“Skip class and collect the cash”

As a student trying to hold down a job and go to school can be very tough.  I find it terrible that people can apply for loans and appear to go to school, but really just collect the money.  In an article titled, “Skip class and collect the cash,” writer and fellow CFE, Sarah O’Colmain, investigates a world of fraudsters that deprive deserving students of much needed loans to go to school. 

A large fraud conspiracy was uncovered at the University of Phoenix in 2009.  An employee noticed that 12 students shared the same apartment complex address back in California and several even shared an apartment address.  The school decided that the situation needed to be investigated and took the case to the feds.  The US Postal Inspection Service and the U.S. Department of Education Office of the Inspector General both begin investigating the suspicious case.  In July 2013, the case was presented in federal court and charges of conspiracy to commit mail fraud, mail fraud and aggravated identity theft were brought against the defendants.   After a few days the defendants were found guilty.  The other conspirators who had not been charged yet rushed to find a plea deal.   

Although not talked about much, FSA fraud is very prevalent and is continuously growing popular.  As many as 34,000 individuals committed student financial aid fraud in 2012.  The judicial system is fighting a losing battle because the cases are hard to find and even harder to prosecute (hard to prove intent).  I find it very upsetting that people deprive other individuals of the right to go to college because they see it as an easy way to get money.  Many individuals in this world are trying to better themselves by going to school and now they may not have that possibility because another person is claiming money they have no right too.  These fraudsters are so smart, they need to put the time and energy they use to commit fraud into finding a job. 

 

Retrieved from:

Fraud Magazine: “Skip class and collect the cash” by Sarah O’Colmain

http://www.fraud-magazine.com/article.aspx?id=4294982419

The Invisible

According to Bruce G. Dubinsky and Tiffany Gdowik, it is not what is on the paper that is so important, but it is what is not on it during a fraud investigation.  Throughout school I have been taught to gather financial statements, review them and come to a conclusion.  The authors do not entirely agree with this approach, ” While that approach will detect the simplest of frauds, it won’t detect the type of complex financial frauds that are increasingly making headline news” (Dubinsky, Gdowik 2014).  They use the example of Lehman Brothers “financial gymnastics”  in 2008.  Lehman used a repurchase agreement to paint a rosy picture, when all was not okay.  Investigators did not discover what was wrong by looking at the financial statements, but rather tried to understand what the company was going through and what financial perils it was being put through.  Lehman “used the chameleon approach: make something that’s really one thing look like something else”.  They made repos look like sales of financial product inventory.  Understanding that Lehman had a strong motivation to reduce its leverage, investigators used the basic fraud triangle to help during the case.  

I think the authors take an interesting approach to investigations.  When first starting into the fraud industry, we are taught the basics.  We are taught the steps and what to look for on the financials.  However, we are not always taught what not to look for, which can be just as important.  After reading the article, I think it becomes apparent that understanding the “brain” of the business is essential.  An investigator must understand why before they can know what they are possibly looking for because many times they are looking for the invisible.  

The art of illusion by Bruce. G Dubinsky and Tiffany Gdowik in FRAUD Magazine

http://www.fraud-magazine.com/article.aspx?id=4294979549

Fraud at Religious Institutions

  Fraud can happen anywhere and many people do not realize that until it is too late.  Fraud can happen at your school, local restaurant, city hall or even your church.  In FRAUD Magazine, issue 29, a large article written by Herbert Snyder and Nancy Emerson is devoted to the topic of fraud in what many consider sacred organizations.  Many church’s have funds set aside to help those in need and don’t ask questions when a person comes asking for money.  Thousands of church’s have been duped out of thousands of dollars by people claiming to be in need.  However, it is not just outsiders that church’s need to be weary of, many times fraud is committed by trusted members of the organization.  For instance, Bernie Madoff was a member of many prominent Jewish religious organizations.  He used his memberships to gain access to prominent members of society and to make a “deal” with them.  

  The article in FRAUD Magazine than ask’s how we strike a balance between charity and good stewardship?  Organizations cannot let themselves be taken advantage of, but they don’t want to question everyone who comes through the door either.  The article recommends that church’s be more aware of the warning signs of fraud/scams.  Investigations also need to be done into large third party organizations to make sure the money is going where they claim.  Interestingly enough,   non denominational church’s are more at risk for fraud from external organizations than others because they do not have the infrastructure set up to weed out the scams.  Many times they are new and short staffed without the necessary resources.  

There are actually organizations that will do the weeding out process for a religious organization.  There are charity evaluators who will review the third parties and rate them.  One major hinderance to church’s is that they do not file charges against the criminal.  They do not want to suffer the embarrassment in front of the community.  Church’s need to realize they have a responsibility to the community to report the crime, otherwise the criminal could go to other local religious organizations and scam them.  

I think it is the lowest of low to steal from an organization that is trying to help the community.  That money could be going to people who really need it and instead is going to someone else.  Church’s need to be more cautious of giving money out though, the article suggested having the church pay the alleged bill directly rather than giving the money to the person. I think this is a good way to prevent/deter fraud from occurring.  

Refund Fraud

   Before beginning this story, readers need to understand my parents.  My parents had children when they were older and were raised in a different generation than most of my friends parents.  My parents do not like technology and I have had to set up their email accounts within the past few years.  They having to remember a password is ridiculous and don’t get me started about “space book” aka Facebook to normal people.  But to their credit, they are very careful with their identity.  They shred anything and everything that comes in the mail with their name on it.  I have been the recipient of many long talks because I tend to throw everything away.  My mom also has a card specifically for online purchases that has a really low limit.  She does not want anyone to get ahold of the number and go crazy at her expense.  

   Imagine our families surprise, when my parents went to file their taxes and could not.  Why not, you ask?  Because someone already filed their tax return, as least as far as the government was concerned.  My Dad’s social security had been stolen and my parents were flabbergasted.  Immediately, my mom went in to protection mode and made sure their accounts and credit cards were secure.  In the course of trying to figure out what to do, my mother talked to a local CPA who has had the same thing happen to her for the past two years.  One source that the government shut down was stealing client information from a hospital in Florida that was lack with their computer security.  To protect herself this year, she situated her finances so that she will owe the government instead of receiving a refund.  She hopes this will prevent the fraudsters from stealing her identity again.  Meantime, my parents are trying to fix the mess that the fraudsters created.  The government has been less then helpful during this entire process.  My mom is given one number, calls them, is put on hold for an hour and then told she has contacted the wrong number.  I can’t tell you how many times my mom has been given the wrong information, but I know the last time she left a rather informative message for the entity.  Watching my parents go through this terrifies me.  I throw away important information all the time and I know now this will come back to bite me in the butt.  What is the most terrifying is how their are so few resources set up to help people when this happens to them.  The government is the one who accepted the false tax return, but they have done very little to help my parents correct the mistake.  

Cat and Mouse

  Target is just one of many stores that has been hacked and lost extensive client information.  Years earlier, T.J. Max was hacked due to outdated and insufficient technology.  Although there technology was legal, it was antiquated and did not provide sufficent protection to customer information.  

   A few months ago millions of Americans information was stolen, when hackers infiltrated Targets computer system and cleaned it out.  According to NBC News,  this was the most extensive data hack in corporate history.  Experts say the best way to prevent this from happening again is for companies to use EMV, it stores data on a chip instead of a strip.  Australia was sited as an example because their fraud cases have drastically decreased after implementing a encrypted chip.  Stronger government standards are expected too because right now there are none, companies set their own payment security.  

   Retailers are getting better at protecting client information, contrary to what many may think after the Target scandal.  As companies get wiser, hackers become more inventive.  The main issue seems to be that companies are too cheap to update their technology security.  I don’t blame them, it seems like by the time you buy a new phone it is already out of date.  They need a guarantee that what they are investing in, will at least last a few years.  

Baby Bodies

Early life is hard to remember as one gets older.  Memories become blurry and gray.  It’s almost like another person lived in our baby bodies and our adult self took over later in life.  I have very few memories from when I was really young.  The clearest memory I have from my early years occurred when I was around three.  My mom was bringing up our clean laundry from the basement.  I wanted her attention for some trivial reason and she said she needed to set the laundry down on the table first.  Granted, our dining room was about 5 feet from the top of the stairs so it probably took her about 2 minutes from the time she picked up the laundry downstairs until she set it down upstairs, but I was not pleased.  I am the baby of the family and was used to getting my way.  My mom set the laundry basket down on our wood dining room table (with the awful green carpeting) and preceded to look out our big bay window (aka ignore me. or at least that’s what I thought).  Instead of waiting quietly for a minute for her to catch her breath I decided I need attention immediately.  What’s the logical response, no I didn’t scream, I bit her.  Specifically, I bit her on the thigh (ok not that hard).  She was so shocked she did not know what to do.  She just yelled from shock and looked down at me in amazement (and not the good kind of amazement).  I was just happy that she was FINALLY paying attention to me and I thought I had met my goal.  But little did I know what she planned for my punishment…a spanking.

Now my parents never spanked my brother or I.  The fact that I, as the “golden child”, received the first spanking was quite the household event.  I don’t remember much about the actual spanking, I think I blocked out the pain and embarrassment, but I do know I never bit anybody again.