Organized crime has an “Easy Button” – White Collar Crime
“The Federal Bureau of Investigation on Friday estimated there are some 1.4 million gang members in the United States and they are turning to white-collar crimes as more lucrative enterprises.”
msnbc.com, FBI: Gangs turning to white-collar crimes
Drug trafficking and prostitution certainly pay the bills, but gang members see the potential to make big money with white-collar crime so says the FBI in its 2011 National Gang Threat Assessment. I’ve written about organized crime before as it relates to the banking sector. In fact, very early on in my fraud career, I lead an investigation of identify theft involving an Asian gang based on the West Coast. To be honest, I was very impressed with the overall scheme. The gang routinely overcame the countermeasures that we deployed and over the course of 6 months, made many, many millions. As far as I know, they remain at large.
From my experience, the biggest threat posed by organized crime as it relates to white-collar crime is their efficiency. Either by threats of violence, a sense of loyalty, or sheer determination, organized crime is often far more efficient than the fraud departments they face. Unless the organized crime entity is targeted by law enforcement, fraud departments rarely see their “enemy”. In jungle warfare, fighting a faceless enemy that can strike with impunity exerts a tremendous psychological toll on soldiers. Clearly, we are not talking about life and death, but fraud investigators can become quite demoralized when tasked with defeating an attack by organized crime. In reality, you never really defeat organized crime, you temporarily slow down the frequency and severity of their attacks.
Whether you work for a company with less than 10 employees, or a multinational with 10,000 employees, there is much to learn from organized crime and their approach to fraud. Sure, the gangs have their fair share of politics and distractions in the form of law enforcement investigations, but when it comes to making money, organized crime makes every effort – violent or otherwise – to protect their cash flow.
Using violence to prevent fraud is not an option for businesses. However, can your company say that it has an organized response in place to prevent fraud? As we know, fraud has many forms. Your company doesn’t have to be fighting organized crime to apply lessons learned from their approach. Ask yourself if fraud prevention and investigation is a high priority in your organization? Does the company dedicate the resources needed to combat fraud – both employee and third-party? (Hint: what appears to be employee related fraud, may actually be a “plant” by organized crime). If the fraud department recommends a change in policy or procedure, or an investment in technology to combat fraud, who listens?
The fact that the FBI believes that organized crime is focusing their efforts on white-collar crime may actually be a blessing in disguise. In order to improve their performance, a sports team often has to play against a superior opponent. In case you hadn’t already guessed, organized crime is the superior opponent. Will your company learn from the experience, or be subject to an embarrassing defeat that serves no purpose… well, almost no purpose. The gang will enjoy spending your company’s cash. And, they’ll probably be back for more…
Need a writer that understands fraud? When you hire me to write an article, blog post, newsletter or white paper you get an accomplished writer that is also an expert in fraud.
paul@mccormackwrites.com