Fraud News Update 02.27.15

Fraud News

02.27.15 – This week’s edition of the Fraud News Update features: Liar Buyer (Not a Jim Carrey Movie), Google (The Front Lines On The Battle For Delisting),The Massive Pilot Flying J Fraud (CHS-1 Identified), Former 1st Lady Sentenced (McDonnell Visits Club Fed), Phantoms (Airheads Get The Hoosegow) and Sandy Hook Fraud (Despicable You!).

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.

Liar Buyer

This fraud news story sounds like the title of the 1997 Jim Carrey movie (Liar Liar).

So, after Christmas we found out that mid December a package had been sent to our house by my sister from Lands’ End. The only problem, the package never arrived. Wasn’t on the front porch, wasn’t in the house or left with the neighbors yet UPS insisted they delivered it on 12/16.

We called Lands’ End and explained that we never received the package. They said they’d send us out another package. Without asking, we told them that if the initial package ever turned up we’d make arrangements to send the original one back to them (the honest and ethical thing to do).

Lands’ End lived up to their end of the deal and resent the package with the presents in them.

Flash forward: The mysterious (original) Lands’ End package ultimately gets delivered to our house by UPS (You know…the one they insisted they delivered three weeks earlier).

We lived up to our word and returned that package to Lands’ End (We won’t go into what a huge hassle this turned out to be with UPS, how challenged their customer service was or how they put the whole thing on us).

That issue aside, apparently we aren’t subscribers of the trending way to shop, and steal, known as “Liar-Buyer” fraud.

According to security expert Bruce Schneier, Liar Buyer fraud is “common fraud on sites like eBay: buyers falsely claim that they never received a purchased item in the mail.” The intent, keep the merchandise while getting a refund. i.e. You got the goods for free!

In this fraud news story, several individuals (former employees at Paypal) have authored research on Liar-Buyer fraud and possible methods to combat the crime.

Google – Can You Be Delisted?

Google solves everything. Right? Getting your name out there, getting publicity, promoting your accomplishments, business, organization or event…some of the great things about the Net.

For some folks, the features that make the Net attractive are the same ones that makes it unattractive.

While most people don’t think there’s any such thing as “online privacy” the issue’s alive and well. On the front lines of this battlefield is Google.

In this fraud news story, the issue of online privacy and getting removed from Google searches is explored.

Given the plethora of sites that share, sell or redistribute information across the web, getting delisted is much “easier said than done.”

It’s definitely not one site and done. More likely, given the data distributors playing in the space, there could be hundreds of places one has to go to try to eliminate information from public view.

The Pilot Flying J

We’ve previously covered the mega Pilot Flying J fraud. Initially, news outlets were reporting that Jimmy Haslam (owner of the Cleveland Browns) was unaware of the fraud being perpetrated by the company. However, questions have continued to linger as to whether he did or didn’t know.

In our continued coverage, there are several breaking developments in the story. First, the name of the confidential information (CHS-1) who provided information to the federal government and participated in their undercover investigation, has been revealed.

While CHS-1’s identity may have otherwise gone undiscovered, thanks to a lawsuit filed against his employer we now know that his name is John Verble, a former Morgan Stanley financial adviser. Verble apparently had a client who worked at Flying J and through that relationship learned of the fraud.

As we know, Verble chose to become a whistleblower and brought the Flying J fraud to the attention of the feds. Morgan Stanley ultimately learned that Verble was cooperating with the feds and terminated his employment.

Verble is now suing Morgan Stanley for his role as a whistleblower (information reported suggests he also brought forward insider trading allegations at Morgan Stanley).

The other relevant fraud news update to this story is that through other trucking company lawsuits affiliated with the Flying J fraud, a federal Judge has stated that “it’s ‘plausible’ Jimmy Haslam may have been aware of the Pilot Flying J fraud.”

Did Haslam know? Did he participate? I guess we’ll find out as the cases continue to unfold.

Former 1st Lady Fraud

There seems to be quite a few stories in the news these days about former 1st ladies taking vacations at “Club Fed” complements of Uncle Sam.

Wondering if the former, self-proclaimed, 1st former Lady of Oregon (Cylvia Hayes) will be joining the former 1st Lady of Virginia (Maureen G. McDonnell) in the pokey? The jury, and the investigations are still out on whether Ms. Hayes will be meeting Mrs. McDonnell on vacation but if it happens perhaps they can throw the taxpayers a few bones and share a room…

Mrs. McDonnell is now warning Congressional wives about the serious pitfalls which they face and how a lack of understanding involving political ethics can ruin your life.

Phantoms: Airheads Get the Hoosegow!

In past issues of the Fraud News Update, we’ve covered various forms of phantom frauds.

Not only are phantom frauds an increasing epidemic being committed around the globe but they’re growing in sophistication and financial loss value.

In this fraud news story, the second co-conspirator in the massive Delta Airline phantom fraud, which went on for over FOURTEEN years, was sentenced.

In an unrelated (but related airline industry) phantom story, Smucker’s got taken for 4.1 million (that’s A LOT of JAM!) by their head airline mechanic who was just sentenced this week to nearly 5 years for his role in a fraudulent phantom airline parts billing scheme.

Phantoms: Who’s In Your Books? Better yet, what are they doing there? Do you really know?!

Sandy Hook Fraud

Nash-villain charged. Allegedly used charitable donation proceeds to line pocket.

“Creating a fraudulent charity to exploit a tragedy is unconscionable.” Kevin J. Kline, Acting Special Agent in Charge of the New Haven Division of the Federal Bureau of Investigation.

Well said, Agent Kline!

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.