Ponzi schemes have been with us since time began. They did not earn that name until Charles Ponzi decided that defrauding people was easier than working for a living. In January 1920 he set up company that offered to double a customer’s money in 90 days. As with all Ponzi schemes the early “investors” were paid their incredibly high returns through the “investments” of later customers. In the meantime Ponzi used the principal to fund his high-flying lifestyle. These schemes …
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Owners and managers of small businesses and non-profits never have enough time to get everything done. Something always gets put on the back burner and over time others in the organization begin to realize that the owner never checks on process A or inventories of X. That realization may be the last part of the Fraud Triangle falling into place. Recall that the Fraud Triangle (https://raiderfraudconsulting.com/lost-in-the-fraud-triangle/) identifies the components needed to make a fraudulent crime likely to occur. Pressure, opportunity …
Imagine being the executive director of a Not for Profit Organization (NPO) and reporting to your board that $75,000 has been lost due to fraud. That it is the median loss for an NPO in a 2018 report from the Association of Certified Fraud Examiners. It is $90,000 if the NPO is focused on a religious, charitable or social services mission. The board will not be happy since the loss means fewer funds available to carry out your mission. If …
I may be too cautious (or maybe suspicious) but I see a lot of risk in the practice of crowdfunding. For someone intent on scamming people it seems to be the ideal place to practice the art of theft. I define crowdfunding as soliciting funds from others to fund a project or charitable cause using a website and often providing status reports and updates on the project or cause. Sometimes this is also known as crowdsourcing but that term also …
Many of the big technology firms such as Google and Facebook have been accused of misusing private data for their own benefit. A recent Wall Street Journal article described something that Google Maps is doing that benefits them financially, gives a platform to scammers and leaves users of Maps vulnerable to fraud and worse. When a person uses Google Maps it can show businesses or other sites nearby. Searching for a type of business nearby always results in a list …
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 …
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 …