Fraud News Update 09.25.14

Fraud News

Fraud News

Fraud News Update 09.25.14: This week’s Fraud Solutions news update features: Fraud Detection Savings (Financial Services Companies Have Figured It Out), Ad Fraud Prevention Principles, Academic Improprieties at Notre Dame, Shhh Fraud, The Cooking Oil Capers, a Juicy $100 Million Dollar Fraud with an alleged murder plot (x2), and Flea Market Fraud.

Read on for more topical information and our insights, observations and unique commentary on the weekly fraud news.

Fraud Detection Savings

In last week’s fraud news update, we referenced an article about the SSA’s SSDI program and the IG’s findings that there’s a lack of technological tools in place to effectively investigate fraud committed against it.

It’s important to reiterate last week’s comments that “to be a good fraud fighter requires a mix of old school techniques and cutting edge, new age technology.

In that fraud news piece, we said that “an investment in technology reaps significant rewards” and cited the Washington Department of Labor and Industries (L&I) 8:1 return on their investment in fraud fighting technology upon implementation.

On the heels of that, I was reminded of the importance of fraud fighting technology again this week when an article appeared in the CU Journal: How Fraud Detection Helped One CU Save $200K.

The last paragraph is perhaps the most telling:

In terms return on investment (ROI), for each dollar Bethpage FCU invested into Quatrro Processing Services they experienced nearly a $6 return in fraud savings.

That’s 6:1 folks. The government needs to wake up and spend some of our taxpayer dollars. Technology: a necessary component in the fraud fighting arsenal.

Ad Fraud

We’ve talked on a couple of occasions about the amount of ad fraud in various Fraud News updates. The problem is reaching epic proportions and losses are increasing while faith in the medium’s effectiveness are decreasing. Steps to combat the issue are definitely necessary.

In this week’s fraud news, the Interactive Advertising Bureau (IAB) released a new set of “Anti-Fraud Principles.” Along with their Anti-Fraud Working Group, this is a positive move towards more effective fraud prevention in the ad space. As seen in previous pieces about the issue, technology alone is not the answer.

Academic Improprieties?

In sports related fraud news, the internal academic investigation at Notre Dame involving four football players and the submission of work allegedly not completed by them has reportedly been concluded. In wake of that, a fifth student has now been named in the investigation and suspended from football related activities. The fate of the five players remains unclear pending honor code hearings which are mandatory in Notre Dame’s academic process.

On the heels of last year’s academic test suspension involving starting quarterback Everett Golson, and the suspension last year of star basketball player, Jerian Grant, this doesn’t look like it will help ND’s recruiting efforts.

According to Notre Dame’s President, the Rev. John I. Jenkins:

“Integrity is at the heart of our mission and academic misconduct will not be tolerated at Notre Dame. If the suspected improprieties are proven, we will use the experience to reinforce among our students the importance of honesty in all that they do. We are also examining ways of better conveying to students that they can avail themselves of legitimate academic assistance without resorting to cheating.”

Culture and “tone at the top” are key ingredients in a fraud prevention program. Whatever the outcome of this investigation, it’s clear that there are academic changes necessary in major D1 college sports programs. Perhaps this is a sign that the institution needs to take a closer look at the academic culture involving student-athletes and their competitive sports programs.

As we stated in the piece we previously wrote about UNC’s cheating issues, the problem isn’t isolated to one D1 school. It’s likely more pervasive than most realize and these kinds of issues either point to a lack of effective internal controls, a “win over all else” (academics) attitude, or both.

The results of the Notre Dame investigation will likely be out shortly. If there are academic improprieties, depending on how Notre Dame reacts, we’ll then know whether the President’s words are just “lip service.” Is the culture at Notre Dame academics over football or football over academics in the Brian Kelly era?

The answer to that question will be in the corresponding recruiting, control, academic and culture changes (or lack thereof) made to the sports programs as a result of the academic issues.

Shhh Fraud: Who Said Libraries Are Dull?

Bribery, conspiracy to commit bribery, kickbacks, no bid contracts…maybe libraries aren’t as outdated in the Internet era as many think they are.

In this fraud news, a former Detroit Public Library official who served dual roles as the Chief Administrative and Technology Officer was sentenced to 10 years in federal prison for his role in the multimillion dollar fraud and kickback scheme.

Wonder if the feds will allow him to run the prison library?

The Cooking Oil Capers

Having been in this industry for 29 years, it never ceases to amaze me what some people will steal. Apparently, used cooking oil is more valuable to thieves than copper and metal which have been disappearing from municipalities everywhere. Cooking oil: liquid gold.

In this fraud news story, a business (Removal Services and Green Energy) owned by Andrew and Bruce Jeremiah, stole over 200,000 gallons of used cooking oil in a multistate operation and then fenced it to refineries for animal feed and bio fuel production. Guilty pleas now on record.

The Jeremiah Bros used a commercial tanker truck, driven by another party, to drain restaurants used cooking oil between the hours of midnight-6am (Side note: While researching this story we learned that this isn’t the brothers first brush with the law).

In an unrelated theft, these folks, on the other hand, were arrested stealing cooking oil from behind a Buffet in NY after being spotted by an off duty police officer on his way to work. The officer noted that the van matched the description from a series of recent cooking oil thefts. Inside their van, police found about 650 gallons of used cooking oil with a resale value of over $2k.

The Wall Street Journal ran an interesting article on the increasing oil theft trend (“Lard Larceny” as they called it) citing doubled oil prices as a catalyst for organized oil thefts. The irony here: used cooking oil used to be worthless and restaurants had to pay people to remove it from their facilities.

Apparently, there’s a real black market for used cooking oil. Who knew?

For more information on this trend, Google: Cooking Oil Thefts. Interesting read.

The 100 Million Dollar Man

A $100,000,000 insurance fraud? That’s what the feds are alleging Jeffrey Cohen pulled off in a superseding indictment charging him with a multitude of insurance crimes designed to “defraud insurance policyholders and prospective insurance policyholders in order to obtain more than $100 million in insurance premiums.”

But wait, there’s more…in what reads like a “made for TV movie,” a federal search warrant in the Cohen case revealed that investigators believe he was also plotting to kill a Delaware judge and an unnamed Delaware official before attempting to flee the country.

Court appearances not yet announced. Cohen’s in the slammer until then.

Frison Flea Market Fraud

Say that three times fast. The Recording Industry Association of America (RIAA) and law enforcement authorities have no problem saying it. In fact, neither did the Judge. At trial, Jack Frison was convicted of “one felony count of conspiracy to traffic in counterfeit goods, one felony count of aiding and abetting copyright infringement, and one felony count of aiding and abetting trafficking counterfeit goods.”

According to the evidence, Frison knew that counterfeit merchandise was being sold at his flea market, he profited from it and failed to take action to prevent it. Frison’s defense, “I only rent the space, I’m not responsible for what’s sold there.” Sentencing pending.

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?