Listening to tax scammers in action

April 18 is the tax filing deadline in the United States this year. The months leading up to the tax deadline can be a trying time for some, having to navigate among complicated tax forms and the byzantine tax rules. For those who owe IRS money, there may be the worry of finding the funds to pay taxes. The busy tax filing season can surely test anyone’s number skills. Of course, one can always use tax software or hire a tax preparer for help. It turns out that we should also be on the alert for tax related potential hazards, e.g. tax scams on the phone. For this kind of hazard, tax software or hired tax preparer will be of no help. Being good with numbers is an important skill in the tax season. Being informed and staying alert is important too.

Ever wonder what a tax phone scam sounds like? This article from npr.org has a recording of a real life phone scam. The recording is between an active fraud ring and a presumed victim who in reality is a researcher for Pindrop Security, an Atlanta-based company that investigates phone fraud. The original recording is over an hour long, several segments of which are posted in this article.

In the first recording segment, the “IRS” man told “Emma Lauder”, the covert Pindrop researcher that she owed IRS $1986.73 due to miscalculation of taxes from 2009 to 2014. To give the situation a menacing tone, the supposedly IRS many told Emma that local law enforcement personnel with an arrest warrant will be visiting her house any minute now. Her properties will be seized and she will face federal imprisonment of up to five years.

Of course, there will be a way out. The way out is through cash! Not through a check or credit card since this is a federal case (this is said at the end of the first recording). The United States federal government is a cash-only organization! The only channel to send cash to the federal government is either Western Union or MoneyGram!

What the scammer said on the phone is amazing and incredulous. Think about it. The size of the budget in 2016 for the United States federal government is over $18 trillion. So the scammer is saying that the federal government can only take cash and the cash can only be sent through one of two channels? If that is the case, Western Union and MoneyGram are the most profitable money senders in the entire planet!

Emma is also told to make the payment to a man named Gabriel Porter in Boston. Is Gabriel Porter the Secretary of Treasury of the United States?

As incredulous as these schemes seem to be, they are effective enough that over 5,000 victims have forked over $26.5 million to such scammers since October 2013, according to this tax scam alert from IRS.

If anyone receives such phone call or email, report such calls to IRS immediately (call IRS at 800-829-1040). Remember IRS will not call anyone for delinquent tax bills without first mailing a tax bill (through the postal service). Here’s several bullet points from the alert that are worth repeating.

IRS will never:

  • Call to demand immediate payment, nor will the agency call about taxes owed without first having mailed you a bill.
  • Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
  • Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  • Ask for credit or debit card numbers over the phone.
  • Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

The mere fact that someone who claims to be from IRS calling you about taxes you owed is enough of a red flag. But those scammers prey on the fear among the potential victims. This is why the recordings posted in the npr article can be a very effective public service announcement. I urge everyone to listen to the recordings. This recording (in several segments) is like an anatomy of a tax scam. You can hear the scare tactics. You can hear for yourself how the scam works. You hear a vivid telling of all the absurd details. Like the scammer telling the victim not to tell anyone. Like you can only wire money to the federal government through Western Union or MoneyGram. They say a picture is worth a thousand words. In this case a phone recording definitely makes the scam feel real.

At the end, the conversation between the scammers and the victim turned surreal. Emma, the covert Pindrop researcher, asked for a receipt of the payment. Pressing for an email receipt of the payment, she was given a confirmation number instead. The letters in the confirmation numbers form a slang term for the female genital. But the insult is not clear at first since it is a foreign slang. As for the actual receipt, she was told to look into her toilet. This is downright creepy and abusive.

The recording in this npr article is a good tool to publicize such fraud schemes. Tax scams can happen any time of year, not just at tax time. Here’s more information from IRS on tax scams.

Siege of Leningrad

A picture can tell a thousand words. Sometimes a number can give a good picture. In the example discussed here, a picture and a number can be combined to make history come alive.

I recently watched a World War II news reels on YouTube called FRONTLINE WWII: Germans Advance into Russia (720p). The video describes the operation called Operation Barbarossa, which was the code name for Nazi Germany’s invasion of the Soviet Union during World War II and was launched on Sunday 22 June 1941. One of the three strategic objectives for the operation was to capture the city of Leningrad, now called Saint Petersburg. The German laid siege to the city for 872 days from September 8, 1941 to January 27, 1944.

Early on in the war, the Germans believed that Leningrad would be taken easily. In fact, it has been reported that Adolf Hitler was so confident of capturing Leningrad that he had invitations printed with the victory celebration party to be held in the city’s Hotel Astoria. Later Hitler made the strategic decision to divert resources to other fronts. The plan for Leningrad was changed from direct attack and capture to a siege with the goal of starving the city into submission.

The siege of Leningrad was one of the longest and most destructive sieges in world history. The destructive impact on the city is detailed in the Wikepedia entry on the siege of Leningrad and in countless other sources. When I watched the YouTube video, one number stands out. During the siege, each soldier or worker doing critical work received 8 ounces of bread a day (and nothing else). The other residents of the city received daily ration of 4 ounces of bread. It did not matter if a resident was young or old, healthy or sick. If the person was not fighting, he or she only had 4 ounces of bread per day for sustenance.

To get an idea how much food is an 8-ounce piece of bread, the following is a picture of a loaf of bread that is found in any grocery store in United States.

    loaf-of-bread-24-oz

The loaf pictured is a 24-ounce loaf. That means that the a Soviet soldier defending Leningrad received about one third of a loaf of bread for an entire day. Here’s the math: 24 oz x 1/3 = 8 oz. But that is only in terms of weight. The quality of the bread that a soldier received could not be compared with the loaf pictured above. The bread during the siege was made up of sawdust and other inedible ingredients (50 to 60%).

The loaf pictured above has 18 slices (you can actually count the slices). The daily ration is then 6 slices of bread for a soldier and 3 slices for everyone else (children and the elderly). Here’s the math: 18 x 1/3 = 6 slices. So a child or an old person subsisted on 3 thin slices of bread that was half saw dust!

The picture was indeed grim. The deaths in Leningrad peaked at 100,000 a month in early 1942, mostly from starvation. Due to the lack of fuel, the trolley service ceased to work for most of the siege. Just to get the meager 4-ounce ration of bread, people would need to walk to a distribution kiosk. In a typical winter in Leningrad, the temperature can drop to minus 30 Celsius (minus 22 Fahrenheit). For many people, the walk to a distribution kiosk would be an insurmountable obstacle.

The Nazi siege of Leningrad that began in 1941 and ended in 1944 was one of the most gruesome episodes of World War II. Nearly three million people endured it. Altogether, the siege lasted nearly 900 days and resulted in the deaths of more than 1 million civilians. The siege of Leningrad was an epic story of sufferings and destruction and ultimately triumph. If the daily ration of bread piques your interest, there are many places to read more. Here’s some links.

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Why Write about Numbers

This is a blog about making sense of numbers. The loaf of bread example shows that sometimes it is the other ways round – finding just the right numerical examples to help us understand a complex story or a complex phenomenon. Please feel free to browse the articles in this blog. Here’s are some articles that may be of interest.

Here are two posts on number sense. The first one is on stealth price increases. Some manufacturers do not raise prices but give you less. For example, a pack of peanut may have 16 ounces before and now weights 14 ounces but is charged the same price as a 16-oz pack. This post shows how to calculate the price increase. This post is a plug on quantitative literacy after an encounter with a store clerk.

I had written on lottery, especially how small the odds are. Buying lottery tickets as entertainment is one thing. Anyone buying them as investment or as quick ways to get rich should know that it will take buying thousands of tickets each week since the time of Christ to have a realistic chance of winning the Powerball lottery. The following are some of the most popular posts in this blog.

How wealthy are the world’s eight wealthiest people?

To find out the total wealth of the top 8 richest people in the world (Bill Gates, Warren Buffet and six other people), we can certainly look up publicly available information on the Internet or from other sources. According to one tabulation based on data from Credit Suisse Global Wealth Data book 2016, the total net worth of these 8 richest men (they are all men) in 2016 is $426.2 billion. Of course, this is a big number. What is a good way to put this number into a proper context? For further meaning of this number, a comparison will be helpful. It turns out that according to the same tabulation, the total wealth of the 3.6 billion people in the poorer half of the current world population is $409 billion. This is a stunning contrast and is a vivid demonstration of the wide gulf between the richest and poorest people in the world.

There is no need to use chart and graph to enhance the demonstration. Just the fact 8 individuals own more wealth than the combined wealth of the people in the bottom half of the world’s economy is enough to convince anyone of the disparity between the have and the have not. I came across this report recently in an article from npr.org. It discussed a recent report released by Oxfam International on global wealth inequity. Here’s the press release by Oxfam on this report. Here’s the actual report by Oxfam.

Oxfam International is a confederation of 19 organizations working together with partners and local communities in more than 90 countries to combat poverty.

The top 8 richest people are, in the of net worth:

  1. Bill Gates: America founder of Microsoft (net worth $75 billion).
  2. Amancio Ortega: Spanish founder of Inditex which owns the Zara fashion chain (net worth $67 billion).
  3. Warren Buffett: American CEO and largest shareholder in Berkshire Hathaway (net worth $60.8 billion).
  4. Carlos Slim Helu: Mexican owner of Grupo Carso (net worth: $50 billion).
  5. Jeff Bezos: American founder, chairman and chief executive of Amazon (net worth: $45.2 billion).
  6. Mark Zuckerberg: American chairman, chief executive officer, and co-founder of Facebook (net worth $44.6 billion).
  7. Larry Ellison: American co-founder and CEO of Oracle (net worth $43.6 billion).
  8. Michael Bloomberg: American founder, owner and CEO of Bloomberg LP (net worth: $40 billion).

The number of the richest people with total wealth equal to the poorer half of the world works like a metric to measure wealth inequality. So it is in some sense a measure of wealth gap. It is not clear if this measure of wealth gap is used by anyone other than Oxfam. But it sure is an effective metric. It gives a vivid demonstration of the wealth disparity between the richest and the poorest.

In 2016, “the number of richest people = half of world” metric is 8 as discussed above. In past years, the number was higher. For example, in 2015, the number was 62. Going back further the number got progressively larger.

    \displaystyle \begin{array}{rrr} \text{Year} & \text{ } & \text{Number of Richest People}    \\ \text{ } & \text{ } & \text{ }    \\ 2010 & \text{ } & 388  \\ 2011 & \text{ } & 177  \\ 2012 & \text{ } & 159  \\ 2013 & \text{ } & 92  \\ 2014 & \text{ } & 80  \\ 2015 & \text{ } & 62  \\ 2016 & \text{ } & 8   \end{array}

The above table is found in the Oxfam press release in 2016 (for the 2015 data). Even in 2010, the contrast with 388 richest people equal half the world is already a clear and lopsided contrast. The trends exhibited in the table show that the wealth gap keeps getting wider.

In addition to the 8 richest people equal half the world, the same report also shows that the 1,180 people in the 2016 Forbes list of the world’s richest people own as much wealth as a full 70% of the rest of the world.

The average wealth of the 3.6 billion people in the poorer half is $113.6 (=409 / 3.6). On the other hand, the average wealth of the top 8 men is $53.275 billion (= 426.2 / 8). This is again a contrast as skewed as the one mentioned at the beginning (basically 50 billion dollars versus 100 hundred dollars). It will be interesting to know the median wealth of the 3.6 billion people in the poorer half of the world economy. It is likely that the wealth data in the poorer half is skewed as well, meaning that most people have very little (say subsisting on $2 a day) while the top part in the group have wealth in the hundreds or thousands.

Statistics is comparative. There are other comparisons that can be made. For example, how does the total wealth of $426 billion stack up against the GDPs of countries of the world. Of course, we cannot expect the total wealth of Bill Gates and Warren Buffet and 6 others men to equal the GDP of a large economy like the United States. The GDP of the United States is over $18 trillion, which is over 42 times the combined wealth of the 8 richest men. This is still a staggering amount of wealth. Take the combined wealth of the 8 men discussed here, multiply that by 42 and we are approaching the size of the US economy! According to this GDP ranking, $426 billion is about the same as the GDP of Iran, which is about $425 billion. Iran is in the 26th largest economy in the world (according to one of the three ranking in the Wikipedia link). Any way you cut it, these 8 individuals are very wealthy.

A Periodic Look at the California Lottery

What are the odds of winning the California Lottery? I am talking about the winning of $1 million or more (the kind of winning that is a game changer in one’s personal life). How often are these million-dollar tickets won? Ten months ago I estimated that the odds of winning $1 million or more in the California Lottery were one in 36 million (see Taking another look at the California Lottery). The data were based on data from California Lottery that I obtained in November 2010 (see Shining a light on the California Lottery). Nothing happened in the last ten months indicates that the odds of winning has fundamentally changed.

Just to confirm, I count the number of winning million-dollar winning tickets as of today (August 30, 2011). This is done at the website of the California Lottery. The data are not readily available. I have to search at this site. I count the tickets by searching one county at a time (there are 58 counties in the state). The result: since the inception of the California Lottery in 1985, there are only 257 tickets that paid out $1 million or more (an increase of 10 winning tickets over 10 months ago). So in its 26-year history, there are only about 260 winning tickets, about 10 per year. The increase of 10 tickets in the last 10 months also confirms the average of 10 winning tickets per year.

With the increase of 10 more winning tickets, the odds are actually a little higher, about one in 36.7 million, but still not fundamentally different from 1 in 36 million.

The mantra of many lotto players is that you have to buy a ticket in order to win. That is so true. You have to get in the game to have a chance to win, even though the chance of winning is infinitesimally small. On average it takes the purchase of about 36 million tickets to support one winning ticket. Still dreaming of winning big?

Wrong Side of the Road, Wrong Side of the Law

Jessica Lynn Shekell was a 21-year old and a sociology major at California State University at Fullerton in 2009. In the wee hours of October 26th of that year, she was driving in the wrong direction on a stretch of the 91 freeway in Anaheim. Shekell’s Toyota pick-up truck crashed head-on into a Chevy’s pick-up truck. The results: Sally Miguel and Patricia Miguel (two sisters in the front of the Chevy’s pickup truck) were dead and their two young nieces (Mary Miguel and Sara Miguel) suffered permanent internal injuries. The lessons? Avoid being on the wrong side of the road and being on the wrong side of the law. With drinking and driving, only do one of them. Some actions in life have grave consequences. Alcohol imparied driving is one of them.

Approximately 45 minutes after the crash, Shekell’s blood alcohol content (BAC) was 0.26 percent, three times over the legal limit (0.08 percent in all 50 states). This meant that the BAC at the time of crash would be higher. According to the BAC calculator of the Police Department of the University of Oklahoma, for someone weighing 120 pounds, two hours after drinking eight 8-oz beers, the estimated BAC is only 0.21 percent (Shekell’s weight was 115 pounds at the time of the crash). The same calculator estimates that drinking eight margarita will result in a BAC of 0.24 percent. Shekell likely had many more drinks than eight. On the night of the DUI crash, Shekell and her friends were drinking at two bars in Placentia, California for several hours.

Shekell was sentenced on Wednesday March 9 to six years for the DUI crash. The prosection asked for 13 years. The defense asked for probation (nice try). Orange County Superior Court Judge Robert Fitzgerald picked the middle point. Is the justice served? In my view, a stiffer sentence is called for.

Interestingly, on the night of the crash, Shekell was not yet 21 years of age (less than two months away from her 21st birthday on December 12). So she was not of legal drinking. According to the prosecutor Susan Price, Shekell was also cited for underage drinking in 2009.

Prior to sentencing, Judge Robert Fitzgerald sent Shekell to a 90-day diagnostic program operated by the state Department of Corrections and Rehabilitation, during which she denied being an alcoholic. When the program was over, officials recommended she be sent to prison. Was it that Shekell was not showing remorse to the the satisfaction of the officials in the diagnostic program? It seems clear that she denied she had an alcohol problem.

Two lives were snuffed out by someone who denied having an alcohol problem. Six years do not seem fair to the victims’ family. Both nieces of the victims suffered permanent injuries in their bodies, having to deal with gaping physical and emotional wounds for the rest of their lives.

Another lesson from this crash is that wearing seatbelt can save lives. The victims in this crash did not wear seatbelts. In my view, this does not lessen the gravity of the crime committed by Shekell. On the other hand, even with wearing seatbelts, the victims would still sustain serious and likely debilitating injuries. With or without seatbelts, it is a no win situation for the victims.

If Shekell has any shred of decency in her bones, she will have to deal with the weight of this tragedy for the rest of her life. At least she will be out of prison before her 30th birthday. Sally and Patricia Miguel are gone forever. In comparison, Shekell’s prospect seems quite good.

Justice aside, it is also not a good situation for Shekell. She was hospitalized for facial trauma and fractures to both arms. Any normal person will have to grapple with the enormous guilt from murdering two people. Though she got a light sentence, she still have to spend six years in a state prison, which could be put to other productive uses. She could finish school and start a career. Any plans she had before the crash will have to wait until she turns 30. Shekell surely had put her family through much anguish. Think of the legal costs her family had to shell out.

For all those who drink and drive, think about this. If you do not care about the victims, you ought to at least care about your future and your family. I sure do hope that the drinking buddies of Shekell on the night of October 26, 2009 had learned this lesson too.

It is really simple. If you get plastered, do not get behind the wheel.

How many lottery winners are there in a year?

I have been wanting to answer the questions in the title. I found that statistics on lottery winning is hard to come by. Even when the state lottery commissions are required by law to made the information public, they tend to bury the information and you have to do work to dig it up. I have strong indication that on an annual basis, winning tickets that pay out one million dollars or more only number in the hundreds. In contrast, there were 37,261 people killed in motor vehicle crashes in 2008 in the United States (see the report from the National Highway Traffic Satety Administration). So if you are passionate about winning various state lotteries, it makes sense to be passionate about not winning the negative lottery of fatality in a motor vehicle crash too.

As of November 2010, there were only 247 winning tickets paying one million dollars or more (see the previous post with this discussion). To get this information, I had to look up the winning tickets in each of the 58 California counties in the official site of CalLottery. So about 10 people are made millionaires by CalLottery each year (since its inception 25 years ago).

The state of Iowa is more forthcoming. The official site of the Iowa Lottery actually had a press release listing out the stats. The number of Iowa Lottery tickets that have won prizes of $1 million or more (through August 2010) is 110. Once again in the 25 years history of the Iowa Lottery, only 110 people were made millionaires, on average 4.4 per year. For the Iowa Lottery, the odds for winning $100,000 or more are better for sure (1089 winnings so far in 25 years) but the odds are still small.

The state lotteries are in the business of selling dreams. I suspect that they do not want to provide a picture reflecting the true odds of winning big. With all the state lottery commisions across the United States combined, I cannot see how the number of winning tickets ($1 million or more in each one) in one year can be in the thousands. If someone is forking over hard earned cash each week to play the lottery in the hope of winning big, it also makes sense to pay attention to traffic safety in the hope of not winning the negative lottery of death in a car crash.

Governor Brown wants to take your cell phone

No, this is not a government seizure of private cell phones. Jerry Brown wants your cell phone only if it was issued by the California state government. Even then, the chance of it having to turn it in is only 50%. The newly installed Governor Brown is only proposing to take away government paid cell phones from certain California state employees in an effort to save money. The potential saving is to the tune of $20 million. Trying to close a budget gap in the California state government that is expected to be about $28 billion, the governor needs to find money anywhere he can.

On the way to work this morning, I heard a report on the radio about the proposal from Governor Brown (here’s one link). The gist of the report is:

  1. Governor Brown does not want all the cell phones back. He just wants half of them back. The total number of phones to be turned in by June 1: about 48,000.
  2. The state government currently foots the cell phone bills for about 40% of its workforce. The total number of state employees with free cell phones: about 90,000.
  3. The state government is currently paying on average $36 a month per cell phone.
  4. Governor Brown’s proposed cell phone reduction order should save the state $20 million.
  5. Even with the proposed saving, one fifth of the state workers will still use state-funded cell phones.

After I heard this report on the radio, I jotted down the nummbers and I found that these numbers are internally consistent and for the most part accurate. The numbers seem to hang together quite well. Definitely there is no glaring errors. In this one instance of budget cutting at least, Governor Brown and his staff got the numbers right.

Here’s how I looked at these numbers. I am going to discuss each of the points listed above.

  1. Currently there are about 96,000 state-funded cell phones in the hands of California state givernment employees. Half of these phones are to be turned in by June 1. That leaves 48,000 cell phones still being in the hands of state employees.
  2. About 90,000 state employees have government cell phones. The count of 90,000 is about 40% of the total state workforce. This means there are currently about 225,000 state employees (see note 1 below).
  3. The average monthly bill per cell phone is $36, making the average annual bill per cell phone $432.
  4. The total annual expense for the 48,000 cell phones being cut would be $20,736,000 (see note 2). This amount is slightly over $20 million and is thus in line with the $20 million being reported.
  5. Even with the proposed saving, one fifth of the state workers will still use state-funded cell phones. One fifth of 225,000 (from point 2) is 45,000. From point 1, about 48,000 government paid cells phones will still be used by state employees. Though the 45,000 is less than 48,000 by 3,000, the difference is not large.

The only external number that I had to find is the total number of state employees in California. The number I obtained from the California State Controller’s Office is 237,576 (as of October 2010). The estimate obtained from the radio report is 225,000 (point 2 above). Overall, the numbers hang together well.

The proposed cut makes sense. According to Governor Brown, some agency heads and managers need to be in touch with employees 24/7. But most state employees do not. However, not the entire amount of proposed saving will be realized this year since some of the cell phones may be under contract with cell carriers. I hope the savings will work out as planned.

Note 1
To find 40% of 225,000, we multiply 225,000 by 0.40.

225000 \times 0.40=90000

But in the radio report, the number 90,000 is given instead. To derive 225,000, we need to do the opposite, i.e. divide 90,000 by 0.40.

\displaystyle \frac{90000}{0.40}=225,000

Note 2

432 \times 48000=20,736,000.