Minimizing Fraud Risk

one dollarThis 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.

It’s that time again… Time to share your predictions for fraud in 2013

Gypsy looking at an eight ball to predict the futureEach 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

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?

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

Source: famliymwr

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

October is National Cyber Security Awareness Month, but you knew that already…

Source: Kurhan

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

 

Paul McCormack:

If you want to learn more about the “art” of interviewing fraud suspects, here is an interview that I gave on the subject. Let me know what you think…

Originally posted on CPE Link Blog:

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…

View original 498 more words

Sorry valued customer, an employee just stole your identity

Customer data theft

Source: Mel B

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!

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

Update: XM Radio Employee Sentenced to 15 Months

Photographer: Stephen McCormack

Photographer: Stephen McCormack

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

Intel engineer helps himself to $400 million

Photographer: Stephen McCormack

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

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