2 weeks Ago By ERIN MURPHY Gazette-Lee Des Moines Bureau
DES MOINES — Iowa Judicial Branch officials plan to ask state lawmakers to simplify the state’s process of collecting and distributing court fees — a system that recently misdirected over $27.5 million to the wrong entities — while some lawmakers press court officials for proof there was no fraud. Judicial Branch officials fielded questions from lawmakers on the Iowa House Oversight Committee during a two-hour hearing Wednesday at the Iowa Capitol.
Lawmakers attempted to learn more from judicial branch officials about the erroneous distribution of court fees that, over the span of four years, resulted in three state funds being shorted millions each. In Iowa, funds paid to the courts in fines, fees and penalties in criminal cases are distributed to various sources, including funds for victim compensation, emergency services, road infrastructure, county attorneys and the state’s general fund. Under the state’s distribution system, clerks of courts enter court fees into a coding program that is supposed to channel those funds to the proper place.
But the Iowa Judicial Branch in October revealed that coding errors sent more than $27.5 million to the state’s general fund instead of to some of those other state funds and programs. The courts had been investigating the issue for over two years.
According to the investigation, more than $10.4 million should have gone to the state fund that supports infrastructure work on roads and bridges, $7.2 million should have gone to a state program that helps victims of violent crimes with certain expenses and $4 million should have gone to a fund that supports juvenile detention homes.
A report from the National Center for State Courts, commissioned by the Iowa Judicial Branch, said state law changes in consecutive years, 2020 and 2021, to the court fees distribution system caused confusion that led to programming errors, which led to the misdirection of funds. The report was conducted in 2023 and made public in October 2024. The Judicial Branch also contracted with an Iowa consulting firm to analyze the newly implemented, corrective procedures.
During Wednesday’s hearing, Judicial Branch officials said they plan next year to propose legislation that would simplify the requirements in the state’s system for court fees collection and distribution. “Court debt statutory framework is incredibly complex. With a complex statutory framework, there are more decision points in our program.
With more decision points, there are more opportunities for bugs and more opportunities for error,” Iowa State Court Administrator Bob Gast told the oversight committee. “To decrease this opportunity for error, we think it is beneficial to simplify the statutory framework. We intend to bring a comprehensive administrative bill forward next session to do so, and intend to seek feedback from all entities that are involved in collection, distribution and receipt of court debt.
” Republican legislators on the House Oversight Committee asked the Judicial Branch officials for documentation that proves no fraud occurred in the misdirection of court fees. The courts have said all fees were collected and distributed, that the error was only that funds were distributed to the wrong sources. None of the reviews conducted by the courts or independent agencies have found evidence of malfeasance.
“I think there’s a lot more information to be gathered by this committee as part of a comprehensive look at getting this fixed,” Rep. Charley Thomson, a Republican from Charles City who chairs the committee, said during Wednesday’s hearing. Republican committee members also expressed concern over the resources the Judicial Branch already has committed to its review of the incident.
In response to questions from Republican legislators, officials said the branch spent roughly $675,000 on the reviews by the national center and the West Des Moines-based consulting firm Zirous. Rep. Taylor Collins, a Republican from Mediapolis, asked officials why the Judicial Branch, in the interest of protecting taxpayers, did not seek the help of state agencies when conducting the reviews.
Republicans also expressed frustration that court officials did not sooner notify lawmakers. Gast said a decision was made to wait until the courts had more information on the scope of the problem before taking the issue to legislators and state agencies. Rep.
Steven Holt, a Republican from Denison, said that delay gives the appearance the courts were trying to hide the issue. “My biggest frustration is that — and the explanation was that you waited until you had a solution — and this is not something you can do that with. So we’re now sitting here,” Holt said during the hearing.
“When you wait almost four years to tell us and the problem becomes $23 million worth (erroneously sent to the state’s general fund), it’s very frustrating that we were not told. It’s very frustrating that it was not identified to me or to other legislators that we needed to fix these issues that were in code that were causing you these problems. .
.. “That’s the frustration and the concern.
And I think that if you had been more forthcoming early on, we wouldn’t be sitting here today.” Court officials said the programming issues have been addressed and fees are no longer being misdirected. However, officials said the Judicial Branch does not have the legal authority to correct the erroneous allocations from previous budget years.
That would require action by state lawmakers, court officials said. Thomson said he would like to see assurances that no fraud occurred before he would be willing to move money out of the state general fund back to the appropriate state agencies. Over the course of the four state budget years that the programming errors were an issue, nearly $588 million in court debt was collected, according to Iowa Judicial Branch data.
If you’re like nearly two-thirds of Americans you’re likely worried about tax season and scammers filing a fraudulent return in your name. Now, tax experts are weighing in on how to prevent getting scammed. Veuer’s Tony Spitz has the details.
It started with a text message, seemingly meant for someone else. Ed Hayduk, a Pennsylvania resident, replied. Over the following weeks, he engaged in what he described to CBS News Philadelphia as a friendly conversation.
Eventually, the sender convinced him to invest a small sum in a crypto wallet. Fake statements showing high returns persuaded Hayduk to invest more—ultimately totaling $50,000. Then, the person behind the messages disappeared.
In an alarming trend that continues to accelerate, cryptocurrency-related investment fraud is leading to growing financial losses , according to the FBI's 2023 Cryptocurrency Fraud Report. The report reveals that while cryptocurrency-related complaints represent only about 10% of the total financial fraud complaints the FBI received during 2023 (the most recent data available), they account for nearly half of all financial losses, with estimated losses exceeding $5.6 billion—a staggering 45% increase from the year prior.
The trend has continued into 2024, with Federal Trade Commission data showing $5.7 billion in losses due to investment scams, more than any other category. CheapInsurance.
com reviewed the FBI's 2023 Internet Crime Report and the supplementary Cryptocurrency Fraud Report to analyze how crypto-related crimes cause the biggest losses. Various types of fraud occur through the cryptocurrency nexus, the peer-to-peer network that uses blockchain technology to conduct transactions. Of particular concern is the rise in investment-related fraud, which accounted for nearly $4 billion in losses in 2023—approximately 71% of all cryptocurrency-related losses reported to the FBI.
These scams often involve investments in fake assets or phony projects. Other types of crimes that use cryptocurrency include tech support, data breaches, and extortion, followed by romance- or confidence-related crimes. This alone represents a 53% increase from the total losses from investment fraud reported in 2022.
"The decentralized nature of cryptocurrency, the speed of irreversible transactions, and the ability to transfer value around the world make cryptocurrency an attractive vehicle for criminals," Michael D. Nordwall, assistant director of the FBI's Criminal Investigation Division, said in the Cryptocurrency Fraud Report. The same factors that make cryptocurrency scams possible also create significant challenges for recovering stolen funds.
Socially engineered scams have become increasingly common, where criminals build trust with victims before introducing fraudulent investment opportunities. One of the most common investment scams is known as "pig butchering," in which perpetrators use phishing techniques to gain the trust of victims through dating apps, social media, and professional networking sites. They may also send unsolicited messages through encrypted platforms such as WhatsApp, Telegram, and Signal.
Ongoing correspondence can draw victims into a trap—even those who think they're not susceptible to a scammer's tactics. Sometimes, the communication may revolve around a fictitious romantic relationship, further manipulating victims into investing in fake cryptocurrency projects. "Scammers will build trust for weeks and months before trying to convince you to invest in cryptocurrency," the report warns.
"They will use text messages, video chats, phone calls, and emails to lure you in." Once trust is established, victims are directed to fraudulent websites or apps where they're shown fake profits and encouraged to invest. When they attempt to withdraw their supposed earnings, they're told they need to pay additional fees or taxes—money they'll never see again.
Several factors, including wider access to cryptocurrency exchanges and the rise of artificial intelligence, drive the surge in investment scams. The District of Columbia Department of Insurance, Securities and Banking identified cases where AI has been used to clone voices, alter images, spread false information, and create fake videos, creating more realistic and sophisticated scams. Sometimes, AI can be used to impersonate family members, friends, or famous people.
A recent multinational investigation, coordinated by the Organized Crime and Corruption Reporting Project, exposed the inner workings of two call centers that perpetrated these scams. Victims were often lured through fake social media ads, particularly on Facebook, where fraudulent news articles featured well-known public figures promoting schemes to "earn money while you sleep." The OCCRP found that these large-scale scams operated like professionally run businesses, relying on marketing firms, payment service providers, and software companies to sustain their activities and create a veneer of professionalism.
Fake identities, forged paperwork, and phony call centers add to the illusions—swindling victims out of their funds. "Scammer's tactics are constantly evolving," Christopher Mufarrige, director of the FTC's Bureau of Consumer Protection, said in a statement. While people aged 30 to 49 filed the most cryptocurrency investment fraud complaints, victims over 60 reported the highest losses—more than $1.
24 billion. This aligns with broader trends where financial scams often disproportionately impact older Americans. For example, last October, the FTC reported to Congress that consumers 60 and older were five times more likely than younger people to report losing money on a tech support scam—a common type of fraud where the scammer pretends to offer the victim technical support, only to extort then or compromise their info once the victim has granted access to their system.
The FBI emphasizes several red flags that could indicate fraud: Be wary of investment opportunities from people you've never met in person who require digital assets to open an account or promise guaranteed or excessive returns with minimal risk. Scammers typically create pressure to act quickly to bypass rational thinking and may request cryptocurrency platforms for anonymous transactions. As cryptocurrency adoption grows, so does the sophistication of these scams.
The FBI recommends verifying the legitimacy of any investment opportunity and being wary of suspicious-looking apps or websites with names that mimic legitimate financial institutions. If you believe you've been victimized, file a complaint through IC3.gov with details about the transactions, including cryptocurrency addresses, transaction hashes, and information about the scammer.
Alternatively, ReportFraud.ftc.gov can be used to report fraud to the FTC.
The bottom line: Be wary of the promise of fast, easy money—on any platform. As the report cautions, "If an investment opportunity sounds too good to be true, it likely is." Story editing by Alizah Salario.
Copy editing by Paris Close. Photo selection by Ania Antecka. This story originally appeared on CheapInsurance.
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