Organized crime has an “Easy Button” – White Collar Crime

“The Federal Bureau of Investigation on Friday estimated there are some 1.4 million gang members in the United States and they are turning to white-collar crimes as more lucrative enterprises.”, FBI: Gangs turning to white-collar crimes

Drug trafficking and prostitution certainly pay the bills, but gang members see the potential to make big money with white-collar crime so says the FBI in its 2011 National Gang Threat Assessment. I’ve written about organized crime before as it relates to the banking sector. In fact, very early on in my fraud career, I lead an investigation of identify theft involving an Asian gang based on the West Coast. To be honest, I was very impressed with the overall scheme. The gang routinely overcame the countermeasures that we deployed and over the course of 6 months, made many, many millions. As far as I know, they remain at large.

From my experience, the biggest threat posed by organized crime as it relates to white-collar crime is their efficiency. Either by threats of violence, a sense of loyalty, or sheer determination, organized crime is often far more efficient than the fraud departments they face. Unless the organized crime entity is targeted by law enforcement, fraud departments rarely see their “enemy”. In jungle warfare, fighting a faceless enemy that can strike with impunity exerts a tremendous psychological toll on soldiers. Clearly, we are not talking about life and death, but fraud investigators can become quite demoralized when tasked with defeating an attack by organized crime. In reality, you never really defeat organized crime, you temporarily slow down the frequency and severity of their attacks.

Whether you work for a company with less than 10 employees, or a multinational with 10,000 employees, there is much to learn from organized crime and their approach to fraud. Sure, the gangs have their fair share of politics and distractions in the form of law enforcement investigations, but when it comes to making money, organized crime makes every effort – violent or otherwise – to protect their cash flow.

Using violence to prevent fraud is not an option for businesses. However, can your company say that it has an organized response in place to prevent fraud? As we know, fraud has many forms. Your company doesn’t have to be fighting organized crime to apply lessons learned from their approach. Ask yourself if fraud prevention and investigation is a high priority in your organization? Does the company dedicate the resources needed to combat fraud – both employee and third-party? (Hint: what appears to be employee  related fraud, may actually be a “plant” by organized crime). If the fraud department recommends a change in policy or procedure, or an investment in technology to combat fraud, who listens?

The fact that the FBI believes that organized crime is focusing their efforts on white-collar crime may actually be a blessing in disguise. In order to improve their performance, a sports team often has to play against a superior opponent. In case you hadn’t already guessed, organized crime is the superior opponent. Will your company learn from the experience, or be subject to an embarrassing defeat that serves no purpose… well, almost no purpose. The gang will enjoy spending your company’s cash. And, they’ll probably be back for more…

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.


About Paul McCormack
I have over 20 years of experience in corporate fraud and intellectual theft prevention, detection and investigation. Unlike many fraud experts, I have both industry and professional services experience. To date, I have conducted over 800 interrogations of fraud suspects including numerous senior corporate executives. As a freelance writer, I have written over 1,000 articles on a broad range of topics. My areas of expertise include: • Asset Misappropriation • Big Data • Bribery, Corruption, and Collusion • Check, Wire, ACH, and Credit Card Fraud • Consumer Fraud • Corporate Security • Cybersecurity • Data privacy (Europe, Brazil, Russia, India, and China) • Drug Trafficking • Embezzlement • Employee Fraud • Executive Protection • Fintech • Financial Statement Fraud • FCPA • Healthcare fraud • Identity Theft • Intellectual Property Theft • Internal Audit • Interrogation Tactics • Loss Prevention • Mobile Fraud • Money Laundering • Operational Excellence • Organized Crime • Payments Fraud • PCI Compliance • Retail Fraud • Risk Management • Terrorism and Counterterrorism • UK Bribery Act • Workplace Violence

4 Responses to Organized crime has an “Easy Button” – White Collar Crime

  1. Edwin says:

    This has been one o the biggest stories over the last few weeks, and you post made for some good reading Paul. Although I think gangs have been involved with white collar crime for sometime From the Mafia families across America, to the e-mail fraudsters from African states, it has always been there. It’s like the FBI have only just turned on their reticular activating system, now they are looking other ways in which gangs are making money they are starting to see it.

  2. Thanks for taking the time to read and comment. I completely agree. It has always been there. May be the FBI is seeing more of a nexus with fraud and terrorism. Time will tell…

  3. Pingback: “Bloodless, white collar crime” « Fraud Happens

  4. Garry Naples CFE says:

    I agree with Edwin and Paul. The face of organized crime has changed significantly over the past couple of decades. The fall of the Soviet Union has caused gang activity in Russia and satellite countries, similarly in Africa and Asia. This is the new face of organized crime. These gangs fund drug activity by conducting these white collar schemes and resorting to identity theft as one method. Identity theft as a crime is also as old as dirt. Recall that the fugitives from the Students for a Democratic Society (SDS) were indicted on a False Identity statute, which was a precursor to the identity theft statutes that have cropped up since then. I dare say that some of these people are probably Linked-In members now.

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