Fraud News Update 12.18.14

Fraud News

12.18.14 – This week’s edition of the Fraud News Update features: The Feel Good Story of the Year (Police Officer’s Kind Gesture Goes Viral), Rotten Tomatoes (Fruit? Vegetable? Or Fraud?), Career Cons (Employee’s Aren’t Always Who You Think They Are), Mob Movie Fraud (Big Surprise), Fraud (Go Big or Go Home) and Benford’s Law (Demystified).

As leaders in the fraud consulting arena, read on for more topical information and our insights, observations and unique commentary on the weekly fraud news. Like our content? Feel free to share Fraud News Updates with your network or colleagues.

The Feel Good Story of the Year?

Last week, I tweeted (Botched “Egg Caper” may be feel good story of the year during time when bashing police is the standard du jour!) Here’s a link to the news story that motivated me to comment.

Freedom of Speech

The society we live in is a complex place with complex problems and big challenges. No one’s perfect and everyone make’s mistakes.

When we disagree with something, we have a right to voice our opinion, freedom of speech is what makes our country such a great place to live.

But with freedom of speech comes the responsibility to balance both sides of an issue. That doesn’t always happen. Media outlets often tell stories in a manner that sensationalizes the issue in what can only be described as an attempt to hype their ratings.

On top of that, people involved in these stories often have a “hidden agenda” which may have nothing to do with the story itself. Again, as reasonable people living in a free society we have to balance all these comments and agendas against facts.

Tough stories need to be told, no mistake about it. And when people die in interactions with law enforcement those are tough stories. But again, in doing so comes responsibility to paint both sides of the picture equally so that we can get to the bottom of the issue with facts, not speculation.

Recently, the result of the tough stories being told is a “bash law enforcement” sentiment as police are the public facing entity most people want to attach their anger to. It’s not right or wrong, it simply is what it is.

Grandmother’s Law Enforcement Encounter

Then, along comes a story like the one in Tarrant (AL.) involving a police officer and a grandmother who got caught shoplifting a dozen eggs to feed her kids and grand kids. She was going to pay for the eggs but she didn’t quite have enough money (Irony: The grandmother went to the “Dollar” Store and eggs cost more than a dollar!) so she put a half-dozen eggs in her pocket.

Then, the grandmother’s “Dogma got run over by her Karma.” The eggs broke in her pocket and the market called the police. See “Double Whammy” (Something bad happens – then something worse)!

When the police officer arrived he could have arrested the woman and taken her to jail. She broke the law. She attempted to steal.

Imagine this jailhouse conversation…

What are you in for? Murder.

You? Egg theft.

Police Officer’s Kind Gesture Goes Viral

The police officer used discretion and compassion in dealing with the situation. Not only did he not arrest the woman but he went out of his way to buy the eggs for her so that she could feed her family.

What happened next is what motivated me to comment: a national outpouring of sentiment commending the police officer for his kind actions and support for the family so that they can eat.

As the Police Chief in Tarrant said “A guy called me from New York and just broke down. He said for two months he’s been angry with police, and he said this has totally changed his mind.” 

Last Words

The stories of the last couple weeks have been told. We’re having “die ins” and pro athletes engaging in shirt message protests. Again, this is within everyone’s right to do as long as it’s done peacefully and within the law.

Being a police officer in today’s society isn’t an easy task. Sometimes they get it wrong and it ends badly, we’ve seen that over the last couple weeks. However, often they get it right.

As compassionate human beings, we have to remember to balance the bad stories with the good like this one from Tarrant which, truthfully, happen every day across the country.

Think we’ll see any pro athletes wearing shirts commending “Egg Caper Compassion and Kindness?” Probably not, but balance is fair so we should aspire to achieve it!

Rotten Tomatoes

“You say tomato, I say tom-ah-to.”

However you pronounce it, organically grown foods are hot and people everywhere are trying to capitalize on the craze! In a recent issue of the Fraud News Update we covered a story about Farmers Market Fraud, which is turning into kind of a big deal in several states.

In this fraud new story, the Alabama Securities Commission alleges that two people trying to find investors for their Cypress Creek Organic Tomato Farms were actually stock scammers selling unregistered securities and both have been arrested.

If convicted of the charges, the “alleged” organic tomato farmers should have ample time to sample the “not so organic” marinara sauce in the pokey!

Career Cons

In last week’s Fraud News Update we featured a helicopter pilot who’d used the FAA Airman Certificate of another pilot to get jobs flying choppers for news and emergency medical companies.

This week, a fraud news story features a Texas woman who stole someone’s identity in order to get nursing jobs in at least 8 difference places.

Impersonation for financial gain is one thing. Providing medical care under that individual’s nursing license, without any medical training whatsoever, takes identity theft to a whole different stratosphere. Scary stuff.

The companies that hired the woman as a nurse submitted insurance claims for patient treatment provided by her. More than likely, those companies are now on the hook to reimburse the government for the millions of dollars they received for that treatment.

This type of identity theft challenges even the best due diligence programs.

Lights…Cameras…Action…Fa-Get-About-It!

Should the fraud news story about the financier of a mob movie getting defrauded by a con man really surprise anyone?!

Actually, the fact that there is fraud associated with movie projects shouldn’t be a surprise whether it’s a mob movie or not.

The entertainment industry is glitzy big business. When you follow the money, financing and fraud go hand in hand.

Fraud

Growing up near the beaches of SoCal, there are a lot of surfing, skateboarding, skiing and snowboarding phrases which have made their way into pop culture. One of them, “Go BIG or Go HOME,” is particularly applicable to this next fraud news story.

According to the U.S. Attorney’s Office, a former Missouri Sheriff’s Deputy and an individual he once arrested for burglary in Missouri, were indicted for worker’s compensation fraud.

While the individual was incarcerated on the burglary charges, the indictment alleges that the pair used the inmate’s PII information and collaborated on a scheme to defraud WorkForce West Virginia.

West Virginia? The last I checked, Missouri and West Virginia aren’t exactly neighboring states so I have no clue what that’s about but the total proceeds of the fraud were $5,388. Really? That’s it?!

If you’re going to commit fraud as the indictment alleges, and ruin your life, the least you can do is make it worth your financial while! Especially when you consider that the pair may have “split the proceeds!”

Unless there’s more to the story than initially reported, the law enforcement agencies spent considerably more money investigating the fraud than the miniscule loss amount. Not sure where the investigative “bang for the buck” is on this one but they did it anyway.

Given all the “super sized” fraud cases, which have resulted in billion dollar losses, this is definitely a case of “Go BIG or Go HOME!”

$5,388. Really?

Benford’s Law Demystified

Lastly, for those of you who aren’t forensic accountants, don’t play one on TV and didn’t stay at a Holiday Inn Express last night…you may be unfamiliar with Benford’s Law.

Benford’s Law is a fraud detection tool used by fraud professionals to detect anomalies (red flags) in large populations of data. Red flags aren’t always indicators of fraud but unusual activity that warrants closer inspection.

Props to Sara Silverstein, a senior producer for the Business Insider. She takes you inside the basics of Benford’s Law, and how it works, with a short video. Sara’s got an MBA from the University of Chicago Booth School of Business with an emphasis in analytical finance. The woman knows a thing or two about numbers!

Fraud News – The Bottom Line

Fraud – empowering people to break the law. It’s a way of life for some and every fraud has a story. At Fraud Solutions, fraud is our world and we’re passionate about prevention. Being proactive is key, so, follow us each week as we cover the fraud beat with added insights, information and unique commentary on stories making the fraud news.

Those are our insights. What are yours?

For more information on how we can help your businesses prevent risk, reduce major fraud losses and improve operational ROI, contact us to schedule an initial consultation. No obligations…just unique insights from an industry leader.