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Identifying Fraud, Abuse, and Error in Personal Bankruptcy Filings

NCJ Number
Date Published
January 2007
60 pages
This federally sponsored report draws on a literature review, expert study panel, and elite interviews to describe current processes for investigating bankruptcy fraud and abuse, to specify related challenges facing the U.S. Trustee Program (USTP), and to suggest avenues for future research and development that could assist the agency in better pursuing its mission.
At present, the U.S. Trustee Program (USTP) relies on a bankruptcy filing process that is not digitally enabled and, therefore, does not support automated screening of claims for potential indicators of fraud, abuse, and error. The conversion to a digital filing process could allow USTP to implement automated screening and expert decision-support protocols to identify filings that present heightened risk. However, such screening would require that USTP define specific risk criteria by which to score individual claims. Other relevant criteria might be developed through statistical analyses of bankruptcy data gathered by the debtor audit project. It is concluded that there are several additional profiling and survey research tasks that USTP might undertake to better formalize indicators of suspicious filings and useful tips, ultimately as a precursor to leveraging digital filings through automated screenings for indicators of fraud, abuse, and error in the future. Sponsored by the U.S. Department of Justice, a study group of experts from the government, academia, and the private sector was formed to assist USTP in thinking about how to better identify and measure fraud, abuse, and error in personal bankruptcy filings. The study group addressed five questions which comprise this report: (1) are there lessons to be learned from how other government programs or the private sector detect fraud and abuse; (2) are there any transferable processes that USTP can consider adopting; (3) how might USTP develop indicators of fraud, abuse, and error; (4) how might USTP consider estimating the prevalence of fraud, abuse, and error; and (5) what future research tasks could USTP conduct to develop data and knowledge that would enable it to more effectively identify fraud, abuse, and error in the bankruptcy system? Appendix, bibliography

Date Published: January 1, 2007