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.

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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?

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Blog of the week – www.fbi.gov/news/news_blog

It is very easy to forget that many law enforcement agencies, including the Federal Bureau of Investigation have a blog. The FBI’s blog is easy to navigate, regularly updated and includes information on a vast range of fraud types that fall within the FBI’s area of operation. It is certainly not aesthetically pleasing, but the format is consistent with the FBI’s persona.

The “news by subject” section is particularly helpful as it provides hyperlinks to topics such as organized crime and white-collar crime. I found the post “Ten Years Later:  The Enron Case” particularly intriguing. Many of the Enron trial exhibits and documents are available online. Personally, it looks fascinating, but I am little biased…


Do you want to learn more about what is happening in fraud today?  Click here

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.


“Bloodless, white collar crime”

“The son of a Philadelphia mob boss infamous for his violent reign was indicted today for a bloodless, white collar crime: a scheme to defraud a Texas financial firm out of $12 million.”

– abc news, ‘Little Nicky’ Scarfo’s Son Busted in Jersey

Within hours of finishing my post on organized crime and the “Easy Button”, I stumbled across this article involving ‘Little Nicky’. Allegedly, Little Nicky and his friends had plans to take over FirstPlus Financial Group, a publicly traded company, by replacing the board with representatives under their control, and using the company to purchase reportedly worthless companies created for the purpose. Prosecutors allege that the scheme cost FirstPlus $12 million.

The scheme unraveled as a result of a three-year investigation by the FBI. That gives you an idea of how difficult organized crime is to combat. If it takes the FBI – with all of their powers – three years to investigate and trigger indictments, the mob had a solid plan in place. There is no indication of how the plan ultimately fell apart, but for at least a short period, it appeared to work. Dismiss members of organized crime as being “dumb”, or unable to commit white collar crime at your peril.

Preparing for this type of attack is way beyond the scope of this post, but, I wanted to provide a specific example of organized crime and white collar crime. It can, and does happen…

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.


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.”

msnbc.com, 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.