Fraud News Update 07.24.14

Fraud News

Fraud News

Fraud News Update 07.24.14: In reviewing our weekly fraud news feed, we’ve noticed quite a few stories that tie nicely together with posts we’ve written on a particular topic. This presents us with an excellent opportunity to update stories or themes we’re focusing on each week and enhance the content provided to readers of the Fraud Solutions blog.

Speaking of Industrial Espionage…

Last weeks original content, Social [Media] Espionage – What’s Your Exposure, was featured in the LinkedIn Publishers forum and continues to be well read. In support of our contention that industrial espionage is a growing problem, this weeks fraud news features yet another story about industrial espionage and the attempted theft of trade secrets from a major company.

While this case didn’t specifically mention the use of social media as an espionage tool, you can bet that outsiders looking to find former company employees to target are gleaning social media sites for previous employment.

The effort was thwarted but there were former company insiders apparently willing to “sell out” their former employers trade secrets for a price. Think it can’t happen at your company? Think again! Here’s the story.

Here’s an Embezzlement Twist

In our recent focus on embezzlement, Embezzlement: The Knockout Punch, we discussed the fact that companies victimized by an embezzler must either prosecute or learn to spell the word recidivist.

Interestingly, in this fraud news story Michelle Rutledge couldn’t wait to be fired to move down the road and embezzle from another entity.

As it turns out, while embezzling from her employer, Ms. Rutledge was simultaneously embezzling from a non-profit, children’s hockey league.

Talk about a double-header. Similar to the suspect in our blog post on embezzlement, Rutledge also worked for her employer for a lengthy period of time.

Stealing from kids and non profits…talk about bad Karma. Rutledge will be spending the next 24 months on vacation at “Club Fed.”

Thou Shall Not Steal

Speaking of bad Karma, in other embezzlement related fraud news the only thing worse than stealing from kids and non profits might be stealing from a church. I’m not sure what happened to the 7th Commandment (some places it’s the 8th) but apparently neither one of these folks paid much attention to it.

A 67 year old secretary employed by a church for 38 years was apparently taking more than shorthand which resulted in a six figure loss to the church.

If SNL’s the Church Lady were here she’d be saying “Well, isn’t that special?”

And on the 8th day, God apparently created fraud…

Surprisingly, embezzlements at churches aren’t that uncommon. While we all want to trust our fellow-man (or woman as the case may be), churches, and other non profits, have money and need strong internal controls to protect revenue like all other businesses do.

In an unrelated fraud news case of the cloth, a Minister in Georgia apparently thought God might turn the “other cheek” when he acted as a straw borrower in a bank loan fraud pocketing $100,000 and passing $700,000 to his co-conspirators. This resulted in a significant loss to the bank and for the next 12 months he’ll be ministering to a new group of sinners.

Rambo Rectifies Wrongdoing

The government contract process encourages small businesses, which are owned and operated by disadvantaged individuals, to bid as a percentage of contracts are earmarked for businesses with this classification.

Gaming the system means posing as a Disadvantaged Business Entity (DBE) to win government contracts and that’s clearly taking advantage of the system. Yet, many bidders for government contracts do just that and the news is littered with stories about government contracting fraud and entities falsely claiming DBE status.

Last week, in this fraud news update, U.S. District Court Judge Sylvia H. Rambo, sentenced Ernest G. Fink, Jr., the former COO and co-owner of Schuylkill Products Inc. to 51 months in federal prison for his role in the largest DBE fraud conspiracy in U.S. history. Three other players in the massive conspiracy were previously sentenced to federal prison for their roles.

One method that cheaters use to circumvent the government contracting process involves the use of a front company, which is how this massive DBE fraud was perpetrated. But its cheater beware out there right now as “the USDOT OIG has cautioned prime contractors and subcontractors not to engage in fraudulent DBE activity and encourages them to report any suspected DBE fraud” to the OIG hotline.

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.