a global, organized fraud model that blends elements of romance scams, Ponzi schemes, and high-tech deception.

Named after the practice of “fattening a pig before slaughter,” these scams lure victims into trusting relationships, build a false sense of financial opportunity, and then bleed them dry. The scale and reach of these crimes have expanded dramatically, and Certified Fraud Examiners (CFEs) play a critical role in detecting and investigating them.

Anatomy of a Pig Butchering Scam

The scam typically unfolds in four phases:

1. Targeting

   Scammers use dating apps, social media, or even WhatsApp “wrong number” texts to establish contact. Targets are often chosen for signs of affluence or emotional vulnerability.

2. Grooming

   Over weeks or months, the scammer builds rapport, presenting themselves as successful investors—often in crypto. They showcase luxury lifestyles and promise to “teach” the victim how to trade.

3. The Hook

   Victims are directed to fake or manipulated trading platforms, often with real-time dashboards showing “profits.” Initial withdrawals may be allowed to build trust.

4. The Butchering

   After the victim invests significant funds, withdrawal attempts are blocked under the pretense of taxes, frozen accounts, or additional fees. Communication abruptly ends, and the funds vanish—usually laundered through complex crypto chains and offshore accounts.

Red Flags for Fraud Examiners

Fraud investigators should be on alert for the following indicators:

Red Flag	What to Look For
Unusual wire or crypto transfers	Large or frequent transfers to unknown exchanges or wallets
Out-of-character spending	Victims liquidating retirement accounts, borrowing money, or maxing out credit
High returns with no documentation	Promised returns exceeding market norms with no formal agreement
Use of lesser-known crypto exchanges	Transfers to unregulated or recently registered domains
Behavioral changes	Victim isolates from family or ignores warnings from friends and financial advisors

Investigative Techniques for CFEs

1. Victim Interviews

Start with building a detailed timeline of the scam. Ask about communication history, emotional connection, transaction amounts, and any names or apps used.

2. Digital Forensics

• Collect screenshots, chat logs, emails, and domain names.

• Trace cryptocurrency wallet addresses using blockchain explorers and forensic tools like Chainalysis or TRM Labs.

3. Financial Tracing

• Review bank and brokerage records.

• Identify ACH, wire, or crypto exchange activity tied to offshore entities or mixers.

• Analyze patterns for evidence of layering or structuring.

4. Platform Analysis

• Investigate any website or trading platform used in the scam.

• Check for domain registration red flags (recent creation, overseas hosting, non-corporate registrants).

5. Collaboration with Law Enforcement and Crypto Exchanges

• File Suspicious Activity Reports (SARs) if applicable.

• Engage with law enforcement agencies (e.g., FBI, Homeland Security, Secret Service).

• Notify crypto exchanges to preserve data before it’s lost.

Preventive Measures

Fraud prevention professionals and financial institutions should consider:

• Training frontline staff to recognize scam indicators in customer behavior.

• Incorporating scam typologies into transaction monitoring rules.

• Educating the public about pig butchering scams—particularly older adults, recent retirees, and tech-savvy professionals.

• Engaging CFEs early when crypto or romance fraud is suspected.

Final Thoughts

Pig butchering scams are not only financially devastating—they’re emotionally manipulative and psychologically damaging. As Certified Fraud Examiners, our job isn’t just to trace money—it’s to see the human cost, understand the evolving tactics, and take proactive steps to prevent future victimization.

By using behavioral analysis, forensic accounting, blockchain tracing, and cross-border collaboration, CFEs can shine a light on these dark networks and hold fraudsters accountable.

Want to learn more?

Join the ACFE Pacific Northwest Chapter for upcoming fraud training sessions where we explore emerging fraud schemes and best practices for investigations.

#FraudPrevention #CryptoScams #PigButchering #ACFE #DigitalForensics #CFE #FinancialCrime #FraudInvestigation #PNWACFE #RomanceScams

In a compelling case that highlights the versatility of fraud schemes, Willard Timothy Sutton, 64, of Pitt County, North Carolina, pled guilty to mail fraud after operating a multimillion-dollar Ponzi scheme through his business, Greenville Auto World, LLC. Sutton used the pretext of a “buy-here, pay-here” car dealership to deceive over 60 investors across Eastern North Carolina.

On July 1, 2025, Sutton was sentenced to:

• 63 months in federal prison

• 3 years of supervised release

• Restitution exceeding $8.9 million

Between 2019 and 2023, Sutton solicited investments by offering individuals a stake in the dealership’s customer financing agreements. Investors were told they were purchasing auto loan contracts that would generate interest income, supposedly backed by real customers making monthly payments.

However, investigators uncovered the following fraudulent practices:

• The same contracts were sold to multiple investors, often using forged signatures.

• Sutton provided falsified DMV titles and fake documentation to support the legitimacy of the deals.

• Funds from newer investors were used to pay returns to earlier investors, a classic hallmark of a Ponzi scheme.

• As the scheme began to falter, Sutton introduced additional fake investment opportunities tied to inventory financing.

The U.S. Department of Justice estimates that more than $60 million flowed through the scheme, with net investor losses totaling over $8 million.

This case illustrates several critical points for Certified Fraud Examiners:

1. Fraud Can Occur in Familiar Settings

A car dealership is not the typical venue for large-scale investment fraud, yet this case demonstrates how trusted community businesses can serve as a front for financial crimes.

2. Red Flags Were Present

Key red flags included:

• Unusually consistent and high returns with no clear explanation of risk.

• Duplicated contracts and altered documentation.

• Lack of independent auditing or regulatory oversight.

• Difficulty obtaining legitimate verification of the underlying assets (i.e., auto loans).

3. Affinity and Trust Exploitation

Sutton leveraged his status as a local businessman to cultivate trust with victims. Many investors were members of the local community who assumed legitimacy based on familiarity.

4. Importance of Independent Verification

The case underscores the importance of verifying:

• Loan documents and borrower signatures.

• Title and vehicle ownership documentation.

• Business cash flow versus promised returns.

Key Takeaways for CFEs

Best Practice	Application
Conduct forensic reviews of documents	Watch for duplicate or altered contracts.
Verify borrower and asset legitimacy	Contact borrowers independently if possible.
Audit source and use of funds	Ensure investment returns are backed by legitimate revenue, not new investor funds.
Scrutinize business model claims	Especially when unusually high returns are promised in low-risk contexts.
Educate potential investors	Community outreach can prevent similar schemes from taking root.

Conclusion

Sutton’s scheme is a sobering reminder that fraud can thrive under the guise of everyday commerce. For ACFE PNW members, this case reinforces the need for vigilance—even when businesses appear reputable on the surface. Fraud prevention efforts should extend beyond financial institutions to include all businesses offering investment opportunities, especially those relying on trust and proximity to attract victims.

This case also demonstrates the critical role that CFEs can play in uncovering and preventing fraud by applying rigorous investigative techniques and promoting transparency in financial relationships.

U.S. Department of Justice Press Release – July 1, 2025

Recent court documents have revealed that a former Bank of America relationship manager based in Brooklyn, New York, allegedly played a key role in laundering illicit proceeds from a $10.6 billion health care fraud scheme targeting Medicare and Medicaid. This case—part of the DOJ’s sweeping “National Health Care Fraud Takedown”—highlights the critical role that financial professionals may unwittingly play in complex criminal schemes.

The Scheme Unveiled

Named in unsealed court filings, banker Renat Abramov, a dual U.S.–Azerbaijani citizen, is accused of helping facilitate fraud proceeds through accounts opened at Bank of America between 2021 and 2023. He allegedly assisted a transnational criminal organization (TCO) in establishing at least six shell medical-supply companies used to submit false claims.

These entities billed Medicare and Medicaid for unnecessary durable medical equipment—such as catheters and glucose monitors—using stolen patient identities, ultimately generating nearly $941 million in fraudulent payments.

How Funds Were Laundered

1. Account Setup & Structuring

   Abramov allegedly structured accounts for fraudulent entities, omitting true beneficial ownership to mask the TCO’s involvement.

2. Layering Through Shell Companies

   Illicit proceeds were routed through shell accounts in China, Singapore, Pakistan, Israel, and Turkey—and even converted into cryptocurrency to obscure the origin of funds.

3. Use of Encryption & Nominees

   Communications occurred over encrypted apps like Telegram, with foreign nationals serving as nominees for the criminal group.

Red Flags for Financial Professionals

This case illustrates multiple warning signs CFEs and compliance teams should be trained to detect:

• Accounts opened for medical suppliers with vague ownership or insufficient documentation

• Unusual volume or velocity of fund transfers unrelated to business operations

• Cross-border transactions with no clear commercial purpose

• Use of third-party nominees in account documentation

• Communications or instructions sent via encrypted channels

Implications & Tactical Lessons

Focus Area	Key Takeaway
Know Your Customer	Conduct in-depth verification of beneficial ownership, especially for high-risk sectors.
Transaction Monitoring	Watch for structured transactions, abnormal flows, and unexplained international transfers.
Internal Controls	Investigate staff who enable high-risk account openings with minimal due diligence.
Regulatory Coordination	Share suspicious activity reports (SARs) promptly and maintain strong communication with regulators.

Broader Impact

Part of the DOJ’s “Operation Gold Rush,” this case is one of the largest health care fraud takedowns in U.S. history. Over 300 defendants have been charged, with more than $14.6 billion in alleged losses. It demonstrates how organized crime networks exploit the U.S. health care system, bank infrastructure, and cross-border financial access.

Conclusion

For CFEs and fraud professionals, this case reinforces the importance of:

• Thorough KYC and beneficial ownership verification

• Proactive transaction analysis and SAR filings

• Cross-functional cooperation between compliance, legal, and law enforcement teams

Cases like this are a call to action: to stay ahead of sophisticated fraud schemes, we must strengthen systems, monitor patterns diligently, and act quickly when red flags emerge.

To learn more about national enforcement actions and fraud trends, visit www.acfe.com or connect with your ACFE Pacific Northwest Chapter community.

— ACFE Pacific Northwest Chapter

July 24, 2025 | 12:00 PM – 1:00 PM PT | Zoom

Join us for an insightful virtual session on Fraud Program Management, presented by John Snodgrass, CAMS, CCE, Director of Fraud at WSECU.

Why This Session Matters

While many fraud trainings focus on emerging threats and tactics, establishing a comprehensive fraud program is equally critical. A well-structured program helps institutions prevent, detect, and respond to fraud effectively—and demonstrates strong governance that regulators and stakeholders expect.

What You’ll Learn

In this Lunch & Learn, John Snodgrass will guide attendees through the essential components of a strong fraud program:

• Program Design & Governance: How to structure roles, responsibilities, and oversight

• Risk Assessments: Identifying the fraud vulnerabilities most relevant to your organization

• Control Frameworks: Policies, procedures, and controls that reduce fraud opportunities

• Monitoring & Detection Tools: Effective strategies and technologies for early warning

• Response Protocols: How to develop escalation paths, investigations, and remediation plans

Participants will gain practical guidance to stand up, enhance, or revitalize their fraud mitigation efforts—whether in a financial institution, corporate setting, or nonprofit environment.

About the Presenter: John Snodgrass, CAMS, CCE

John brings over 25 years of fraud and compliance expertise, including leadership roles at BECU and the Washington State Employment Security Department. He now leads WSECU’s fraud program and is a past president of the Northwest Fraud Investigators Association  . His depth of experience ensures this session will be both informative and actionable.

Session Details

Topic	Details
Date & Time	July 24, 2025 • 12–1 PM PT
Format	Virtual (Zoom)
Cost	PNW Chapter Member: $12 • Non-Member: $20

Why Attend?

• Gain expert insights into all aspects of fraud program management

• Learn from a leading fraud professional with deep institutional knowledge

• Apply practical frameworks to strengthen your organization’s anti‑fraud defenses

• Earn CPE credit in a concise, one-hour format tailored for busy professionals

How to Register

Secure your spot by visiting the event page on our website. Zoom login details will be sent upon registration.

Final Thoughts

Fraud programs are not one-size-fits-all. This session offers the knowledge and tools necessary to tailor a program that aligns with your organization’s goals, resources, and risk profile.

Don’t miss this opportunity to learn from a seasoned expert and elevate your fraud prevention strategy. We hope to see you there!

— ACFE Pacific Northwest Chapter

Ponzi schemes are often cloaked in legitimacy, making them difficult to detect—until it’s too late. While the marketing materials and promises might appear convincing on the surface, the truth lies beneath: in the financial transactions.

As Certified Fraud Examiners (CFEs), understanding how to uncover the mechanics of a Ponzi scheme by tracing the flow of funds is essential. With the right tools and mindset, we can identify red flags and intervene before more victims are harmed.

Anatomy of a Ponzi Scheme

At its core, a Ponzi scheme depends on:

• No legitimate revenue stream

• Using funds from new investors to pay returns to earlier ones

• Creating the illusion of profitability and growth

These schemes often collapse when the operator can no longer recruit enough new investors to cover withdrawals—or when they are exposed through an audit or regulatory investigation.

Transactional Red Flags

Here are key financial indicators that a CFE or auditor should look for when analyzing transactions:

1. No Corresponding Investment Activity

Legitimate investment firms purchase securities, real estate, or business interests. In a Ponzi scheme, funds often enter the account but are not used for any legitimate investments. Instead:

• Funds are transferred to other investor accounts as “returns”

• Money may be routed to the operator’s personal or affiliated accounts

2. Circular Fund Flow

Watch for patterns where money moves:

• From Investor A ➜ Promoter ➜ Investor B

• Or from Company Account ➜ Multiple investor payouts with no external investment purchase

This recycling of funds is a hallmark of Ponzi activity.

3. High Volume of Incoming Wire Transfers or Checks

Incoming investor deposits typically far outpace any legitimate revenue. This might include:

• Frequent transfers in similar amounts (e.g., $10,000 increments)

• Use of vague descriptions such as “investment capital” or “loan”

4. Large, Regular Payouts Unrelated to Business Earnings

Ponzi schemes often issue “returns” monthly or quarterly in predictable amounts, despite no correlation with actual income or investment performance.

5. Commingling of Funds

Operators often use the same account for:

• Investor deposits

• Personal expenses

• Business operations (if any exist)

This lack of fund segregation is both a control weakness and an indicator of fraud.

Analytical Tools for Detection

CFEs and forensic accountants can use the following approaches to trace activity:

• Funds Flow Analysis: Mapping the origin and destination of every dollar through visualization tools

• Source and Application of Funds: Comparing investor inflows to claimed investment income

• Bank Statement Reconciliation: Identifying inconsistencies between statements, ledgers, and claimed returns

• Benford’s Law: Analyzing digit distribution for anomalies in financial reporting

Real-World Red Flag Example

In one high-profile Ponzi scheme, the promoter claimed to invest in foreign currency markets. However:

• All deposits from investors were routed to a single business checking account

• No transactions reflected actual FX trading activity

• Instead, funds were regularly transferred to other investors labeled as “dividends,” with no profits ever realized

This financial pattern—constant inflows from new investors and outflows to prior ones—is exactly what CFEs must look for when evaluating fraud risk.

The CFE’s Role in Early Detection

Identifying these transaction patterns early is critical. CFEs can:

• Review bank records and financial statements for inconsistencies

• Interview victims and employees to confirm payout timing and investment promises

• Work with law enforcement or regulators to preserve evidence and freeze assets

Final Thoughts

Ponzi schemes thrive in secrecy and misdirection. But numbers don’t lie. By carefully tracing transactions and understanding how these schemes operate, CFEs are uniquely equipped to bring them to light.

Early detection through transactional analysis can stop the damage, protect investors, and strengthen the integrity of financial systems.

On June 19, 2025, our Pacific Northwest Chapter of the Association of Certified Fraud Examiners (ACFE) will hold its Annual Business Meeting via Zoom—bringing together dedicated professionals to reflect on the past year and chart the path ahead.

Highlights from the Agenda

1. Membership Updates

   Recent membership growth and demographic trends, celebrating the addition of several new Certified Fraud Examiners. Our chapter remains committed to expanding services and support for both accredited CFEs and aspiring professionals. 

2. Financial Update

   The Board will provide a transparent breakdown of our fiscal health, including revenue from events and chapter expenses. This level of financial stewardship ensures we remain a strong, stable, and sustainable organization.

3. Scholarship Recipients Announced

   In support of the next generation of CFEs, we proudly announced the winners of our annual scholarships. These deserving students and early-career professionals are already making positive strides in the fight against fraud. 

4. Strategic Planning for 2025–2026

   We collaborated on setting the strategic direction for the upcoming year—covering educational programming, outreach initiatives, mentorship, and community engagement. Your input will guide event topics, volunteer opportunities, and member benefits. 

Before the Meeting: Monthly Training Session

As always, our Monthly Training Session preceded the annual meeting. Open to all, it offers high-quality professional development and CPE credits. (Registration is separate.) 

Stay tuned for upcoming events, webinars, and volunteering opportunities as we move confidently into the 2025–2026 chapter year.

In a significant move to combat the misuse of digital technologies for fraudulent purposes, Washington State has enacted House Bill 1205 (HB 1205), codified as Chapter 51, Laws of 2025. This legislation amends the state’s criminal impersonation statutes to include the knowing distribution of forged digital likenesses.

Understanding HB 1205

HB 1205 expands the definition of second-degree criminal impersonation to criminalize the intentional distribution of digitally forged likenesses. Specifically, it targets individuals who:

• Knowingly distribute a forged digital likeness of another person, presenting it as a genuine visual representation or audio recording.

• Do so with intent to defraud, harass, threaten, or intimidate, or for any other unlawful purpose.

• Know or reasonably should know that the digital likeness is not genuine.

Under this law, such actions constitute criminal impersonation in the second degree, classified as a gross misdemeanor. This offense is punishable by up to 364 days in jail, a fine of up to $5,000, or both.

Safeguards for Protected Expression

Importantly, HB 1205 includes provisions to protect freedom of expression. The law explicitly states that it does not apply to the distribution of visual representations or audio recordings for matters of cultural, historical, political, religious, educational, newsworthy, or public interest, including works of art, commentary, satire, and parody protected under the Washington State Constitution or the United States Constitution.

Implications for Fraud Examiners

For professionals in fraud prevention and detection, this legislation underscores the evolving nature of identity-related crimes in the digital age. The use of deepfakes and other digital forgeries poses significant challenges, and HB 1205 provides legal tools to address these threats.

Fraud examiners should be aware of the legal definitions and thresholds established by this law, particularly the emphasis on the distributor’s knowledge and intent. Understanding these parameters is crucial for identifying potential violations and collaborating with law enforcement agencies in investigations.

Accessing the Full Text

The full text of HB 1205 can be accessed through the Washington State Legislature’s website:

HB 1205 - Session Law Chapter 51, Laws of 2025

In early 2025, the Social Security Administration (SSA) initiated a sweeping update to its Death Master File (DMF), a database used to track deceased individuals and prevent identity fraud. This update, influenced by the Department of Government Efficiency (DOGE) and its head, Elon Musk, aimed to remove outdated or dubious records. However, it resulted in the erroneous addition of over 10 million names, including approximately 6,200 living immigrants, to the DMF. 

The Consequences of Erroneous Death Declarations

Being mistakenly listed as deceased in the DMF has severe repercussions:

• Financial Disruption: Individuals lose access to bank accounts, credit lines, and retirement benefits.

• Loss of Services: Medicare and Social Security benefits are halted, affecting healthcare and income.

• Identity Challenges: Obtaining employment, housing, or even purchasing necessities becomes difficult.

These errors have disproportionately affected vulnerable populations, particularly immigrants, leading to significant hardships. 

Misconceptions About Fraudulent Benefits

Claims that millions of deceased individuals receive Social Security benefits have been debunked. The SSA’s outdated systems sometimes default missing data to implausible ages, but this does not equate to fraudulent benefit distribution. A 2024 Inspector General report confirmed that while the database included nearly 18.9 million unmarked deaths, almost none were receiving benefits. 

Implications for Fraud Examiners

For professionals in fraud prevention and detection, this situation underscores the importance of:

• Data Accuracy: Ensuring that databases like the DMF are accurate to prevent wrongful denial of services.

• Ethical Oversight: Monitoring government initiatives that may inadvertently harm individuals under the guise of fraud prevention.

• Advocacy: Supporting policies that balance fraud prevention with the protection of individual rights.

Conclusion

The misuse of the Death Master File serves as a cautionary tale about the unintended consequences of aggressive fraud prevention measures. It highlights the need for meticulous data management and ethical considerations in policy implementation to safeguard the rights and well-being of all individuals.