INDIANAPOLIS (WTHR) — Thieves are stealing government benefits paid to hundreds of retirees, veterans and even those on disability. $500,000 has already been taken. 13 Investigates shows you what happened to an Indiana veteran and why she and others are taking legal action to protect their money.
Veteran's Benefits Stolen/Disappeared
Protecting the nation became Jennifer's Kreegar's sole mission when she joined the Army in 1989.
From basic training at Fort Meade to the Department of Defense, Kreegar spent part of her Army career working at the National Security Agency.
That's the same agency in charge of U.S. cybersecurity.
Intelligence data is collected at the NSA to help the government counter foreign and domestic threats.
Now, 15 years after going on V.A. disability, Kreegar is back home living on her family's farm in Middletown.
Weeks ago she made a startling discovery the day after her monthly disability check was deposited.
"All my funds were withdrawn," she revealed.
It turns out, the government she defended had failed to protect her and hundreds of other recipients from thieves siphoning their Department of Veteran Affairs and Social Security benefits.
"It happens to you, and you're like this is really real," Kreegar said, describing the violation she experienced.
It all started in December when Kreegar went to check her deposit in the Direct Express payment program. Comerica Bank administers Direct Express, which provides electronic payments to 4.5 million Americans with no bank accounts who collect social security, disability and veteran benefits.
One minute Kreegar's money was in her account. The next minute it vanished.
"I was getting a little frantic when I seen my balance was at $10," she said. She eventually found herself locked out of her account.
"You put in your social security number, and they said that didn't match their records," she told 13 Investigates. Kreegar went on to explain what it felt like to lose control of her account and more importantly her money.
"Panic!" she said. "You're trying frantically to get through on the line, but you can't talk to a person," she added.
Kreegar said she called Comerica, but her call was forwarded on to Conduent Business Services, LLC in Texas. Comerica Bank hired Conduent to provide customer service for the Direct Express Program.
No Fraud Warning Issued
Kreegar said she soon discovered the scheme to steal her cash started three weeks earlier and without a single fraud warning.
"So somebody had gotten in and changed my address on the 6th (of December)," Kreegar said.
For most bank accounts a change of address would spark a call or an electronic alert to a cell phone to let the customer know someone had initiated a change to the account.
But Kreegar said she didn't get that from Direct Express nor Conduent. She was left in the dark.
Twenty days after the address change, the thieves reportedly called again. This time they request was for a new card. The caller wanted it expedited and sent to the new address in a hurry.
"Not notified. Nobody called me to ask me if I requested a new card," Kreegar said in disbelief. There was also a transaction fee for $13.50. She decided to call Direct Express the next day. But before she could inquire about the fee, she saw her money disappear before her eyes. $1,000 was taken in one single ATM transaction in Georgia. Worst yet, the thieves had total control of all her money.
"They had changed my address, canceled that card (and) my account and issued themselves a new one, and it went to Georgia," she said.
The first and only alert Kreegar received was the day after her money had been taken. She got a postcard in the mail informing her of an address change that took place weeks earlier.
"So outsiders can get into your account, take your money, leave you with nothing, and then you're trapped in the system," she said.
Kreegar knows it's a big problem and discovered retirees and others on disability across the country sharing similar stories.
Senator Investigates Direct Express
According to an investigation conducted by U.S. Senator Elizabeth Warren (D) Massachusetts, at least 480 similar fraud cases involving Direct Express were reported in 2018. The amount stolen already amounts to about $500,000.
Sen. Warren's letter noted that Comerica failed to notify government officials about concerns about such fraud. VA Secretary Robert Wilkie told Sen. Warren he was unaware of the security breaches until he received her letter.
"I've had 70 people contact me since last year, most of them since August," said Jim Simms, a former private investigator in Fresno, California and Direct Express victim. According to Simms, he's worked with victims of fraud from at least a dozen states including: California, Washington, Idaho, Texas, Arkansas, Alabama, Georgia, Florida, South Carolina, Massachusetts, Illinois and now Indiana.
Bottom line, Simms believes the security lapses inside the Direct Express program leave millions of taxpayer dollars vulnerable.
"It's Russian roulette. It happened to me twice," he revealed. "If there were any security parameters on the card at all, the first piece of fraud would alert the card holder and the serial things wouldn't happen," he said accusing Comerica of malfeasance.
The Direct Express website provides customers with suggestions for protecting their accounts. Still Comerica blames the fraud on outside hacks but refused to talk to 13 Investigates citing pending legal action. That action involves Kreegar.
Class-action Lawsuit Filed
Kreegar and six other victims from around the country want Comerica to pay for failing to stop the fraud. They have filed a national lawsuit seeking class-action status against Comerica and Conduent Business Services LLC doing business as Direct Express.
At least one of Kreegar's fellow complainants lost $30,000 that the companies have refused to refund.
Kreegar told 13 Investigates she wants the government to find a company "that's credible" and is frustrated by the lack of oversight of the agencies in charge.
She says “…it’s hurting people that rely on this and not to mention that's taxpayers dollars being stolen.”
The Office of Inspector General for the Treasury confirmed it is conducting an audit and investigation into the Direct Express Program. The government is also soliciting new bids to possibly hire a new contractor in 2020 to take over and administer federal V.A. and social security benefits.
Conduent has been making headlines over the last week.
13 Investigates has learned the State of Indiana is expanding a 10-year working relationship with Conduent. The company signed a $232 million dollar contract with the Family and Social Services Administration to help process applications for state benefits like Medicaid, food stamps and temporary aid to needy families.
Indiana inked its deal just days after Conduent agreed to pay $235.9 million in Texas to settle allegations the company failed to perform strict preauthorization checks for orthodontic services for Medicaid patients. According to the Texas Attorney General, taxpayers were cheated out of millions of dollars for cosmetic tooth repairs that should not have been covered under Medicaid. As part of the settlement, Conduent admitted no wrongdoing.
Protecting Your Benefits
There are options for those concerned about a Direct Express Account. Recipients can set up a direct deposit account at a bank or credit union that uses multiple security measures to stop criminals from authenticating and take control of private accounts. Many banks also provide a text alert system to make customers aware of unusual or suspicious purchases. The only drawback is those accounts might incur fees. Direct Express does not charge a fee.
If your Direct Express Account is compromised:
Call the number on the back of your card; Direct Express, 1-888-741-1115
Contact Conduent Business Services LLC at 1-844-663-2638; Report suspected Fraud to Comerica
Complaints can also be filed with the Office of the Inspector General of the U.S. Treasury
File a complaint with the government's consumer financial protection bureau