Archive for November, 2005
Wed 30 November 05 · Filed under Fraud News Stories
For the second time in recent history, illegal stock trading has been tied to an employee of Quad/Graphics Inc. It is alleged that a securities broker had an employee steal copies of unpublished BusinessWeek issues, and used information from the “Inside Wall Street” column to make some stock trades.
Specifically, it is alleged that broker David Pajcin used BusinessWeek information to make 10 trades. Each of those 10 trades saw Pajcin selling his stocks the day before the magazine became available to the public.
Quad says that it has safeguards in place, both electronic and physical, to protect the copies of BusinessWeek before they hit the newsstands.
The last time Quad employees snagged advance copies of BusinessWeek, they got themselves prison sentences.
Story here.
Mon 28 November 05 · Filed under Fraud News Stories
Those who have been the victims of identity theft have the option of putting a fraud alert on their credit reports from the 3 credit bureaus. Is it worth the hassle?
In all honesty, a fraud alert on a credit report provides only a small amount of security. It is simply a statement that your identifying information has been compromised. Your phone number is attached to the fraud alert, and any business offering credit to you should call that number prior to the issuance of a new account.
The whole purpose of the fraud alert is to curb identity theft by preventing others from fraudulently receiving credit in a victim’s name. But the fraud alerts are only as good as the businesses paying attention to them. Companies offering credit are NOT legally obligated to act upon fraud alerts. Some lenders grant credit without investigating, and some even grant credit without ever pulling a full credit report.
So what do I recommend? If your identifying information has been compromised (i.e. your wallet has been stolen, your social security number was released, etc.) then I recommend putting the fraud alert on your credit bureaus.
Even though it appears that lenders are not doing a very good job of following through on fraud alerts, it is one layer of protection that I recommend utilizing. Above and beyond that, those who have been victims of identity theft need to be continuously and proactively monitoring their credit reports for suspicious activity.
Sun 27 November 05 · Filed under Fraud News Stories
Entrepreneur Magazine’s December issue includes a short article about click fraud. What is click fraud, you say?
Companies can advertise their wares via pay-per-click advertisements. These are usually very short, with a few key words and a link to the advertisers website. Using services such as Google, the companies pay each time someone clicks on one of their ads.
Many of the pay-per-click (PPC) services track the clicks, and can detect some level of fraudulent clicking. This includes multiple clicks from the same IP address or rapid, repetitive clicking. This type of clicking is generally done in an attempt to increase the charges to the advertiser or to increase the revenue of the website that posted the ad.
Read the article here.
More interesting info on click fraud is also found here on the CNET News.com site. They say that Google created a “fraud squad” to monitor potential click schemes.
Thu 24 November 05 · Filed under Entertainment
A federal lawsuit against match.com accuses the company of luring customers into subscription renewals via emails from fake suitors. It is alleged that employees of match.com sent emails to members and went on sham dates in order to get subscribers to extend their subscriptions.
A separate lawsuit accuses Yahoo of posting fake profiles to boost the number of apparent subscribers.
Who knew so many people were looking for love? Check this out:
- Match.com reports 15 million members worldwide.
- The first six months of 2005, date-seekers in the U.S spent $245.2 million on online personals and dating services.
Full article at Reuters.
Wed 23 November 05 · Filed under Uncategorized
Creative types use stock photography for advertising, websites, and print media. Today I was searching for additional stock photos for my website. I went to Getty Images, a favorite of mine, and was browsing their cd collections.
And wouldn’t you know….they have a cd by Digital Vision called FRAUD. Yes, the theme of the cd is fraud and is entitled Fraud. Oh my…..now we have stock photography devoted to my area of specialty!
This is how they describe the cd: “The black market, money laundering, breaking the law, forging signatures and credit card fraud — the dark side of the business underworld is captured in action.”
Tue 22 November 05 · Filed under Fraud Detection & Prevention
The second part of this fraud story involving Bielinski Brothers Builders Inc. touches on the more personal side of the fraud. The brothers were defrauded by their CEO, Robert Brownell, who was responsible for a total loss of between $10 million and $20 million.
The brothers had a gut feeling that something was wrong. They noticed that Brownell’s office door was closed more often. Other employees also signaled that there were problems with Brownell.
Brownell, an employee who was with the company for almost 10 years had betrayed their trust. They considered him to be more than just an employee; he was also a friend.
How do the owners begin to trust employees again? Can they afford not to? They still have a business to operate, and at that company’s size, it would be impossible not to have people in positions of trust. On the bright side, this situation has seemed to re-inspire the brothers and remind them why they’re in business.
Full text of the story here.
Sun 20 November 05 · Filed under Fraud Detection & Prevention
Those familiar with internal fraud (i.e. committed by your own employees) know it is expensive, particularly when it involves executives. The executives have more access to information and assets, and that leads to bigger frauds.
Bielinski Brothers, a large builder of homes in southeastern Wisconsin, apparently didn’t suspect one of their own. Robert Brownell worked for the company for 10 years, most recently as CEO with a $175,000 annual salary plus perks.
It is known that Brownell conspired with Robert Mann of Mann Brothers Construction to exploit the billing process. Also involved was a partner at the law firm of Michael, Best & Friedrich, named Michael Gral. Currently, ten players in the fraud have been charged federally. A really cool graphic illustrates how the players were connected to Brownell.
The known losses to Bielinski Brothers are at least $10 million, and some suspect the actual losses could be as much as $20 million. The money stolen by Brownell has not been found, and none of the obvious vices (drugs, gambling, infidelity) have been identified.
Full text of the story from the Milwaukee Journal Sentinel is found here.
Sat 19 November 05 · Filed under Fraud News Stories
The Association of Certified Fraud Examiners is providing free anti- fraud training in Louisiana, following Hurricane Katrina.
“Conducting Internal Investigations” is being presented by the ACFE to State employees and higher education auditors of public or private universities. The training is particularly important for those who need to meet continuing education requirements.
Full press release here.
Thu 17 November 05 · Filed under Fraud News Stories
A survey released by Cybersource, a provider of electronic payment services, says that merchants will lose $2.8 billion to online fraud this year. Yikes!!! The threat is growing, but apparently companies aren’t doing much more in the way of personnel.
Full story here.
Sun 13 November 05 · Filed under Fraud Detection & Prevention, Writing & Blogging
Would you recognize the clues that your client has been ripped off by one of its employees? Or would management conduct business as usual, blindly trusting their employees?
Companies make the mistake of not actively searching for fraud. They tend to trust their employees and trust the procedures in place to safeguard company assets. It may be good business to trust employees and empower them to make real contributions to the growth of the company. However, it is not wise to turn a blind eye to signs that a trusted employee may be stealing.
How do companies protect themselves? First they must examine their financial statements and look for unusual variances and situations. Next, the detailed accounting records must be examined. Some signs of fraud are easy to spot, such as bank accounts that haven’t been reconciled for long periods of time. There are other signs, such as improperly recorded transactions, adjusting entries at the end of accounting periods, and computer activity at unusual hours.
Issues with incompetent managers may also be a sign of fraud. Managers with problems such as poor planning, poor delegation, inability to meet goals, or ignorance about the company’s business may be more likely to commit fraud. Override or disregard for controls and procedures are also a cause for concern.
Full article here.
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