A billion dollar industry and it ain’t legal (Hint: it used to be a secret)
All is not right with economies in the Western world. The US remains in a malaise while several European economies teeter on the brink of the abyss. The UK just entered a “double dip” recession and as a major trading partner for the US, we’ll surely feel the impact here in the coming months. There are many reasons for the current economic crisis. Without doubt, risk taking on Wall Street and the reckless spending that it helped fuel and support is largely to blame for where we find ourselves today. That’s history. Done. We can’t change it, we can only learn from it.
I am far more concerned with how we move forward. How does the US economy dust itself off and lead the world to better times? If there was a “magic bullet” we would have used it by now. I guess time will tell whether the decisions being made today in both the public and private sector will hurt or help.
One thing I can tell you is that US businesses are making the recovery far more difficult than it needs to be. Don’t believe me? Would you believe Pamela Passman, the president and chief executive officer for The Center for Responsible Enterprise and Trade (CREATe.org)—a Washington-based non-profit industry group focused on responsible business practices?
“Failure to address the challenge of trade secret theft costs industry billions of dollars each year and can have devastating reputational, financial, and legal impacts for individual companies and the global economy as a whole.”
CREATe.org just released a report entitled “Trade Secret Theft: Managing the Growing Threat in Supply Chains‘. The report claims that trade secret theft costs industry billions of dollars annually and serves as a critical impediment to innovation, job creation and sustainable economic growth.
What does the US economy need today? How about innovation, job creation, and sustainable economic growth! US companies are literally allowing one element of the solution to the country’s economic woes to slip through their fingers into the hands of foreign competitors – many of which reside in China. Chapter 3 of the CREATe.org report states that “The weak rule of law in many countries makes it all but impossible for multinational corporations to address trade secret theft after the fact”.
Once a trade secret is gone, it is gone for good. No second chances.
Many companies sound concerned, but what are the really doing to combat the threat? Passman states the following,
“Over the past several months, we have engaged with representatives from more than a hundred multinational corporations and have been struck by the deep and pervasive concern over trade secret theft. We heard universal agreement about the need for broader awareness of the challenge and better practices and systems to help address the issue internally and externally with suppliers and business partners,”
Sorry folks, talk is cheap in this situation. In many cases, the companies that “lose” trade secrets have only themselves to blame. This is not a new problem! There is plenty of evidence available from law enforcement and non-profit agencies such as CREATe to show that trade secret theft happens on a regular basis. Goodness knows how many instances are covered up and never hit the business press.
I sincerely hope that CREATe report triggers action. The US is an intellectual property powerhouse but we can’t keep giving the stuff away. In my next post, I’ll highlight some basic steps that companies can take to protect their trade secrets. No magic bullets, but certainly more than many companies have in place right now.
As it relates to intellectual property theft prevention, “the ball” is firmly in the court of US companies. Let’s hope no one steals it before they realize that they have it.
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
Interesting article: How CIOs Can Learn to Catch Insider Crime (with help from yours truly…)
I thought my readers might be interested in an article that CIO magazine just published on insider crime. A writer from CIO magazine interviewed me about a month or so ago and I am proud to say that I am quoted extensively throughout the article. Here is just one of my sound bites:
“I’ve yet to meet any C-level person who says, ‘I’m so proud that we have 500 people preventing fraud.’ It’s not what people want to put out there as a badge of honor. It’s a necessary evil.”
Please check out the full article. In my opinion, the writer did an excellent job discussing insider fraud from a number of angles.
I hope you enjoy the article. Please let me know what you think!
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
Payroll and inventory fraud – are you next?
Apparently, there is quite a bit of money to be made from gourmet mushrooms (no, not that kind). So much so that Gino Silva and Steven Perei, both employees with D’Artagnan, a mushroom distributor set up their own company in direction competition with the employer.
Starting in December 2007, Silva and Perei made sales on behalf of their own company, Mediterra, then stole D’Artagnan’s inventory to complete the sale. To conceal the theft, Silva enlisted the help of D’Artagnan’s inventory control specialist to manipulate purchase order records and alter inventory records. This scheme was simple, yet quite brilliant – by using their employer’s inventory for their new company, top line sales essentially equaled bottom line profit. Why pay for inventory when someone else can foot the bill? The mushroom scheme lasted just over 12 months.
The mushroom scheme was not Gino Silva’s “first rodeo”. From 2005 to 2008, Silva was vice president of operations for Philips Accessories and Computer Peripherals. While working there he conspired with others to add “ghost” employees to the company’s payroll that ended up being paid approximately $1.2 million for nonexistent services (Ghost employees may be real people or fictitious but they do not work for the company).
Silva pleaded guilty to the payroll scheme in December 2008. In June 2009, he received a 27 month sentence and a restitution order for $843,414. In April 2011, Silva pleaded guilty to the mushroom scheme, and in March 2012 received a 28 month sentence, a year of supervised release and $71,179 in restitution for the mushroom scheme.
Silva committed two very different frauds and was eventually caught and sentenced twice. Is he a criminal mastermind? Certainly not, but he still managed to defraud two companies with relative ease. Will he commit a third fraud once he is released from prison? Who knows? But, the temptation may be too great… and this time, he probably knows how not to get caught!
I can tell you that there a literally thousands of companies that he could join and commit exactly the same frauds without being caught for at least a year. Is your company next?
Read more here
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
Oh what a tangled web we weave… what happens when you can’t trust anyone?
Of all the government agencies to steal from, the National Security Agency would probably be the last one on my list. If just half of what the media says they can do is true, surely, they have the capability to uncover a fraud perpetrated by a vendor.
Yet, Bechdon which made metal and plastic parts for the NSA, successfully defraud the agency over a ten year period. The father son team of William and Donald Turley overbilled the agency for hours that their company never worked. As an aside, I am curious as to why the NSA would pay for parts produced by the hour and not on a fixed price basis, but I suppose we’ll never know the reasoning behind that decision.
The father son duo both confessed to the fraud during clearance interviews as part of the process for bidding on sensitive NSA contracts. Surprisingly, they confessions came over a year apart. William Turley confessed in March 2006, and Donald the following year in April (Why it took the NSA more than a year to complete the second interview is anyone’s guess).
Now for the twist that all good stories involving the NSA should have… Enter Christina Turley Knott, William Turley’s daughter and Donald Turley’s sister…
Christina is by far the more accomplished fraudster. She managed to embezzle $4.5 million from Bechdon without the knowledge of her father or brother! Presumably, while the father and son were busy bilking the NSA, they didn’t pay attention to the fraud happening beneath their noses. Christina will be sentenced shortly for her fraud, but initially the family declined to turn her in as they feared she would disclose the NSA overbilling scheme.
The moral of the story? Don’t expect your employees to act in an ethical manner if they see your company’s leadership defrauding others. The “tone at the top” is often thrown around as important to preventing fraud. In this case we can see what happens when owners or senior executives abandon their ethics at the front door. There is no honor among thieves, especially when there are millions up for grabs. Just ask the Turleys…
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
Punishing the white collar criminal
“The judge opened his file and retrieved the case’s sentencing memos, plea agreement and lengthy pre-sentence report, which he had read over the past few days and which spelled out the case’s particulars: Borgono had pleaded guilty to conspiring to defraud the federal government by falsifying records that allowed her boss, the president of a Miami-based export company, to steal more than $10 million from the Export-Import Bank of the United States”
The Washington Post Article referenced above provides a ‘behind the scenes’ look at the challenges facing the judiciary when sentencing white collar criminals. Should society punish white collar criminals to the maximum extent allowable under the law, or does it make more sense to show compassion? Does tough sentencing for white collar criminals discourage “would be” fraudsters? How important is it to rehabilitate the offender?
Consider the vast difference between the punishment that the federal prosecutors argued for and the request made by Borgano’s defense attorney:
“Because so much money had been stolen, federal prosecutors argued in court papers that Urbina should sentence the former office manager to 18 months in federal prison. Her attorney countered that Borgono deserved just a year of home detention and two years of probation because the Peruvian immigrant, who became a U.S. citizen in 2007, had not reaped a dime in the scheme’s proceeds beyond her $500 weekly salary. She had cooperated extensively with authorities and had helped them build their case against her boss, a man sentenced by Urbina to nearly four years in prison. She also had the support of her community, the attorney said. The judge’s folder was filled with heartfelt letters from relatives, friends and even her priest.”
More on who won that fight in a minute…
In addition to the investigations that I personally conduct, each week I review over fifty cases involving fraud and intellectual property theft to determine which examples to include in our Global Knowledge Center. The differences in the sentences handed out to white collar criminals are truly startlingly, and in some cases alarming. Even within the same jurisdiction, the sentences handed down vary significantly. And let’s not forget that the Internal Revenue Service may also take an interest in the case. Or not… I have yet to understand the criteria that the IRS applies when determining which cases involving fraud and unreported income are worthwhile pursuing. That’s a discussion for another day…
I understand better than most that each case is unique and numerous factors must be taken in to account before a sentence can be handed down. But let’s consider the variation in sentencing from the “would be” fraudsters perspective. Does the threat of prison time factor in to their decision making process? Should it? What are the odds that they will be caught in the first place? Why consider the worst case scenario when committing fraud is so incredibly easy to do?
The case highlighted in the Washington Post article is somewhat different as Norma Borgano did not personally benefit from the fraud – her boss Guillermo O. Mondino did and he received 46 months in prison for his troubles.
So let’s compare Mondino’s sentence to the 66 months that Patricia K. Smith,the perpetrator of a $10.2 million dollar fraud received. That’s a difference of 20 months, or nearly two years. I fully understand that each case is different, but is Smith’s crime anymore heinous than Mondino’s? In fact, Mondino’s fraud involved a far higher potential loss of $24 million. Did Mondino’s attorneys do a better job defending their client? Who knows, but the difference is significant – especially if you are the unlucky individual serving the “extra” 20 months!
As for Norma’s fate, she received a year of home detention, four years of probation and $5,000 in restitution payments. Is that an appropriate sentence? Let’s be honest, who are we to judge?
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
Don’t forget about fraud perpetrated by customers…
Many fraud blogs – including this one – tend to focus almost exclusively on employee fraud. However, fraud perpetrated by customers can be just as damaging.
Not surprisingly, many companies are loathed to think that customer fraud happens. Senior executives in marketing, sales and operations often appear determined to explain why customer fraud is not a big issue. To underscore their flawed logic, and in defiance of their fiduciary duties to the company, the executives continue to dream up new products and services that are riddled with holes that allow, and sometimes encourage customer fraud to take place.
Inevitably, when the fraud losses start to mount, rarely will the department that created the product/service acknowledge that it was flawed. Instead, they ask why the fraud department seemed unable to stop the fraud from taking place. The company’s CFO or COO normally gets dragged in to the discussion and so begins the “Mexican Standoff”.
Before anyone becomes overly agitated that I believe executives sometimes violate their duties of loyalty and/or care, think about the bigger picture. Typically, fraud losses are not recorded in the same profit and loss statement (P&L) where the revenue is booked. Most executives that are in charge of a product or service receive bonuses based on the revenue generated instead of net profit earned. Surely, that creates the potential to drive up revenue at the expense of sound fraud risk management practices that minimize costs?
Some enlightened organizations allocate fraud losses back to the individual product or services’ P&L. Doing so allows the company to judge the sales and marketing executive’s performance based on revenue growth and the “bottom line” which reflects revenue less associated costs, including fraud.
This approach to fraud loss accounting is not “fool-proof” and requires time and effort to ensure that both the fraud department, and the department receiving the fraud loss allocation support the process. However, it is well worth the effort as the moral hazard associated with marketing and sales “owning” the revenue and not the fraud loss should give organizations – both large and small – cause for concern.
Does your organization allocate fraud losses to product P&Ls? If so, has it helped minimize losses?
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
Bookkeeper plays “hide and seek” with company’s bank records
Bonnie Denning didn’t want the owners of Easy Picker Golf Products to see the company’s bank records, and now we know why! Over the course of less than 12 months, Denning alledegly embezzled $818,339.37 from the Lehigh Acres company using wire transfers, a debit card linked to the company’s accounts, and one check (I suspect that there will be more fraudulent checks uncovered in due time).
Here is a break down of the loss:
60 Debit card transactions – $411,387.00
Alledegly used to used to buy clothes, gas, electronic goods and home furniture.
54 wire transactions – $358,885.50
Alledegly included $4,799.58 to purchase granite for Denning’s home and $29,160.00 associated with a drug rehabilitation program for a relative
1 check – $5,295.76 for shutters for Denning’s home
Total loss – an eye popping $818,339!
Here are some lessons learned:
Denning refused to turnover the company’s bank records to the owners. In fact, the owners had to request the statements directly from the bank! That is a GINORMOUS red flag. Never, I repeat never give your bookkeeper sole custody of your company’s bank records.
The bank issued a debit card to Denning apparently without the knowledge of the owners. I’ll leave it up to the owners and the bank to decide who is at fault here; however, as I have said before, relying exclusively on your bank to prevent embezzlement is a losing proposition.
Engaging a bookkeeper should never result in the the owners abandoning oversight of the financials. To the contrary, owners must stay engaged and ensure that the bookkeeper compiles the results in an accurate and efficient manner. Put simply, not paying attention can cost you dearly.
I sincerely hope that the Easy Picker Golf Product Company can survive this catastrophic loss. I can only imagine how the owners must feel.
As this case develops, I’ll keep you posted.
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
Employee fraud – the problem may be bigger than you think…
Before you can tackle employee fraud within your organization, you need to know how big a problem you have. An article that I wrote for Memento – a leader in enterprise fraud management – discusses a common mistake that banks make when tackling employee fraud. The principles that I share in the post are applicable to more than just banks.
Click here to read the post.
Please feel free to leave comments here, or on Memento’s blog letting me know what you think.
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
Intel engineer helps himself to $400 million
Intel Corporation is a world-class organization that has dominated the market for computer chips for many years. In fact, there is a high probability that the device you are using to read this post has an Intel chip inside. However, based on a recent case involving Biswamohan Pani, an Intel Senior Staff Engineer, it may need a little help protecting its intellectual property.
According to the FBI, here are the facts of the case:
From February through April, 2008, Pani was looking for a job at other computer chip manufacturers and ultimately obtained a job at Advanced Micro Devices Inc.
Pani kept his job search secret from Intel. (Why wouldn’t he?)
When he announced his departure on May 29, 2008, he told the company that he might work for a hedge fund
Pani told Intel that he wanted to take the next one-and-a-half weeks as vacation until his last day at work on June 11, 2008
Unbeknownst to Intel, Pani had started downloading from Intel numerous secret documents about Intel’s manufacturing and design of computer chips. The intensive downloads began on May 28, just before he announced his departure, and continued on May 29
Pani started working at AMD on June 2, while he was still on Intel’s payroll and still had access to Intel’s computer systems
On June 8 and June 10, Pani remotely accessed Intel’s computer system numerous times and downloaded 13 of Intel’s most valuable documents
Along with other confidential and proprietary information, Pani downloaded a document explaining how encrypted documents could be reviewed when not connected to Intel’s computer system
Pani backed up the downloaded files to an external hard drive for access after he left Intel
On June 11, 2008, Pani reported to Intel for his exit interview and falsely stated that he had not retained any of Intel’s property, when, in fact, he had kept the electronic equivalent of boxes full of downloaded documents and some printed Intel documents at his apartment
Documents taken by Pani were found a month later when the FBI searched his home. Intel has valued those documents as worth $200-$400 million, at minimum
The FBI was able to recover these documents quickly, before Pani could use them to Intel’s disadvantage, largely because Intel reported the theft quickly and assisted the investigation. AMD also cooperated with the investigation, and there was no evidence that AMD or its employees had asked Pani to take these documents or even knew that he had them
Based on the fact pattern above, it appears Pani knew exactly what he was doing. He grabbed documents before, during and after Intel knew that he was leaving. He also bought time by convincing Intel that he was leaving the industry. I can’t imagine that lying about his ultimate destination stopped Intel from blocking his system access. They probably just forgot to do it. After all, Pani was still on the payroll and “burning” his vacation allotment. Why block an active employee?
Who knows what actually took place, the net result was that Pani had one-and-a-half weeks of access to Intel’s systems during which time he did the most damage. So how did Intel figure out Pani had stolen trade secrets? Clearly, after the fact, but not much else has been mentioned in the media.
This case is eerily similar to another case that the FBI investigated involving Sanofi-Aventis. Is it really that easy to steal trade secrets from Fortune 500 companies? Apparently so…
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
Update: XM Radio Employee Sentenced to 15 Months
I have an update on a case that I previously discussed involving XM Radio. Valencia Person, an Accounts Payable coordinator just received a 15 month sentence for her role in the embezzlement.
The news article detailing her sentencing notes that Person agreed to a monetary judgment of $908,924. That doesn’t make much sense to me as the article later notes that Brenda Jones, her co-conspirator received $690,000 and Person received $125,000. May be there will be more information available when Jones is sentenced on August 16…
Now, I wonder how much the investigation cost to complete… I would hazard a guess that the total loss easily exceeds $1,000,000. Investing in prevention doesn’t seem so expensive after all, does it?
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
Help wanted – willingness to share trade secrets a must
How much do you know about FOAMGLAS? Not much?
Thought so…
If you worked at Pittsburgh Corning’s facility in Sedalia, Missouri, you probably know a lot about FOAMGLAS. Up until recently, Ji Li Huang, and Xiao Guang Qi would have loved to chat with you. In fact, if during that “chat” you agreed to share what you knew about FOAMGLAS, in return you might have ended up $100,000 richer. That’s what the US government alleges at least.
Apparently, Pittsburgh Corning recently made major advances in the formulation and manufacturing process associated with FOAMGLAS. Just so you know, FOAMGLAS is used in liquid natural gas (LNG) tanks.
Which country has the greatest demand for FOAMGLAS? China – it has 10,000 LNG plants.
I’ve discussed the theft of trade secrets numerous times on this blog. What makes this case unique is the fact that Huang and Qi allegedly placed an advertisement in a local newspaper that solicited “technical talent” with experience at the Pittsburgh Corning plant. The advertisement indicated that there was a project lead vacancy associated with the building of a foam glass factory in the Asian market. What they really wanted was information, presumably to launch a competing product. That’s speculation on my part… Coincidentally, Pittsburgh Corning just announced plans to open a facility in China.
Thankfully, the FBI stepped in using an undercover employee from the company. The plan that the undercover employee shared with Huang and Qi involved the employee breaking into the engineering department and stealing equipment related drawings. The FBI helped coordinate the exchange of the documents and the corresponding payment. Huang and Qi are now in custody awaiting court hearings.
Should the allegations noted above result in convictions, it will represent another example of a U.S. based company creating intellectual property that attracts unwanted attention from foreign competitors. From what I can tell so far, Pittsburgh Corning did everything right. How many companies are not so well prepared?
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
Sorry valued customer, an employee just stole your identity
As a freelance writer, I often write for companies around the globe.Here is an article that I wrote for Memento – a leader in enterprise fraud management.
The post discusses the theft of nearly 3,000 customer identities by a bank manager with a very troubled past.
Click here to read the post.
Please feel free to leave comments here, or on Memento’s blog letting me know what you think.
If you would need an article, newsletter, blog post or whitepaper, please contact me at paul@mccormackwrites.com.
P.S. I ghostwrite too!
The Fine Art of Interviewing Fraud Suspects
An interview with Paul McCormack, fraud investigator and educator…
How many fraud suspects have you interviewed in the course of your career as a certified fraud examiner?
After the first hundred, I actually stopped counting, but I’ve easily interviewed more than 500 people while investigating employee and third party fraud.
How is interviewing a fraud suspect different from the interrogations we see dramatized on TV?
The goals are very different. On TV, the actor-detective wants to force a confession. It makes for entertaining television. The goal of the interview in a private company is to encourage the employee to share information. Threatening him or her, with termination or legal action, isn’t appropriate or effective. In fact, there are legal risks to it. Tactics that may be appropriate for law enforcement can get you in trouble if you employ them as an interviewer in a corporation.
What qualities make a good fraud interviewer?
A good fraud interviewer knows how to connect with people. I don’t mean in a jovial way. He or she must be able to understand a person’s thought processes as well as their body language and use them to drive the interview. A good interviewer is able to listen intently to what the employee is saying. And not saying. They are adept at establishing rapport. A good fraud interviewer must be able to maintain composure, no matter how the employee reacts, and be creative in figuring out how to get the employee to talk.
How do you prepare before you go into the room with the employee?
You start by taking a hard look at the documents you have and trying to explain the employee actions in context. Could the transaction in question be the result of a system error or a process problem or a lack of employee training, and not fraud? Could we be misreading the document? You develop hypotheses and try to disprove them before doing any interviews.
Preparation before going into the interview room is crucial. You want to learn as much as possible about the individual whom you are about to meet. You conduct mock interviews and role-play all the scenarios you can think of. Mock interviews allow you to test your data again and develop confidence in your exhibit. I’d say for every hour spent in the interview room, three hours are spent preparing.
What do you hope to get out of the interview?
I want to stress that proving someone guilty or innocent is not the goal. The performance of investigators should never be judged on how many confessions they get or how many employees are terminated as a result of their investigations. That creates an incentive to chase the easiest cases. The goal is to find, validate, and provide facts so that others can make fully informed decisions regarding an employee’s employment status.
Throughout the interview, you have to keep asking yourself, “am I getting the information I need to write a report that someone else can view as complete?”
What’s the biggest mistake a fraud interviewer can make?
The worst mistake is assuming the target of the investigation is guilty and it’s your job to prove it. Going into an interrogation with a predefined conclusion can get you in trouble. You may believe the evidence is stronger and more compelling than it actually is. You may think that the documents speak for themselves when they don’t. You may not ask questions that need to be asked.
Each investigation has to be conducted with the same view to gathering facts, understanding the facts, and allowing others to interpret those facts. The worst thing that can happen is for an investigator to shortcut that process and believe that they are the proverbial judge, jury, and executioner.
For McCormack’s best practices for fraud detection and prevention, listen to his free webcast on The Threat Within: Combat Employee Embezzlement.
https://cpelink.wordpress.com/2012/08/23/the-fine-art-of-interviewing-fraud-suspects/
October is National Cyber Security Awareness Month, but you knew that already…
Did you know that October is National Cyber Security Awareness Month (NCSAM)? Ok, you probably did not. It isn’t exactly the type of event that hits the front page of most newspapers and websites, but it should.
The FBI’s Robert Mueller recently stated that “cyber security may well become our highest priority in the years to come.” In my opinion, that time is fast approaching. If you follow the news regarding Cyber Security as I do, you may agree that we are already under a sustained attack that has the potential to cut the country’s economy off at the “knees”.
As we all know, it is not just corporations that are the victims. US consumers are targeted by organized crime groups from around the globe. In fact, this is not just a US problem, it is a global epidemic.
It is easy to dismiss NCSAM as a silly event that means nothing. And that is EXACTLY why you should pay attention. As long as consumers are victimized, there will be an incentive for fraudsters to invest the time and money to launch their attacks. So, with that in mind, please take the time to review the FBI’s recommendations below:
Set strong passwords, and don’t share them with anyone.
Keep a clean machine—your operating system, browser, and other critical software are optimized by installing regular updates.
Maintain an open dialogue with your family, friends, and community about Internet safety.
Limit the amount of personal information you post online, and use privacy settings to avoid sharing information widely.
Be cautious about what you receive or read online—if it sounds too good to be true, it probably is.
If you want more information on NCSAM, the FBI’s press release contains links to a number of helpful resources. I hate to state the obvious, but if you don’t take the time to improve your awareness of the cyber security threat facing the nation, no one will do it for you.
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
Open letter to would-be fraudster
Dear Mr/Mrs Would-Be Fraudster:
I know you read this blog… I can see the search engine terms that you used to find “Fraud Happens”.
So, you want to commit fraud and don’t want your employer to catch you? I am glad that I can help! What have you learned from reading this blog?
Well, you’ve probably learned that committing fraud really isn’t that hard to do, and you may end up with millions of dollars. You may have also learned that working with a co-conspirator has its downside. If you work at a large company, you probably know that they respond to fraud losses differently than small companies. If you’re a government employee, you found out that fraud in the public sector can be just as damaging as fraud in the private sector. Finally, you may now know what could happen if you are caught. I guess that you are trying to determine if you would serve time, or merely receive a “slap on the wrist”. I hope you also learned that fraud destroys lives.
So what have you decided to do? Is the probability of getting caught so low that are willing to take the risk? Have you thought about how you’ll spend the money? Maybe you want to punish your employer? After all, you really don’t get paid enough…
Before you make the leap and begin stealing, do this for me… Close your eyes and begin to envision what your world would look like if you ended up getting caught. Will your significant other stay with you? How about the kids, will they understand why the new toys you just bought have to go back to the store? Will they want to visit your new “home” – the one with all the other “bad people” wearing the same clothes? What about your parents? How do explain your decision to embezzle money from your employer? After all they have tried to teach you, if only you had listened…
I understand why you are tempted to commit fraud. You and I both know that there is a chance that you’ll steal just enough to pay off overdue bills or buy that fancy car you’ve always wanted and not get caught.
Just remember this… there are people just like me all over the world that have dedicated their careers to fighting fraud. We’re not always perfect and we do make mistakes. However, for the most part, we’re really good at what we do. I hope you learned a great deal from reading my blog. If you’ve learned anything, I hope you’ve decided not to commit fraud. Contrary to what many would like to believe, fraud doesn’t have to happen. Ball’s in your court…
Paul McCormack
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
Old enough to know better?
Mary Ella Hixon, what are we to do with you?!?
The 91-year-old former mayor just pleaded guilty to stealing $201,000 from River Falls, in southern Alabama.
The judge sentenced Mary to 10 years in prison. However, luckily for Mary, he suspended the sentence due to her age. She will instead be placed on probation for five years.
All going well, at age 96, Mary will be free to do whatever 96-year-old people do, sleep I guess…
Did the judge make the right decision? Should age play a role in the sentencing of white-collar criminals?
Did the judge do the right thing when he suspended Mary's sentence?
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
It’s that time again… Time to share your predictions for fraud in 2013
Each year, I ask readers of this blog to share their predictions regarding fraud in the following year.
If you have time, please visit the poll I created on LinkedIn.
I’ll share the results at the end of January.
Thanks for voting!
Paul McCormack
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
Minimizing Fraud Risk
This is a guest post from Nick Anderson with Forths Forensic Accountants, based in the UK.
Every company can suffer from fraud schemes. As a manager and founder, it is your duty to introduce practices that will minimize the risk.
The way you do business, the manner in which you handle sensitive information and the ethical code inside the organization will all affect the risk of fraud. Knowing how to interact with your employees and what kinds of fraud prevention experts to consult will be determining for the future of your business.
Hire a Forensic Accountant
A forensic accountant is one of the professionals that your company needs.
Some business owners believe that they are in no way vulnerable and that fraud schemes cannot unfold in their organizations. These beliefs are highly misguided. Being prepared for the worst is the only way to ensure the safety of your company’s sensitive data.
A forensic accountant will assess the security breach risk of the organization and establish the safest practices for your needs. Preventive practices are the only way to do serious damage control and to make sure that nothing bad is ever going to happen.
Do a Background Check on Employees
Even if you feel uneasy about doing background checks before hiring employees, you will have to get involved in such procedures.
Very often, information about a person’s professional past is publicly available. Call one of the candidate’s references or the previous employer to find out more about the individual’s work ethic.
Limit the Number of People Responsible for Company Finances
A large number of people having access to sensitive and financial information means that you will be increasing the risk of identity theft and fraud schemes occurring.
Only a few trusted individuals should be given the right to handle financial information. It is crucially important for you to be involved, as well. Do unexpected inspections and always control the information in the company’s financial books.
Computer Passwords and User IDs
Different levels of access to business information, high computer security and the usage of passwords and IDs are several other ways to protect sensitive data.
Computer security is still highly underestimated by many companies because they believe a hack attack will never occur. Invest in proper computer maintenance. Hiring a computer expert to be onsite throughout the workday is another great idea.
Each employee should have access solely to the files that are needed to do their work. Multiple levels of access and a strict hierarchy of information should be introduced from day one. Keep in mind that most of the securities breaches businesses suffer from happen inside the company itself. Limited access to information is the only sensible method of protection.
Educate Employees about Fraud Prevention
Educate employees about the risk of fraud and make sure everybody is instructed how to act in the case of fraud suspicion.
Often, fraud goes unnoticed because employees lack the training needed to detect its warning signs and to act properly. A fraud awareness training is a brief sessions that could potentially save you a lot of money in the future.
Even if you are fully prepared, fraud can occur at your company. Still, taking the right precaution measures will decrease that risk. You are the only individual responsible for the security and the growth of your business. Hire the right professionals, educate your employees and restrict the access to sensitive information. These are some of the main steps to implement in an attempt to keep fraud possibilities under control.