My local newspaper had an article about a financial advisor who committed fraud and was sentenced to 28 months in a Federal prison. The actual charges involved wire fraud and money laundering. The advisor convinced the victims to give him access to their bank accounts. Over a period of time he moved about $1.5 million to his own use. The victims were highly paid professionals with a very busy life. They turned over control of their accounts to a financial …
Blog Posts
I planned to use the end of 2018 to publish a collection of items but life got in the way. So now these small posts will be a bridge from 2018 and into 2019. None of these are enough for a post by themselves but they are all related. Think of this as a buffet of fraud and risk of all sizes. Lots of fraud out there and the elderly lose the most when they are victims. The Federal Trade …
Americans are very generous. When a hurricane, tornado, flood or other disaster occurs wallets, purses and checkbooks are opened to help fund humanitarian needs. Earlier this year The Giving Institute issued its report: Giving USA 2018: The Annual Report on Philanthropy for the Year 2017. (https://givingusa.org/giving-usa-2018-americans-gave-410-02-billion-to-charity-in-2017-crossing-the-400-billion-mark-for-the-first-time/). It showed that Americans donated over $410 billion in 2017 to charities and nonprofit organizations. That amount was 5.2% more than the previous year. As I write this two national lotteries have a combined …
As the owner of a business or non-profit you already know how busy your life is and how difficult it can be to handle the “must do’s” let alone the “should do’s”. When someone mentions “internal controls” for the company you can feel guilty. You know that it is good for you and the company yet there is no more time in the day. Yet without reasonable internal controls the firm is susceptible to losses, theft and fraud. There are …
If you have been a reader of this blog for any time you know about the Fraud Triangle….Pressure, Opportunity and Rationalization. If the scammer is under financial pressure and sees an opportunity to relieve that pressure (and can rationalize doing so) the likelihood of fraud to occur is much greater. There a couple more components that, if present in your life, may make you more likely to be a victim of fraud. They are Greed and Envy. Here is an …
Jeri owned a small rapidly growing manufacturing firm in the Midwest. She had recently landed a contract to supply a major retailer with a newly developed product. Production was beginning to ramp up, materials were being sourced and sub-contractors were being brought onboard. Everything seemed to be working like a well-oiled machine until Jeri’s controller, Scott, stopped by the office. Scott had been with the company for several years making a number of improvements in financial operations and reporting. One …
As a member of the Association of Certified Fraud Examiners I receive a magazine called, appropriately, Fraud Magazine. In the most recent issue there was an article* about the latest identity theft crimes. I read about W-2 spear phishing that gives a criminal access to someone’s W-2 and other personally identifiable information (PII). The criminal then uses the information to file a tax return in the victim’s name for a refund. Another very recent ploy is using that same PII …
Being defrauded by someone is bad enough but at least you can dream of retribution. What if you lost money to a fraudster and discovered that the person never existed! That is one of the fastest growing property crimes and it is called Synthetic Identity fraud. In fact some studies have shown that over 80% of credit card fraud now is due to false identities. What makes this new fraud so frustrating is that the identity is part real and …
Sometimes it helps to look at a situation, such as a fraud scheme, in a different way. When the scheme is explained this way it seems ridiculous that investors, or auditors, or regulators didn’t see what was happening. Paul Krugman is an economist who won the Nobel Prize for Economics in 2008 and has been a professor at Princeton and MIT. He has written dozens of books and countless columns for the New York Times and for business magazines. In …
Do you remember Enron? Executives of this Texas energy company (formed in 1985) decided that providing electricity and natural gas to homes and businesses was not exciting enough. In the 1990’s management began trading natural gas and electricity contracts to hedge the cost of producing power. Their business model soon transitioned into offering trading services to customers and third parties and their reported trading profits became more meaningful to the company than their original power business. Enron became a growth …