Fraud News Update 12.11.14

Fraud News

Fraud News Update 12.11.14: This week’s Fraud Solutions news update features: Fraud News – How A BOT This? (Digital Advertisers Arch-Enemy), God Fraud, Gambling and Golf (New Twist), Flying as a Phony,  Bribes for Booze (No Surprise Here) and Storage Tank Fraud (Gas in the Ground is Definitely no Good).

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.

How a BOT This?

Most superheros have an arch-enemy, the classic protagonist, and digital advertisers are absolutely no different. In this fraud news story, Reuters is reporting that digital advertisers will lose a cool $6 bil next year exclusively due to their arch-enemy: BOTS!

We’ve covered fraud in the advertising world before in previous issues of the Fraud News Update. Today, someone’s quantifying the losses and if these numbers are accurate, it’s a whopping loss figure for an industry that’s finally figured out something’s wrong in digital ad land. “Houston, we have a BIG problem: FRAUD!”

The Economist is reporting that digital advertisers will spend approximately 140 billion this year. With $6 billion allegedly representing fraud, that number’s probably a pretty accurate estimate as it comes close to the 5% average fraud loss figure that studies indicate businesses lose annually.

We’ll be following the story more closely to see how Ad Man thwarts the evil villain’s nefarious plans…

God Fraud, Gambling and Golf

We’ve written about the increasing number of religious fraud cases in the past. Historically, we’ve seen a number of fraud embezzlement cases involving church insiders, ministers and pastors etc.

The theft from the Agape Family Worship Center initially got my attention but the person accused of allegedly stealing from the church wasn’t one of Captain Renault’s “usual suspects.” I read with interest the story about the CA CPA (Donald R. Gridiron, Jr. – great name if you’re a football player) who’s been accused of pilfering $4.25 million from the parishioners in the pews.

In every fraud story there’s usually one thing that stands out. In this case, however it wasn’t necessarily that the suspect’s a CPA but three buzzwords that stood out for me: gambling, golf and religious connectivity.

The Criminal Complaint – Religious Connectivity

Language in the criminal complaint filed in federal court said the following:

“The [Agape] Worship Center hired defendant Gridiron based, in part, because of defendant Gridiron’s “connections with individuals in the religious community as well as his standing within that community.”

The news stories we read said nothing about what the defendant’s connections were to individuals in the religious community which resulted in his original hire. Professional curiosity got the better of us so we did a little more digging.

The leadership page at the Faith Center Ministries in Walnut, CA may have the answers. The Church Board of Directors lists: Donald Gridiron, Jr., head of Finance and Donald Gridiron, Sr., Pastor. Several other individuals with the same last name are also employed by the church or on their Board.

It remains to be seen whether this is the same family or not but if it is it would definitely explain the religious connectivity statement in the criminal complaint associated with the defendant’s initial hiring by the victim church.

Wondering if FCM’s auditing their books?

The Golf Connection

Gridiron Jr., it turns out, is also accused of funneling $1.5 million of the embezzled funds to the Western States Golf Association (Walnut, CA., same city where FCM is located), a nonprofit organization where official documents indicate he was also the treasurer and registered agent.

This sounds a little bit like a “wacky way” of trying to launder stolen funds through another organization’s finances which, coincidentally, also happen to be directly within your control.

We’ve previously written about individuals who’ve simultaneously embezzled from more than one organization.

Wondering if the Western States Golf Association’s auditing their books?

Gambling God’s Money Away

But wait, there’s more. The other vice is a reference to the church’s stolen booty allegedly being gambled away by Gridiron, Jr. at a casino.

According to the criminal complaint, on one day in 2014 $17,500 was wired from the church’s account to the defendant’s. A day later a corresponding amount was withdrawn from the defendant’s account at a casino.

The State of NJ (where the victimized church is located) Casino Control Commission has this language on their website:

Problem gambling includes what is often called compulsive gambling and pathological gambling. It refers to a condition where people are, to some degree, addicted to gambling. While the results of a gambling addiction can be devastating, there is help available for those people who need it.

No word on whether Gridiron Jr. had a gambling addiction but there was definitely financial devastation here and the victim was the church.

Wonder if Gridiron Jr. ever took the Casino Control Commission’s “Do You have a Gambling Problem” Quiz?

Q #16 caught my eye: Do you ever commit, or consider committing, an illegal act to finance gambling?

Hmmm… If convicted, embezzlement would definitely fit the definition of an “illegal act!”

Flying as a Phony

Phony: “Someone who isn’t genuine. Fraudulent.”

Frank Abagnale did it. He pretended to be a pilot and “deadheaded” (the airline process for transporting flight crews when they aren’t working) all over the world passing bad checks. Deadheading: the stuff “Catch Me If You Can” was based on.

John Michael Dial did it. The major difference between Dial and Abagnale? In this fraud news story, we discovered that Dial actually knew how to fly helicopters but he tore a page from Abagnale’s forgery playbook using phony identities and other people’s FAA airman certificates to get real flying jobs.

Abagnale wasn’t flying the planes just using the airlines to get a free seat and fortify his pilot persona in furtherance of the fraud.

According to the FBI, while flying choppers for real companies including news stations and air ambulance services, Dial used at least 25 different names, as well as six SSN’s and 10 birth dates.

This isn’t Dial’s first fraud rodeo. Hopefully, he stayed in the chopper for the “full 8 seconds!” Like Abagnale, reports suggest that Dial has a criminal history involving theft and forgery convictions along with misdemeanor bad check convictions dating back to the mid 70’s.

Dial just plead guilty to aggravated identity theft and he’ll fly off to Club Fed for two years.

Bribes for Booze

Before I even read this fraud news story, (Former Chief of Staff Pleads Guilty to Accepting $7,500 Bribe in Exchange for Letters of Support for Liquor License), I thought “it sounds just like the pay to play political landscape in Chicago!

Turns out, I was right. Bribes for business.

We’ve written about the political landscape in Chicago on previous editions of the Fraud News Update and there is no shortage of cases for the Chicago Field office of the FBI and U.S. Attorneys Office to work on when it comes to political corruption here!

Storage Tank Fraud

Lastly, for anyone that thinks fraud is a victimless, paper crime, it isn’t. In this fraud news story, two insurance agents were convicted for producing phony certificates of insurance sold to owners and operators of underground storage tanks (“USTs”) throughout the state of Michigan.

The insurance policies are necessary to prove financial coverage in the event materials stored in the UST’s are released into the ground. A lovely thought.

Some owners who couldn’t pay for the insurance because it was too costly, or who had tanks that were uninsurable due to “age or condition,” purchased the bogus insurance certificates to try to get over on EPA inspectors.

Having worked one of the largest Superfund site investigations in the U.S. from 1994-1997, ground contamination is a very real issue with serious environmental impact (See Love Canal if you have doubts) and the issuance of these fake insurance certificates put the public at risk.

Kudos to the EPA and FBI for their undercover op.

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.