Fraud News Update 01.12.17 – This week’s edition features: VW Arrests (U.S. Attorney bringing the heat!), Zombie Whistleblowers (suing the federal government), Shark Attack (the legal profession isn’t immune), Power Grid (vulnerabilities), Counterfeiting Wars (ugg) and The Blips (stolen PII).
As leaders in the fraud consulting arena, read on for more topical information and our insights, observations and unique commentary on some of the weekly fraud news stories.
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Love Bug Arrests
If it’s true that the “early bird gets the worm” then likewise the first people arrested in a high-profile criminal case… get “the plea deal!”
Aside from the civil fines, penalties, regulatory actions and recalls faced by the automaker in the diesel emissions testing scandal previously made public, that’s exactly what we have here now, a criminal case.
Last fall, at least one former VW employee plead guilty to charges associated with the emissions fabrication and is already cooperating with federal authorities. Several other former VW employees are believed to be cooperating with the government in exchange for “immunity from prosecution” deals.
However, as the U.S. Attorney’s Office starts working up the management food chain, looking for bigger fish, the deals are going to be few and far between. Someone’s gonna be “breakin rocks in Leavenworth” for this deal!
Think high level VW employees overseas are now avoiding industry events in the U.S.?
Everyone knows what a whistleblower is.
With the enactment of the Dodd-Frank Act came the foundation for the federal whistleblower program and compensation (payday) structure associated with it.
Clearly, if you came forth with a whistleblower allegation after Dodd-Frank was passed into law, you might be eligible for an award under the provisions of the Act.
However, logically speaking, if you blew the whistle before Dodd-Frank you wouldn’t be retroactively eligible for a whistleblower award. I.e. the provisions of the Act weren’t even signed into law yet. That makes complete sense. Or does it?!
Now, we have zombie whistleblowers: people who came forward with a whistleblower complaint BEFORE Dodd-Frank was passed and are now seeking a payday under the provisions of the ACT (which came about after they came forward with their information).
In the words of Mr. Spock, “I find that highly illogical, Captain!”
In other words, zombie whistleblowers think that the federal government should still pay for their information no matter when it was provided. Of course, the federal government’s zombie slayers are rightfully denying claims when the information predated the Act’s compensation language.
The result? Disgruntled zombie whistleblowers are dragging their carcasses into court and suing the federal government for their failure to pay. Some people will try anything for money, no matter how ridiculous it may seem. I guess that also includes some lawyers.
Phishing for Sharks
Speaking of the legal profession, there’s an old joke.
Q: Why don’t sharks eat lawyers?
A: Professional courtesy!
This story, and many others like it, which surfaced in 2016, proves that there are quite a few bad actors around the globe who have absolutely no qualms with taking on lawyers or law firms , either by hack or attack.
The recent attack against the DNC during this years elections highlighted the fact that neither politicians nor lawyers are immune from nefarious digital activity.
Critical infrastructure protection and security are imperative and another major 2016 theme was that things connected to the Internet really aren’t (secure).
If you’re a fan of turning on the lights in your house, electricity or anything else that runs off it, the Power Grid study and vulnerability discussion might be of interest.
Can you say “cyberwarfare target? I knew you could.”
Ugg’s Counterfeiting War
Counterfeiting is a classic form of fraud. Simply put, you have an intentional [product] misrepresentation, which is material and relied upon by the consumer to their financial disadvantage.
Oftentimes, traditional forms of financial crime fighting take the form of enforcement first and education second. However, in the seedy, underground, global world of product counterfeiting, an enforcement first strategy is often ineffective as new counterfeiting sites pop up like wildflowers once one is shut down.
Likewise, other forms of financial crime, with similar global challenges (Nigerian 419 scams come to mind) required an entire paradigm shift in order to effectively deal with them. Traditional investigation strategies weren’t going to stop the scourge of letters, faxes and e-mails being sent to unsuspecting consumers by bad actors overseas.
Hence, the need to do something different: move to more of an education first (crime prevention) strategy to try to stop victimization before it happens.
As the old analogy goes, “Well, if the boot fits…” and for Ugg it apparently does. They’ve moved to a social media based customer education and awareness program including a dedicated counterfeit education page on the company’s website with a suspicious activity and authorized retailer URL checker.
Educated consumers, interacting with the company’s website and social media, are also feeding information back to the company with an added benefit: enhanced legal and enforcement actions around the world.
Fraudulent times call for innovative measures!
The Blips: Stolen PII From Financial Transactions
Cyber threats continue to be on the 2017 radar screen with no signs of slowing down any time soon. In fact, the trend from these two stories seems to have the arrow pointing upward.
There’s an increase in cyber related intrusions and the theft of personally identifiable information (PII) from consumer’s financial transactions which can then be used to commit massive amounts of fraud around the globe.
Anyone who tries to tell you that there isn’t a direct correlation between global cyberattacks and fraud is sadly misinformed.
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