Fraud News Update 11.22.16 – This week’s edition of the Fraud News Update features: Green Light – Yellow Light – Red Light (CEO goes night night), Dumbest Response To Theft (Ever?), Data Breaches (C-Suite ignorance is no excuse), Dream Works (The PO fraud) and Fraud Detection (Simple Strategies).
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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Green Light – Yellow Light – Red Light: CEO Goes Night Night
This sounds like a classic Dr. Seuss lyric but fortunately it’s not one of Ted Geisel’s literary masterpieces.
It’s cam scam: the sordid story of a Chicago Deputy Transportation Official, a consultant and the former CEO of Arizona based traffic enforcement company, Redflex.
Bribes for business and kickbacks… “pay to play” is the Chicago way. Here, the often used phrases “Statehouse to Bighouse” and “vote early and often” are common place.
The State of Illinois is one of the most corrupt states in the country and the litany of convicted state legislators, former Governors and City of Chicago Aldermen proves it. Case in point, Illinois actually had two former Governor’s in prison at the same time, a dubious honor not many other states can make.
What the cam scam players were thinking is beyond me. I mean, this is Chicago… where the FBI Field Office has the inside track on investigating political corruption. There’s no shortage of nefarious political behavior and true to form, this scam was also going on in other Midwest cities as well. For government agents, that’s called “job security” friends!
Oh sure, this episode of “Politicians Gone Wild” went on for a number of years before detection. But it ended badly, as it always does, and now all three cam scammers are vacationing at Club Fed! Go figure.
Dumbest Response To Theft, Ever?
Employee’s steal – customer’s can no longer pay cash!
Government officials can “spin” the payment issue however they want but penalizing customer’s, at the sake of not addressing the real employee theft issue, is definitely not the correct response.
This type of uninformed response puts the “LA” in LAME!
Those are our insights. What are yours?
Data Breaches: C Suite Ignorance Is No Excuse
At this point in our data breach existence, executive ignorance regarding the magnitude of organizational damage caused by data breaches is absolutely inexcusable. If you don’t know by now… and you’re a C Suite executive, you have a duty to know.
Apparently, however, many don’t as 64% of U.S. C-Suite respondents to a recent survey did not recognize that lost or stolen data would have a serious impact on their organization. To the 64%: Your business definitely is not fraud proof!
Given the number and magnitude of all the breaches that have taken place globally, and the incredible amount of press surrounding them, the fact that almost two-thirds of U.S. respondents surveyed didn’t understand the type of organizational impact a breach would have on their organization is hard to fathom at this point in the game.
Everybody Was Kung Fu Fighting – Those Kicks Were Fast As Lightning
DreamWorks Animation won their case but spent $3 million defending themselves before they could prove the “PO” fraud.
The plaintiff ultimately withdrew his civil lawsuit but was later convicted on federal wire fraud charges and is likely going to prison…
DreamWorks is out the BIG bucks plus their time, energy and effort. He’s going to the BIG house and will be without personal liberties. Not sure who the bigger loser is here. This much is certain however, with DreamWorks $3 mil in their pockets, the only “clear” winners here are the lawyers!
Fraud Detection – Strategies
My experience tells me that nothing is ever as simple as it sounds when trying to implement enterprise wide fraud risk management programs.
It’s hard enough getting five people to agree to go to lunch on any given day, much less agree to a time and location. Likewise, when it comes to risk mitigation, everyone has an opinion and getting senior leadership and executive consensus is often a challenging and uphill battle.
This piece, in Director of Finance online, advocates simple fraud detection strategies. As we know it’s never simple…but they’re on to something with their suggestions.
For more information on how we can help your businesses prevent enterprise fraud risk, conduct fraud risk assessments, provide fraud training, develop fraud content, reduce major fraud losses and improve operational ROI, contact us to schedule an initial consultation. No obligations…just unique insights from an industry leader.