This month, an individual who had defrauded thousands of U.S. Navy sailors in San Diego County through a tax and insurance fraud scheme has been sentenced to house arrest and was ordered to pay $500,000 in restitution. Paul Flanagan operated a business called Go Navy Tax Services from a trailer just outside of Naval Base San Diego.

The 56-year-old Flanagan reportedly had sold expensive but unnecessary insurance products to service members, and he apparently preyed on his victims by adorning his trailer with military flags. The goal was to deceive service members into thinking his business was even affiliated with the U.S. military, according to the California Attorney General’s office.

Along with two co-defendants, Flanagan was able to rake in substantial commissions from products they offered. The trio reportedly advertised free income tax preparation services for military service members, but then persuaded them to purchase retirement accounts. Instead of actually using the money for a retirement account, the defendants opened unnecessary life insurance policies without their victim’s knowledge or consent. In the process, the trio earned more than $2 million in commissions from nearly 5,000 applications and contracts.

“Our military service members and their families contribute so much to our nation – yet there are people without honor who want to cheat our American heroes,” said California Attorney General Rob Bonta, whose office worked alongside the San Diego County DA’s office, the Inspector General of the Navy and Naval Criminal Investigative Service to bring charges against Flanagan and his counterparts.

Service Members in the Crosshairs

Fraud against military personnel remains a serious and ongoing problem. The Federal Trade Commission has warned that service members are potential targets for fraudsters. Certain scams are more likely to strike the military community because these families uproot frequently due to new assignments, and each of these relocations requires the moving of household, buying or renting a new residence, and opening many new accounts. Military families simply undergo these transitions at a much higher rate than most of the civilian population.

In late 2019, the FTC reported that between January 2015 and October 2019, the FTC had received more than 163,000 fraud reports from military retirees/veterans; nearly 13,000 from active duty service members; and three million from civilians. The median loss from fraud over a nearly five-year period had been $658 for civilians, but was $775 for active duty personnel and $950 for military retirees and veterans. Thus the median loss for military retirees was 23% higher than current service members – and an astonishing 44% higher than that for other civilians.

Additional findings from the FTC found that military retirees/veterans had been the victims of about $66 million in fraud losses in 2020. That compared to $17 million lost to fraud by spouses and dependents of active-duty personnel; $13 million by active-duty service members; and $6 million by members of the reserve forces.

In addition to the financial loss for those individuals, this can undermine military readiness and impact troop morale.

Identity Theft and Imposter Scams

Active duty service members were 76% more likely than other adults to report that an identity thief misused existing accounts, such as a bank account or credit card, according to the Federal Trade Commission’s 2020 Consumer Protection Data Spotlight. The findings further indicated that securing personal information presented special challenges for active duty troops. According to the Spotlight, nearly 14% of active duty service members who reported identity theft said that a family member or someone they know misused their identity, compared to just 7% of other adults.

So-called impostor scams were especially damaging to military consumers in 2020, and resulted in reported losses totaling $40.8 million. This was the top form of fraud to hit military consumers, when measured both in terms of the number of reports and overall losses. These can include impostors posing as others to get money or personal information from victims.

The good news here is that there is something military personnel and their families can do to fight back. Since October 31, 2019, many members of the military are eligible to receive free electronic credit monitoring, which can help spot identity theft. In response to a new FTC Rule implementing a 2018 law, the nationwide credit reporting agencies – Equifax, Experian, and TransUnion – now provided free electronic credit monitoring services to active duty service members and National Guard members.

Other Scams Targeting the Military

The past year saw a rise in scams directed at military personnel. Go Navy Tax Services was hardly the only seemingly “legitimate” business to target those in uniform with false promises of insurance. Instead, military personnel are directed to look into the actual Servicemembers’ Group Life Insurance, which is a government-issued insurance that is available at a low price.

Other common scams include car sales, loan and credit card offers, payday loans, and rental property offers. If any of these seem too good to be true, that’s because it probably is!




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Peter Suciu is a freelance writer who covers business technology and cyber security. He currently lives in Michigan and can be reached at You can follow him on Twitter: @PeterSuciu.