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A serious problem: Nevada tops nation for financial fraud

Nevada has the highest rate of financial fraud per capita in the nation, according to a new report.

Through an analysis of Federal Bureau of Investigation internet crime data from 2022 and census data, Tiplati, an accounting software company, found Nevada had 286 victims of financial fraud per 100,000 people. The Silver State ranked just ahead of Delaware, Alaska, California and Colorado, per the report.

Based on FBI data alone, Nevada ranks No. 18 in the nation for the most reports of fraud, with 9,090 victims, per the 2022 report. The state also ranks 19th in the amount of monetary losses due to fraud in 2022 with an estimated $127.3 million lost.

The Tipalti report doesn’t provide in-depth information on why fraud rates are so high in Nevada and didn’t respond to requests for comment. The FBI report also doesn’t go into depth about what types of fraud occur in each state.

Two experts from UNLV said they aren’t sure why Nevada topped the nation for fraud — which has a broad range of possible crimes.

Jason Smith, chair of UNLV’s accounting department, said Nevada could top the nation because enough residents don’t have a high level of financial literacy. Nevada’s friendly incorporation laws and regulations which result in a high number of people choosing to incorporate their businesses in Nevada — including Elon Musk — may inflate financial fraud numbers, he said.

Gregory Moody, director of UNLV’s cybersecurity program, said he suspects Nevada’s heavy concentration of workforce in hospitality in gaming could make it easier for certain types of fraud to have an outsized impact on the state. He also suspects that the state’s small population makes it more susceptible to be at the top of the list for per-capita rates of fraud.

“We have a small denominator here so if anything big hits us … we have less variability to play with here,” he said.

More effective attacks

Over the last year Las Vegas has been hit with high-profile fraud and cybersecurity incidents as MGM Resorts International estimated it lost $100 million in the third quarter as a result of a nine-day cyberattack that took place in September. Caesars Entertainment also was a victim of a cyberattack and reportedly paid a random to its attackers.

Both UNLV experts said financial fraud is a serious problem not only in Nevada but across the U.S. The 2022 FBI report found fraud complaints were down by 5 percent from 2021. But the total monetary loss due to fraud in 2022 was up 47 percent to $10.2 billion compared to $6.9 billion in 2021.

This trend of fewer victims but more losses in 2022 compared to 2021 is also consistent in Nevada. The 2021 FBI Internet Crime Report found that Nevada had 17,706 victims in 2021 — which is 48.6 percent higher than the 2022 victims figure of 9,090 — but the state’s total losses in 2021 were $83.7 million — which is 52 percent lower than the 2022 losses number of $127.3 million.

Moody suspects this inverse trend of lower number of victims and higher losses is a result of criminals behind these frauds creating more targeted attacks against victims that can provide a higher payout.

“The more that they hit us with these attacks, the more we’re inoculated against it to be less responsive,” Moody said. “So the more that they do this, the less effective it becomes, they have to get more out of it each time to be effective.”

Smith said the potential for fraud is always increasing as more of people’s everyday lives, including banking and financial information, can be moved online and susceptible to attack.

Contact Sean Hemmersmeier at shemmersmeier@reviewjournal.com. Follow @seanhemmers34 on X.

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