Identify Fraud by Family Member

[DMAC]

Looking for advice on a situation my wife and I find ourselves in, I'm hoping someone might have first hand experience they can share. The gist of it is that my wife's sister has fraudulently applied for and collected unemployment benefits under her daughters name (my niece), to the tune of about 25k.  My niece found out about it while applying for a home loan where they discovered there was a tax lien on her credit report.  Because my niece has been recently fully employed she wasn't actually eligible for all that unemployment so the state is saying she received an overpayment and now must repay the benefits her mom had been receiving. The department of labor provided my niece with documentation that shows the benefits were direct deposited into her mom's account.  My nieces credit report also shows many maxed out credit cards that were taken out without her knowledge, she has never owned or applied for a credit card, so we assume her mom took those out as well.

Futhermore, after finding all this out I was concerned about my mother in laws credit report, she lost her husband about a decade ago and is oblivious to these kind of things.  So we pulled her credit report and it shows 3 students loans were taken out totaling about 25k that has her daughters (my nieces mom) address tagged to them.  There have been no payments made on them and now have about a 50k balance. 

I'm involved in this because my niece has asked for advice on what to do.  She doesn't want her mom to go to jail but also doesn't want to be responsible for paying back all that unemployment.  My niece confronted her mom about it and at first her mom denied knowing anything  but then, without admitting anything, told my niece not to talk to the department of labor about it and that she would help her pay off the tax lien.  I've told my niece not to take any money from her mom and to not pay anything toward the tax lien and to just be honest with the department of labor while they investigate.

I'm not sure what else I can do or should do other than just encourage everyone to be honest and let the cards fall where they may, but that's easier said than done when dealing with the possibility of sending a family member to jail. Especially because this family member is a single mom that still has 2 young children at home that lost their dad to suicide a few years ago. Having their mom go to jail would be devastating.

Anyone seen a situation like this play out?  How much trouble is my niece's mom really in?  Could she do jail time? My wife is very stressed out about being put in the middle of this drama, so any advice is appreciated.

[SwordGuy]

Yes, the thief and defrauder in question can do PRISON time, not merely jail time.

And that's where she belongs.   

Can you help raise her kids if she goes to prison?  Because, frankly, that would be the best thing for those kids.   Think about all the horrible ideas she is imprinting in their young minds if she's willing to steal from her daughter and mother.

Ok, the above would be 2nd best, 1st best would be the thief actually suffering remorse and doing everything she can to undo her mischief.   But I think that's about as likely as my cat learning to read and write in multiple human languages.

Sorry to be harsh.   But why fool yourself into thinking that someone despicable enough to steal from their mother and their daughter wont' continue to act despicably in the future?

[cool7hand]

I'm very sorry to learn of this situation. As a retired legal professional who didn't work in this area, I only know enough to get you in trouble. You definitely want to get legal advice for your niece. She likely becomes a co-conspirator if she takes any actions in furtherance of the fraud. She might also have a reporting responsibility regarding an ongoing crime. An attorney won't go to the cops unless you ask them to. Indeed, an attorney may not ethically threaten criminal prosecution under most jurisdictions' ethics rules. Get yourself some legal advice from a local attorney with criminal law experience, such as a former prosecutor or assistant prosecutor. For whatever it's worth, thanks for being a healthy adult resource for your niece.

[Adventine]

Also consider that a mom who could do that to her eldest daughter could easily do the same to her younger kids.

[Frankies Girl]

I am not a lawyer, but I worked with someone that had this happen to a family member. They consulted a lawyer and they were told the only way to remove all the fraudulent accounts/financial responsibility was to file charges (in your niece's case against her mother, since she knows that's who did it) so she can prove she was not complicit in the fraud. Period.

And depending on the amounts and the level of theft (grand theft for instance) is likely to result in prison. If she's defrauded several companies in addition to grand theft... yeah, she's going to be facing jail/prison. Which she absolutely should be. It's obvious that she's pretended to be someone else to steal and she's hurt both actual family members AND committed major fraud to boot. 

By not reporting this, the victim is going to be seen as still responsible for the accounts. She can file a police report/id theft reports against person/s unknown, but the investigation likely will result in the mother being identified as the criminal if there is any investigation done since the mother used her own address/accounts to funnel the proceeds into (it may not be a slam dunk tho; ID theft is usually low on list of priorities for police but if we're talking 50K+ ... that is likely to get them to go after her).

Niece needs to consult an attorney and get an idea of what her options are. And ASAP she needs to put freezes and fraud alerts on all her and any other family members' accounts (spouse/children) that the mother may have been able to get info about. If that woman was ever in their home, she may have searched for SS# and other info in order to do this to anyone else and not allow them access to any details or their home again to prevent further theft/criminal activites.

[Sibley]

Your niece has two options. File charges against her mother, or take the hit to her credit and financial situation. That's it. There are no other options.

OP, it would be kind of you to help your niece get into therapy. The emotions here are complicated, to say the least.

Edit: And niece really needs to put fraud alerts on her credit, consider freezing her credit, etc.

[six-car-habit]

 Is the tax lien you mention, from the state , for the unemployment payments , or for something else completely ??

  She should let the unemployment division sort that end of things out. If she truly didn't have anything to do with filing the application there must be some clue
 in the paperwork that it was not her that filed it -[other than the money going to her mom's account direct deposit ]. And their investigator should find it. And niece should cooperate fully with the state investigator.  And not pay them a penny on the outstanding balance. Put those pennies toward a lawyer if the state indicates a criminal charge, or garnishment forthcoming.  Let them go after Mom for fraud.

  If she wants to forgive her mom for all the credit card accounts, those are basically act as a non-recourse loan, she hasn't given any security in anything so they can't seize anything she owns. She could wait maybe 8-9 years, until they all roll off her credit report.  Tell her never to acknowledge any of the accounts, and never pay a thin dime on any of them either [ pay anything and it starts the "statue of limitations" at zero again ] .  Tell her she can get her own house "someday".... maybe in a decade, assuming the Mom doesn't impersonate her again until after 2030....

[Jon Bon]

This is an extremely shitty situation, sorry you are in it.

However it sounds like the authorities are already somewhat involved. I mean if you already discovered it, I don't think it will be super hard for someone with a warrant to uncover the fraud.

So yeah your niece needs to get on the right side of the law asap. I really don't see any way out for mom. Even if you niece try's to help her mom and 'cover' for her that money still needs to paid back and you still have a mother who sure sounds like a terrible person. At least if Mom is completely found out your niece will be able to start her financial life with a clean(ish) slate rather then having it be completely ruined.  I would think her only hope is to be completely found out and appropriately punished because if she is able to get out of any part of this I don't see her wanting to change. With that sort of behavior a person needs to hit rock bottom before the are willing to change.

But I am just some dumb guy on the internet. Good luck to you all.

[PDXTabs]

IANAL, but I would expect a police report, not filed charges, to be enough. But yes, the police and the DA might want to peruse that, especially if the state is the one who was defrauded.

[PDXTabs]

If she wants to forgive her mom for all the credit card accounts, those are basically act as a non-recourse loan, she hasn't given any security in anything so they can't seize anything she owns. She could wait maybe 8-9 years, until they all roll off her credit report.  Tell her never to acknowledge any of the accounts, and never pay a thin dime on any of them either [ pay anything and it starts the "statue of limitations" at zero again ] .  Tell her she can get her own house "someday".... maybe in a decade, assuming the Mom doesn't impersonate her again until after 2030....

That's not entirely true. There are multiple ways that could go wrong including, off the top of my head:
1. The CC company filing suit (I've seen it happen). If you don't defend yourself they will get a default judgement and try to get any bank balance that you have. At least in Oregon that's a simple/fast/inexpensive process for them. They're pros.
2. The mom paying a small amount of the balance, which restarts the clock AFAIK.

[Catbert]

In addition to all the above your niece needs to get over thinking that her mother will "help out" paying this off.  If she had money she wouldn't have done all this.  I suspect a gambling or drug problem but that's just me.

Everyone connected to shitty sister needs to check their credit and lock it down.  She's probably been in your house. 

Niece needs to go to the authorities.

[Villanelle]

Niece can't have it both ways.  Either the charges are fraudulent and she was a victim of a crime so she is not on the hook for the charges, or the charges are valid and she is on the hook.  She doesn't really get to say that she doesn't want to pay these, but she also doesn't want this to be considered a crime.  That pawns the results of the illegal acts onto the creditors, and niece doesn't get to do that.

So IMO, her first step needs to be deciding which is more important--removing these loans an cards from her credit report (and not being responsible for paying them) and also protecting other future or current victims, or protecting her mom from the natural consequences of mom's actions.  Once she's made that decision, she can then figure out next-steps. 

[jnw]

In my opinion her mom needs to serve time and hopefully learn a lesson so she doesn't continue doing this to people.

[volleyballer]

Speaking from personal experience, this story sounds like the mom is a gambler.

To what extent does niece depend on the mom for anything (lives w mom, etc?) Or is niece gainfully employed and on her own? It gets even more messy when their financial lives / survival are intertwined. Can you offer niece a roof over her head if things go south? If this isn't nipped in the bud now the mom's behavior will continue until they both go down with the ship together.

[iris lily]

OP, this is horrifying. I am so sorry.

For those who want to hear a similar story, listen to “Criminal” podcasts 51 and 52, available on Spotify and elsewhere. It is the story of a young woman who was harassed by mail for years, along with her family, and then as she got older her credit is ruined by an identity thief.

The identity of the stalker is chilling.

[Jon Bon]

OP, this is horrifying. I am so sorry.

For those who want to hear a similar story, listen to “Criminal” podcasts 51 and 52, available on Spotify and elsewhere. It is the story of a young woman who was harassed by mail for years, along with her family, and then as she got older her credit is ruined by an identity thief.

The identity of the stalker is chilling.

Ok, I had to go and listen. That is some really F@%&ed up stuff!

Yeah OP I would aggressively pursue this asap. It is never going away or going to get better.

[BlueHouse]

Wow, that's horrible for everyone involved.  I don't know where my bleeding heart came from, but I do want to point out to everyone that the perpetrator here recently lost a husband to suicide and still has two small kids to support.  She may just have not known what else to do and maybe wasn't thinking straight. 
This needs to be made right -- the niece needs to treat this as identity theft and report all known instances to the appropriate agencies.  But we don't have to vilify the mom.  She may or may not have some mental or emotional challenges.  Maybe that will be contributing circumstance when the authorities determine punishment? 
As for punishment, I would think it would depend on where you live.  Where I live, white collar crime would be dismissed with community service. 

Sorry I don't have advice, I just feel terrible for everyone involved.  No one wants to put their own mom in jail. 

[Paul der Krake]

(Everything below is assuming everything your niece has told you is true. Fraud is often messy, especially when there are more than two parties invovled. We don't know any of these people.)

If it had been a one time thing I'd say maybe this can be worked out and kept in the family over the proverbial kitchen table. But the pattern is pretty damning and everyone needs to understand that this is going to unravel, big time. Absolutely, you should comb over everything, turn every rock to see what else might be lurking that you don't yet know about.

BTW, the tax implications of repaid benefits are going to be a mess too.

Basically, your niece is an impossible situation. She's not going to save her mom's skin and hers. This isn't going away. She needs to become comfortable with the idea that her mom is going to face some serious consequences for all this, and what exactly those consequences will be are largely out of her hands.

In your shoes I'd arrange a consultation with a lawyer who can impress onto her the gravity of the situation.

[iris lily]

Wow, that's horrible for everyone involved.  I don't know where my bleeding heart came from, but I do want to point out to everyone that the perpetrator here recently lost a husband to suicide and still has two small kids to support.  She may just have not known what else to do and maybe wasn't thinking straight. 
This needs to be made right -- the niece needs to treat this as identity theft and report all known instances to the appropriate agencies.  But we don't have to vilify the mom.  She may or may not have some mental or emotional challenges.  Maybe that will be contributing circumstance when the authorities determine punishment? 
As for punishment, I would think it would depend on where you live.  Where I live, white collar crime would be dismissed with community service. 

Sorry I don't have advice, I just feel terrible for everyone involved.  No one wants to put their own mom in jail.

All of those factors, mom of young children, sudden death of hisband, mental,state etc would be offered up at sentencing. None of this means she should not be held responsible for these actions.