IIA – ACFE Fraud Seminar November 13, 2013 Cutting Edge Tips in Today’s World of Fraud...
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IIA – ACFE Fraud Seminar November 13, 2013 Cutting Edge Tips in Today’s World of Fraud Christopher J. Rosetti CPA, CFE, CFF, HSG Community Focus | Statewide Impact | National Networ
IIA – ACFE Fraud Seminar November 13, 2013 Cutting Edge Tips in Today’s World of Fraud Christopher J. Rosetti CPA, CFE, CFF, HSG Community Focus | Statewide
IIA ACFE Fraud Seminar November 13, 2013 Cutting Edge Tips in
Todays World of Fraud Christopher J. Rosetti CPA, CFE, CFF, HSG
Community Focus | Statewide Impact | National Network
9 Where Else FBI Academy Morocco, Puerto Rice, Greece, etc.
Gracie Mansion CNBC
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Frank Knows Fraud
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So Does Bruce
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12 Fraud and People Fraud is perpetrated by people! Fraud is
oftentimes limited by ones imagination There is no right way or
wrong way to Perpetrate a fraud Technology assists the fraudster
Technology assists the investigator
WHY DO YOU HAVE TO BE ACTIVELY AWARE OF FRAUD? Fraudsters and
criminals are doing more information and knowledge sharing than the
anti-fraud professionals that are tasked with finding them. You can
not assume that because you were a DOS expert in the 90s that your
computer skills are still sufficient to catch a fraudster let alone
identify their schemes. Fraud comes in many different shapes,
sizes, and colors. If you are not actively aware, you may be
sitting right next to fraud and not even know it.
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23 IRS E-filing Started in the 1980s 78,000 returns filed the
first year Went nationwide in 1990 Decreased filing errors
Decreased IRS postage costs Increased audit efficiency Increased
opportunity for fraud
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24 Metadata Hidden information embedded in computer files but
not generally visible in the ordinary display or printing of the
document Digital DNA Keeps track of changes to documents, including
Word, Excel, Power Point Reveals information about the creation,
alteration and transmission of a document Types of Metadata (MAC,
Document and Digital) Identifies times and dates of changes Deleted
text
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25 BST Valuation and itigation AdvisorsBST Valuation and
itigation Advisors Examples of Metadata Stored in Documents Your
name Your companys name The name of your computer Names of previous
authors Document revisions Hidden text of cells Comments
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Properties
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27 BST Valuation & Litigation AdvisorsBST Valuation &
Litigation Advisors Document Illustration Metadata regarding the
last 10 users of a document is captured and stored and is valuable
when an individual denies ever seeing a particular smoking gun
document.
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True Story Metadata reveals Merck edited out negative test
results from Vioxx drug study during 2007.
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29 Email Example Plaintiff claimed she was discharged in
retaliation for making a sexual harassment complaint. Defendant
produced a memo, dated before her complaint that listed her on a
list of employees to be let go in a planned seasonal layoff She
contested the authenticity of the email with the memo. The memos
Metadata confirmed its date of creation, prior to her
complaint.
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30 Another Email Example Terminated employee fabricated an
email to suggest that a manager with whom she had a romantic
relationship had made the decision to terminate her. Metadata
exposed the terminated employee as the author of the document.
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It's risky, of course---if we're caught, it could mean many
hours of community service.
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32 Williams v. Sprint/United Management Co. Terminated
employees brought a class action suit Sought Excel spreadsheets
with all Metadata intact, including embedded formulae Court Ruled
the Metadata was discoverable
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Extra Credit
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34 What to Know About NFP Frauds NFP are more susceptible to
fraud than other organizations 85% of all frauds involve asset
misappropriation Cash is the most common asset misappropriated Cash
is primarily misappropriated via: Purchasing Fraud Schemes Expense
reimbursement schemes
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Trend Setter
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ACFE 2012 Report to the Nations Asset misappropriation schemes
Most common87% of cases Least costlymedian loss of $120,000
Financial statement frauds Least common8% of cases Most
costlymedian misstatement of $1 million Corruption schemes Just
over one-third of cases Median loss of $250,000
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37 What They Do Create Shell Companies Create Fictitious
Invoices Create Fictitious Websites Create Fake Telephone numbers
Create Virtual Operators Create Fictitious Resumes
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38 What to do? Listen to me! QuickBooks Edit function Review
cancelled checks Review credit card statements Require credit card
statements as documentation
42 What They Offer Receipts on authentic thermal paper!!! A
toll Free hotel telephone number confirming your checked in at the
hotel Rescue calls to get you out of a meeting Virtual doctors
offices Fake travel documents and confirmations Virtual employment
Shopping service
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43 Internet Alibi
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44 Another Web Sites Services Have alibis validated by live
operators Choose between local or out of town alibis Call in sick
service Escape a date Printable doctors services Virtual doctors
services Virtual travel agency And prepare just about anything you
can imagine!!!
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45 Advertisements Politicians have spin doctors, celebrities
have publicists, corporations have lawyers and public relations
departments, investment banks have analysts, now regular people
have ALIBI NETWORK. Visit our E-Store to help us protect your
interests.E-Store
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46 More Services Call in Sick Service. Call In Sick Service
provides clients with a cast-iron sickness alibis. We would call a
place of your work for you and pretend to be your doctor /dentist
or a spouse, etc. and tell your boss that you cant come in. So you
will not have to fake it on the phone! This is even useful for our
clients who are self-employed freelancers, business owners, etc.
Escape-a-Date Service. You were looking forward to a perfect date
when she suddenly told you she was married. Our service allows you
to set-up a save me from my date phone call at a predetermined
time. We will call you at the time you wish and if married dating
is not something you are into, we will set the tone for an
immediate getaway.
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47 These People Mean Business Your Problems: 1.You dont have
the resources (money, people, time) 2.You believe your auditors are
the Special Forces of Forensic Accounting 3.You are very trusting
4.You believe that fraud could never occur because you have
internal controls 5.These people are very convincing and/or
confrontational 6.The Board is not familiar with their fiduciary
responsibilities or the possibility of fraud 7.You dont have the
big guns
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Shell Companies
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Create Fake Website
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50 Creating Fake Websites Choose a domain name (e.g.,
IAMAFRAUDSTER) Choose a web host (e.g., Go Daddy) Build your
website Get more detailed info on www.ehow.com
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FAKE WEBSITES DETECTION Use Whois lookups to determine the
owner and when the website came online. Compare the services,
invoices, and other pertinent information to the go live date. Look
to see if there is contact page that lists a physical address
and/or phone number, or corporate offices. Use search engines to
identify the location of the office to see if it is mail drop, post
office box or registrars office. Use www.archive.org to view the
website history of the site to determine its length of use and
appearance over time.www.archive.org
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PURCHASE A LOCAL NUMBER
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EXPENSE ACCOUNT FRAUD The Criminal Mind 1. I want or need extra
money and I want to use my expense account to do it, I will need to
know, Where I can get fake receipts How to make fake receipts What
are the best expenses to fake
66 Fake Airline Confirmation Dear Mr. Client, Ticket
Information Passenger(s): First Name, Last Name *AIRLINE NAME*
record locator: 35GKTKT Ticket type requested: electronic
(e-ticket) Our record locator: AJVAPVHQ9825T72NA Airline ticket
number(s): 6413ADVCAD6SV54 Tuesday, XXXXX, 2006 *AIRLINE NAME*
Flight #####. LOS-ANGELES INTERNATIONAL AIRPORT (LAX) to BUSH
INTERCONCTINENTAL (IAH) Departure (LAX): Date, 4:10 PM CDT
(evening) Arrival (IAH): Date, 9:27 PM CDT (evening) Class: COACH
Seat assignment: XX
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67 Fake Hotel Confirmation Dear Mr. Client, This is to confirm
your hotel stay at the "Hotel Name" in New York, N.Y. from Date
through Date. Guest Information Name: First Name, Last Name
Check-in: Date, 3:30 p.m. Check-out: Date, 10:00 a.m. Room type:
single Confirmation id: 3#####59######25F Rate $$$$$/night + tax
based on a discount rate for (seminar participants, etc.) Hotel
Information Name: "The Hotel Name" Address: XXXXXXXXXXX, New York,
N.Y. ##### Phone: ###-###-####
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68 Fake Rental Car Confirmation *RENTAL COMPANY* Your Itinerary
Number: 644-VPWVH687-AD654 Car Type: Economy (Unlimited Mileage)
Pick-Up Date: January 8, 2007 - 7:00 AM Drop-Off Date: January 9,
2007 - 7:00 AM Pick-Up Location: Chicago - Ohare Intl (Ord)
Drop-Off Location: Chicago - Ohare Intl (Ord) Driver: First name,
Last Name Confirmation #*:PAVHAVH6549DVCD Confirmation Number is
assigned by the rental car company that booked your reservation and
should be your primary reference number when contacting the rental
car company on all issues related to your rental car including
pick- up and drop-off. Summary Of Charges Daily Rate (1 x $68.99):
$68.99 Subtotal:$68.99 Taxes and Fees:$15.17 Estimated Total
Charges:$84.16
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Slide 71
HIRING/RESUME FRAUD, The Criminal Mind 1. I need to conceal my
background or my ulterior motive as to why I am seeking employment,
My criminal record is a red flag, I want to conceal my previous
terminations of wrongdoing, I need to disguise my actual past
employment, 2. I may need a corroborating website designed, 3. I
need fake references who will pass a background screening process.
4. I need fake diplomas, transcripts, and other related
documents.
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PURCHASE A LOCAL NUMBER
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Slide 74
Slide 75
Fraud Does not Discriminate
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Slide 77
CREATING FAKE IDENTITIES TO PERFECT CRIMES 1. FakeID.cc 2. 21
Overnight 3. You Finish It 4. ID-Blog 5. Novelty ID Cards 6. Fake
ID 7. ID Chief 8. Fake 21 9. Fake ID Master 10. Real Fake ID
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DIPLOMAS & TRANSCRIPTS
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79 Employment Alibi
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80 BST Valuation & LivisorsBST Valuation & Livisors
Internet Dr.
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81 Paybacks and Alibis
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HIRING/RESUME FRAUD DETECTION HR is the first line of defense.
HR professionals and hiring managers should be alert to references
giving what appear to be canned responses. Ask for an a fax number
to send a confirmation. Ask for an email address to send a
confirmation or keep in case there is additional follow-up
required. Ask for a mailing address for your records. In most
instances the above mentioned questions will derail a paid
reference service and they will be unable to provide any of the
additional information and this should be considered a huge red
flag. Contact Universities directly to confirm degrees. Diplomas
are unfortunately no longer reliable proof.
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More Fraud
Slide 85
SICK TIME, DISABILITY, INJURY FRAUD EASY! Check to see if the
doctor is listed locally. Ask the employee for an address of the
doctor or to write it down on the excuse. Employee delays in
bringing in documents (could be waiting to have them delivered).
Buy available fake excuse packets and distribute to HR and use as a
comparison.
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85 Ramifications False job history one advertisement stated
they would provide them with false business cards, work phone, work
email and a personal secretary to the extent you are embarrassed
about being unemployed. Excuses for being absent, lost productivity
Promote purchasing fraud Confirmation of fictitious
receivables
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86 Ramifications Taxes, charitable contributions Insurance
claims Entertainment expenses (Ragus) Inflate business expenses for
tax purposes Support for divorce payments Expense reimbursement for
trips Rental Property deductions
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87 Edit News Websites
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88 False Publicity
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89 Easily Make Your Own Unique CNN
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90 Who Am I and Why Am I Relevant?
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91 BST Valuation & Ltigation AdvisorsBST Valuation &
Ltigation Advisors What did he do?
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92 Say it Isnt So?
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93 Ramifications Allows us to create websites for companies
that dont exist Allows us to create websites for products that dont
exist Allows us to facilitate purchasing fraud Allows us to
facilitate fictitious sales and A/R schemes Allows us to falsely
promote ourselves