Gold River firm helping California, other states nail fraud artists

A Gold River company that was little more than an idea five years ago is now providing cloud-based fraud detection services to California and government agencies in four other states, helping catch an increasingly sophisticated group of tech-savvy criminals.

Pondera Solutions started building its intricate high-tech engine in 2011, rolling out its Fraud Detection as a Service, or FDaaS for short, in 2013. Since then, triple-digit percentage increases in annual revenue have been the norm, and state governments have come calling.

Pondera’s FDaaS system is a Google-powered analytics solution capable of analyzing and cross-referencing staggering amounts of data from multiple platforms and records-keeping entities, including records kept by states and counties. It can rapidly laser in on fraud, waste and abuse in government programs, enabling agencies to initiate investigations and ultimately, prosecutions.

For nearly a year, Pondera’s service has been utilized by the California Employment Development Department, which is tasked with making timely unemployment benefit payments throughout the state. EDD says scammers have become more adept at using computers and other high-tech means to defraud the process, but Pondera is making that much more difficult.

“One of the most impressive things about it was the marshaling of resources all at once, almost instantaneously … and merging them together,” said Patrick Henning Jr., EDD’s director. “We’re super-excited about it. It holds a lot of potential.

“We deal with fraud in about 40 ways … but the (Pondera solution) is the most technologically advanced system that we’ve seen.”

Pondera’s system for EDD was funded with a $1.75 million program integrity grant from the U.S. Department of Labor. Pondera works cooperatively with EDD’s Criminal Investigations Unit, which has projected a recovery potential of tens of millions of dollars.

For EDD, Pondera’s engine can quickly sift through millions of files using five years of program data, involving more than 11 million claim records, claimants and employers. All the while, the software can cross-reference red flags such as duplicate Social Security numbers, unusual claim patterns, suspicious communication behavior, incarceration records and other data.

The system can even assign a score to indicate the strongest cases of suspected fraud.

In California, Pondera’s fraud-detection service also is utilized by the Department of Social Services and the state Department of Health Care Services.

State agencies in Iowa, Nevada, Georgia and Pennsylvania also have contracted to utilize Pondera’s FDaaS solution. The state of Georgia employs Pondera in seven assistance programs. Pondera also has offices in Columbus, Ohio, and Tallahassee, Fla.

Gary Bateman, a spokesman for Iowa Workforce Development, an agency with duties that include unemployment insurance oversight in that state, said IWD has been working with the Pondera platform for nearly two years, and “it has been an eye-opener. It has shown us all those things that people do to commit fraud, and now, we’re putting more of them away.”

Bateman said IWD has unearthed fictitious employers, false tax returns and fraudulent records by the score, and in quick order.

“One of the things that works so well for us is (Pondera) works in a timely manner,” Bateman said. “We’re required to work quickly … which is understood because people who get laid off need that money quickly … (Pondera) allows us to discover things quickly and act in a timely manner.”

Because the Pondera engine includes Google Earth, a location that has been receiving a suspiciously high number of medical payments can be instantly identified by sight. Bateman said Google Earth once found a fraudulent benefits recipient address “that was an open field. There wasn’t even a building.”

“That used to take half a day to send someone out to literally eyeball the site, but now we know in seconds,” said Amanda Huston, Pondera’s vice president of service delivery who also has a background in law enforcement.

Jon Coss, a technology industry veteran, is a Pondera co-founder and its current CEO. Coss said the inspiration for the firm came during a visit to Google’s Mountain View campus shortly after the technology consulting company he founded, Finish Line Solutions, was acquired in 2010. He recalled that he was stunned by “the massive computing power (Google) had, running mountains of data through advanced analytical algorithms. I realized they had the tools to identify patterns of activity that had previously been invisible.”

Coss stressed that the Pondera solution “is actually more than massive computing power to find needles in these haystacks … It was designed to work the way (law enforcement) thinks, to make it easier for them to work with. That part was critical.”

Coss said scammers are constantly honing their own computer skills, but typically, they’re often tripped up by patterns of behavior. Greg Loos, Pondera’s chief operating officer, agrees, claiming that the Gold River firm is not so much a technology company as a “behavioral analytics company.”

Last month, Nevada’s Division of Welfare and Supportive Services announced that it will use a $1.5 million federal grant to install Pondera Solutions technology to detect fraud and improper payments in the state’s Supplemental Nutrition Assistance Program. Coss said one of the most gratifying things about his company’s service is “making sure that payments and help rightly go to the people who need it the most.”

Pondera’s fraud-detection technology also can be applied to Medicaid, tax/revenue payments and even fraud related to unlawful use of disabled parking permits.

Privately held Pondera does not disclose annual revenue, but Coss said year-over-year gains over the past couple of years have easily surpassed 100 percent, and he expects the same in 2016. He’s hopeful of doubling the number of states in which Pondera operates over the short term. If all that happens, Coss said local job growth is inevitable.

The company also could see growth on a national scale, potentially involving some of the nation’s top security agencies.

Coss would only say that he has been approached by officials with various federal agencies, but no formal contracts have been signed to date.

This story was originally published January 14, 2016 at 3:19 PM with the headline "Gold River firm helping California, other states nail fraud artists."