ST. PAUL, Minn. (FOX 9) – New laws to prevent and prosecute fraud in Minnesota may have taken a big step forward on Monday.
Fraud committee hearing
The House fraud prevention committee took a look at several bills coming out of recommendations from the governor’s office.
That includes funding new auditors at the office of management and budget, and more artificial intelligence used to find abnormal or suspicious claims.
Republicans are still skeptical about gaps in the protections and they point to the framework from program integrity director Tim O’Malley as a guide for solutions.
What they’re saying:
“I believe that if we just implement all of O’Malley’s recommendations, we will solve 90% of this problem,” argued Rep. Patti Anderson (R-Dellwood).
“I agree, O’Malley’s report is strong and the nine pillars he lays out very much align with the government accountability handbook…
Investment fraud targets the human desire for financial growth by promising high returns with “low to no risk.”
- Ponzi Schemes: Named after Charles Ponzi, these schemes pay “returns” to earlier investors using the capital brought in by newer investors. There is no actual underlying business; the system collapses when new recruitment slows down.
- Pyramid Schemes: Similar to Ponzi schemes, but participants are usually required to sell a product or service. The primary “profit” comes from the recruitment fees of new members rather than actual product sales.
- Pump and Dump: Fraudsters spread false, positive rumors about a cheap stock (the “pump”) to drive up the price. Once the price peaks, they sell their shares (the “dump”), leaving other investors with worthless stock.