FraudJournal Blog

April 24, 2013

ZeekRewards – How The Cons Play on Fears and Hope

Filed under: Uncategorized — fraudjournal @ 5:21 PM
Tags: , , , , ,

Mitch Weiss, PA Writer at USAToday, posted an article “ZeekRewards scam leaves N.C. town millions poorer“, on March 30th this year to share the pain and embarrassment of the residents of Lexington, North Carolina. In this touching article there are the warnings, voiced anger and frustration, and lessons of how fraudsters repeatedly use various scams on the public. The key word of choice from all victims is “…we trusted…” him or her or the company or the family.

Trust is a word that comes from the source of our soul. It is what we use to describe a direct connection to any person, place or event we choose to open ourselves towards, and here is the caveat, with an anticipated return or reward for this ‘trust’. Unfortunately, the very nature of trust indicates that any return is actually not promised; it is solely in the hand of those or the individual we trust. We trust our family, friends, neighbors, employers or employees and the list go on. Which brings me to my point; why do we do this? Have we become so disconnected from our instincts that we are unable to see the snake in the grass, the odd reflection in the mirror, or the subtle nature of the predator in wait.

Any investigator will tell you that truth is like fake gold; the shimmer albeit indicative of gold is not the promise of gold. Truth requires both patience and quiet of mind to hear it. It is that quiet glint that says to you, wait…you need to check this again. One of the victims in this article thought she had done her due diligence. She drove to the location to verify it was indeed a valid business entity and saw the line outside the door of people willing to offer funds to invest while the getting was good. But here in lies the rub, her first instinct was right, her second action was not based on instinct but on desire to join the crowd. And cons love crowds. Why? Because crowds are easier to control. Because collectively they become the bait-ball that predators can take a run at.

Much like the great Ponzi scams of the century, once the fraudster is caught, they will always say, “…you shouldn’t have let it get this far”. And they are right. But only on that point, they are still accountable for their actions and not our gullibility. However, there is always someone who cries “…the Emperor has no clothes on!” And they are quieted or ignored because we seek the lucky find that changes our lives and makes life easier to live. Its more fun to boast we struck it rich than do the work.

So I ask you then, is a mindful life really that difficult? Are we that fearful of poverty or keeping up with the world or the lack of opportunity that we are driven like lemmings to follow the barker of the carnival of promises and cures? When are we as the general public also responsible for our unwilling to slow down and ask the hard question; what is impulsing me to take this chance? What am I risking? And does the rush of my fellow friends and family a good thing or a fear of missing out.

It is sad that when we are down in the spirit, hurting and in need of hope that some group or individual offers the promise of false hope at the cost of our hearts. However, in times of broken hearts or wishful thinking, this is the most important time for us to stop, look, listen to our heart of hearts and ask the hard question…what impulse am I following.

Be safe my colleagues and friends. There are no promises of fame and fortune. What we sow we shall surely reap. It may take time if we dawdle here and there, but the universe can only send us what our hearts ask for – an easy ride with no foundation or the gradual and stable building of a future.



March 12, 2013

Should Forensic Accountants Be Considered Private Investigators?

I must say it is nice to see Forensic Accountants become acknowledged by the general public as a potential solution to detecting, defending and even more importantly deferring, as much as possible, fraudulent behavior in the workplace and home. Even shows such as NCIS have given a nod, however slightly, to Forensic Accountants (often noted as FA). Most Certified Fraud Examiners (CFE) have some working knowledge of accounting and this has become more emphasized in our annual training. And many private investigators have to review financial information in order to follow through with their engagements with clients. Which brings me to my question for the general fraud community, should Forensic Accountants become Private Investigators and licensed within their state as is required by some states.

While most states have specific regulations that professionals who “investigate” as a profession must be registered and licensed as private investigators, FAs and CFEs for the most part have not been included in this group. Recently, private investigators have raised their voices to urge any and all individuals that claim to or state they investigate be required to follow state law and become licensed as a private investigator.

I agree that investigative work requires knowledge of state laws and regulations to keep both investigator and the general public safe from unqualified professionals looking to merely increase revenue and try out new trends of services. CFEs are required by the Association of Certified Fraud Examiners (ACFE) to maintain training and must pass a 4-part exam and submit recommendations prior to being allowed to take the exam. This includes: Investigation, Financial Transactions, Criminology, Law.

Having said this, many CPAs have become FAs in order to build a more diversified portfolio of services such as fraud prevention, fraud risk consultations and forensic accounting. I do have concerns with CPAs who provide forensic accounting services that are not CFEs. Not because they are educationally lacking in work financial knowledge or work experience, but there are legal ramifications to consider when performing investigative accounting. The rights of both sides of the case, claimant and defendant, have legal rights of process and must be acknowledged according to the rules and regulations of the law.

And so I ask, “Should Forensic Accountants and Certified Fraud Examiners be considered Private Investigators”, and if so, “Should Private Investigators be required to be certified in bookkeeping or accounting 101 before handling financial case work”? There is the opportunity to collaborate in wonderful ways, but do we think this will be the end result or is this a turf war? The question has some merit. What do you think?


August 22, 2011

Is Ethics Hard-wired or Learned

I was reading a posting in LinkedIn by Fernando A., in the ACFE group, titled “Pants on Fire! Children and Lying“. The link led to a site called 8/18/11 – children and lying. The article a study into the frequency of children telling lies and whether this was indicative of a future problem. It seems that children who lie well are cognitively more advanced and are able to hide their tracks better. They tend to grow up and be more capable of dealing with complex situations, such as employment that requires quick problem solving or outside of the box thinking. The article suggested they might become bankers; I wondered about other financial positions that have recently been in the headlines for manipulation of funds and factual information.Then I thought about the recent trends in education for forensic accounting and fraud investigation. And what about learning to understand the federal tax code and recent gloable accounting issues.

Today’s generation is faced with making choices for more than which college to attend or job for a career. They have become a self-monitored social network of information and ideas. They want their lives to have impact, their efforts to matter, and their path to move at the rate that technology limits them. And I ask myself, what were they like as children? How did they interpret whether to help each other to obtain the advancement they rationalized as necessary to reach either their own goals or their family’s goals. I mention family because so many children now have been pushed through the process of high grades for college and then a better future. Does all of this push to succeed on a fast track impact their view of ethical standards?

Last week I was talking with a college professor who teaches at North Seattle Community College. They have created a new Certificate of Fraud to help students prepare for a career in fraud fighting. One of the topics discussed was about how students’ views of ethical behavior is changing nationwide. Does this generation of students feel differently about sharing information and taking risks that a previous generation might see more black and white. And if so, will that impact how they investigate fraud?

I don’t have an answer, but it poses the question of whether the “perceived need” to commit a fraudulent act will need to be redefined into less black and white and into more levels of grey. I hope not, but as those of us currently in the trenches age, and others come into the roles of leadership, what do they interpret ethical behavior to mean.

So now I am back to whether or not ethics is hard-wired or learned at an early age and how does that affect the fight against fraud. Employers are already being challenged by young professionals on what they expect as employees. Perhaps this generation of young professionals will need to show the veteran fraud fighters what they see as the solutions to a potential fraud wave looming in the future. Elder abuse and exploitation, cyber crime, and white-collar crimes will continue to rise as there is a shift in which population is taking the lead.

My vote is on this upcoming generation of professionals to take everything to the next level with technology and all its trappings. And I still ask, what were they like as children? Were they good liars too?

November 8, 2010

Fraud Victims – When Do They Get Their Day In Court?

I have recently received several responses from victims of fraud asking what it takes to get their cases heard in court. Their plea for help is painful to hear and all of us that investigate and work fraud cases understand that this is not  a small problem, that it is part of a bigger picture. So how do we answer these cries for justice when the there are so many obstacles to overcome?  Let’s talk about the obstacles in getting cases to court.


Fraud comes in as many forms and is committed by as types of perpetrators as you can imagine. Unless the perpetrators are strung-out drug addicts, they look just like you and me. They are our neighbors, friends, family members and business partners as well as con-artists out looking for a ‘mark’ or victim. They are rarely like the characters pictured in CSI, NCIS and other crime shows. And the timing from start of a case to asking the questions, getting the information and forensic reports back, getting the proper warrants and subpoena’s to get the fraudsters booked takes place is in not hours or days, but months of hard work and focus. Many investigators go out of their way to help fraud victims, but these are not the stories we hear about. This is especially true in elder abuse and exploitation cases, and crimes against children.


First, the levels of creativity and focus by fraudsters is undeniably surprising. Most of us that are in the trenches regularly mumble to ourselves that if fraudsters could focus their attention and creative problem solving skills towards the problems of humanity, we may just solve some serious world problems. But they don’t and have all day and lots of connections to find latest, greatest and often complex methods to get ahead of the rest of us. This means the battle to catch and try them involves constant learning, adapting current skill sets and gaining access to new technology. Ask any government office which version of software or hardware they are using and they hang their head and sigh.

The economy has not helped this situation at all. Most law enforcement departments are being hit with increased demands to process fraud cases, but are trying work them without an increase in manpower. I have heard some detectives have an ongoing case load of 15 cases on their desk at one time, and it’s growing. I recently spoke at a conference for law enforcement training about forensic accounting to give them the necessary steps to get ahead of the curve and understand the information they have to process in order to properly document and forward their cases to prosecution. It’s a start, but it’s costly and what ever money that is left over in the budgets is being funneled to keep the lights turned on.

That does not mean they are totally in the dark either. Most government agencies, offices and law enforcement personnel have begun to team up to go after fraudsters. The days of jurisdiction issues is coming to a close. Technology is allowing quick and efficient means of shared information. But it is starting in the areas of better funding and this means not all law agencies are going to be at the same level of technology and manpower. This also means it is going to take more than a village to catch a thief; it’s going to take counties, states and a nation to effect change. And don’t forget you the public. When the public cries out for justice; there is nothing more powerful than a grassroots movement to tell both politician and government that they are not happy with the situation on hand.


In fraud cases, the victims are required to prove they are victims. This is because there are no physical signs that are tangible proof that a crime has occurred. A rape, murder or sexual assault has tangible evidence that can be processed and documented. But in financial crimes, evidence needs to be documented and verified by professionals. Officers of the law including detectives have not been trained (up until recent years) to work financial crimes. This is added training on top of their required training to physically and mentally deal with their original daily tasks. This is why they ask for victims to provide as complete and documented a case as possible. They are required to verify all that you provide before they can move it forward.

Recently, law enforcement agencies are starting to establish a ‘fraud department’. Most often this new department is manned by a detective or officer that is interested in financial crimes. This also means that funds now must be shared with a new department and all personnel must be educated on the protocol for financial crimes. This is not an easy task and can take a while to get all the necessary technology, training and directives in place. But I am seeing changes and the successes are getting noticed. Hopefully this will show the way for other agencies to begin changes necessary to take cases and move them up the system for prosecution.


I wish I could say all victims will get their day in court. The courts are inundated by cases. Prosecutors are also overwhelmed. And anytime you involve professional experts, the process can get lengthened based on the complexity and level of detail the expert needs to present to educate judge and jury of the facts. Most jurors do not have any background on fraud or accounting for that matter, and the details need to be exact, simple to understand, and relevant; meaning no rambling on about debits and credits.

It is also expensive to take a case to court. The costs can be more overwhelming than the loss in some cases, and sometimes it destroys the victim more than the fraudster. But that doesn’t mean that prosecutor’s don’t want to take the cases or that detectives don’t want to process the cases. The bottom line lately, is just that. Time and costs are continuing to be obstacles. But again, steps are being taken to make change. In larger areas of population, both law enforcement and government agencies are collaborating on education and establishing standards of protocol to handle fraud cases. This is KEY to bring the necessary change and produce results. Nothing can happen without all agencies and personnel being on the same page to fight crime and provide its citizens the personal rights of safety and freedom from abuse.


Having said that, it is also up to the public to report crimes and to hold their own accountable. Often, fraudsters are able to move about society freely because they have been protected by those close by them, or because victims have not reported their crimes. As scary as it sounds, if you don’t file a report, it doesn’t get on the books and into the system. Often law enforcement will check with each other and if they find out they are familiar with that name or their system pulls up that name (even if they were not convicted), the officers have a suspect with a possible fraud pattern. It adds bite to their efforts to stop the thief.  And, there is nothing worse to hear than other victims come forward after the fact, when the fraudster could have been stopped years ago. In order to truly stop criminal fraud, there has to be a grass-roots effort. This includes to understand where the line of ethics and moral standards begins. This includes setting examples at home and work that casual theft, aggressive behavior, and entitlement are not acceptable in our society.


I realize this is a lengthy post. But I felt it necessary to let those that follow my blog and are victims of fraud, that we do hear the cries of frustration, anger and resentment. That we know there are cases not being handled as quickly, and sometimes, at all. And that what they hear are more than excuses; that there are real obstacles that are being hurdled as we speak, and that change is coming. We are all part of this problem and it will take all of us to resolve it. The public needs to send a message that entitlement is not a right or excuse to take another’s property or livelihood. That is comes with penalties. That as a whole, we the public, in this nation will not tolerate such behavior and empower those dedicated to detect, deter  and defend against perpetrators of fraud, the funding, manpower, and tools needed to protect and take care of our fellow citizens.

August 24, 2010

Fraud & Forensics: Times are changing…are we?

Most of you are familiar with the CSI shows on television. And you have read articles on fraud examiners catching the Madoff’s of the world lately, but most of you don’t know the process forensic accountants, fraud examiners, and law enforcement go through to quantify or qualify the information for their clients and the court. It’s not a glamorous process and it doesn’t happen in sixty minutes let alone sixty days. It’s a tedious and detail oriented process that requires pulling hundreds if not thousands of bits of information into one historical reference, and the process has been in place for a very long time. But Dylan was right, times they are a-changing.

The recent shifts in technology have made the amount of data exponential, and this means the time to manage and analyze have also become exponential. Cases now span years instead of months. Imagine an embezzlement case over five years with one hundred clients and their historical information. So how do you provide your clients with a work product using what I call the F.E.E. principle: Focused, Efficient & Effective?

In my usual internet nosing around I found this article “Follow the Money – Find the Fraud” by Tracy L Coenen, at Sequence Inc from the Wisconsin Law Journal, written by Tracy Coenen, CPA, CFF in June of this year. It’s a article about how we each must consider the complexity of our case. What are we faced with? How can we wade through mounds of documents and data and deceptive efforts to get to the facts and then put all of that into a format that educates the facts to both judge and jury. I think this article will help you ponder this thought and hopefully consider some new ideas. There is a lot out there to choose from, but in the end it is about the truth and the best and most efficient way to get to that truth. Facts speak loud, but they rarely shout ‘here I am’.

I would also like to add that technology does NOT replace the ability to interview and investigate, but it does allow us to more efficiently get to the facts to build a case and prepare that case for litigation. Remember, fraud examination and forensic accounting is not about technology it’s about the truth of the situation; the prima facie evidence necessary to present a case if you choose to go to trial.

TIP: CFF means Certified in Financial Forensics – see link above.

July 27, 2010


Filed under: Fraud Schemes,Fraud Trends — fraudjournal @ 2:26 PM
Tags: , , ,

One of the discussions running around the fraud blogs and LinkedIn groups is about how fraudsters have been able to get past CAPTCHA. So is it dead? That question was asked in a 2007 article when Google filed for a patent that would allow computers to read images that contained a graphic of morphed characters. (

And if you ask the internet about CAPTCHA, you will find various requests to locate a program that would essentially ‘kill’ the CAPTCHA program temporarily when dealing with other languages. So is it dead? Not yet. Businesses and websites still are using this program as a security measure. So what is the fuss?

Most of you have already experienced CAPTCHA without knowing it. This is when you are required to type in what you see on the screen (usually a set of twisted or distorted letters, numbers or combo of both) when you purchase or create an account with an online storefront or organization. If you don’t, here is a link to Wikipedia to learn (

Recently in New York, scammers created another work around by setting up a network of users to purchase tickets online from Ticketmaster. The company under indictment ‘’, purchased the maximum of number of tickets to big name concerts and events by employing a vast network of purchasers who could type in the semi-obscured graphic used as a security measure to stop scammers from purchasing more than the allowed number of tickets. These tickets were then scalped online for prices far above the normal retail value. So, now you know why some of those concerts were sold out so fast and so many tickets were for sale online.  You can read the article here: .

So how does this effect the fight against fraud? It means that fraud has truly become a global concern. While it creates jobs in India and China, it also allows fraud rings to branch out and work towards becoming an even bigger menace than before. If the sources of scamming is off-shore, then the process to shut them down becomes much more complicated and deals with multiple jurisdictions. Plus their costs are minimal, they have a dedicated work effort can be a 24/7, and you and I can’t see them at work. It allows them to blend in or hide in plain sight.

The economy is already creating budget havoc for everyone. Law enforcement is already overwhelmed with fraud on the grand scale, which means it is up to you and I to stay aware of what we see on the Internet and around us today. Help your local and regional fraud teams by reporting fraud when you see it. And don’t buy scalped tickets – most often they are not your everyday you and me that ended up with spare tickets. It’s guys just like the scammers ‘’ that stole your right to purchase them at the retail price in the first place.

May 6, 2010

Fraud-America’s Financial Termite Infestation

Filed under: Author's Post,Fraud,Fraud Trends,Insurance — fraudjournal @ 5:12 PM
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One of the reasons I started this Blog was to keep people educated, connected and supportive of those fighting fraud. I share trends and information to keep everyone updated and to initiate discussions. One of the latest discussions is a direct reflection of the economy and the impact on those that investigate and prosecute fraudsters.

As law enforcement and the legal system becomes more and more inundated with fraud cases, and their budgets and manpower continues to be reduced, fraud victims are finding they are left on their own to do the leg work to get their cases heard. Insurance companies no longer cover fraud loss without a conviction, and financial institutions consider fraud the cost of doing business. This puts the general public and business owners in limbo as they try to determine whether it’s worth it to prosecute or just be made whole by mediation/restitution; which means the fraudster gets to go on to greener pastures.

The best way I can describe this scenario is to consider fraudsters as financial termites that eat away at the foundation of our economy. If the house next to you does not to their due diligence to reduce the risk of or stop fraud, the infestation is able to travel from house to house to house until they bring down an entire area. And just like pest exterminators, fraud fighters want to go after the top termite. The little soldiers that get sent out to search and destroy definitely do their damage, but they can get replaced on a regular basis.

And this scenario works for identity theft, white collar crime both big and small, and terrorists (which many fraudsters are connected with). Osama Bin Laden doesn’t have to walk into a bank to get money. He just has to get his soldiers to commit ID theft enough times to fund a beginning of a cell’s activity. Does this pop your eyes out of their sockets yet? It should.

At a recent fraud conference, I spoke with investigators, detectives, and other CFE’s about how they were dealing with the increase in fraud. Most of them looked like they could cry. Or get spitting mad. They were embarrassed that they couldn’t even provide a fraud victim with a decent answer of when and how they would be able to get to their case. “It’s physically and mathematically impossible for seven detectives to investigate over 8,000 cases a year,” Sergeant Justin Newsom stated to Amy Johnston of KVUE News in Austin, Texas, in an article from December 16, 2009 on the internet (1). Yes, that was in 2009.

So what is the purpose of this post you ask? Well, it is to let you know that fraud is on the rise and the general public needs to understand that a case number is no longer sufficient to get their fraud case handled or paid by insurance companies. Each State, City, County or Town has their own criteria for what makes a fraud case sexy enough to handle. Just like the FBI, if its big dollars and they can pull down more than one individual, they are more likely to get the case to go up the ranks to get funded for handling. That means, those cases that seem big money to you and me, may not meet the criteria and end up being set aside when they have more time or more funding or manpower.

In January 10, 2010, Levi Pulkkinen of the Staff posted an online article reporting on MV Maersk Inc. getting hit by an embezzler to the tune of an estimated $263,000 dollars. You may remember the company as they were hit by pirates off East Africa last April. The embezzler, a Sumner resident (located in Western Washington State), did so from about June 2006 to June 2009, when she was terminated. Prosecutors stated she repeated the frauds at least 116 times. (2)

So my request, nay my expectation after you all read this, is to do your homework. Take a hard look at your business and personal life. Do you know who to contact if you suspect fraud? Where would you go to report fraud? How at risk are you? And what can you, the general public and hard working Americans do to help your fellow fraud fighters? If it means contacting your local and state government then do it. If it means contacting someone show can assess your fraud risks, then do it. Take a moment, and consider what you would do to protect your home from termites, and then how that translates into fraud control in the house of American business and personal safety.

Here are the articles referenced and some sites for more information/education:

  3. For references for find a CFE for fraud risk assessments
  4. For information on Consumer ID Theft information
  5. For more information of fraud scams

February 7, 2010

Gel Pens – Once Touted To Fight Fraud…

Filed under: Fraud Alerts,Fraud Schemes — fraudjournal @ 2:33 AM
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Today during my daily review of emails and fraud awareness updates, I received an article from a fellow professional in the fight against fraud. To my surprise, a once touted fraud prevention tool, the Gel Pen, has now become a tool for embezzlement.

Let’s go back a few years. Remember the scare about “washed” checks because of ball-point pen ink? That was when the Gel Pen came into our lives. And now there are several kinds available for use. Some of you may know a version called the erasable pen. Many use them for crossword puzzles and balancing the checkbook. But it seems that not all Gel Pens are alike.

In Steve Pednault’s article, Still Writing Manual Checks? What Pens Do You Use?, he has discovered that the ink will disappear with heat leaving a now almost blank check to use. While I don’t believe in telling people how to steal or commit fraud. I think that awareness is key to making informed decisions. Here is the link to his article and an article he recommended about the Pilot Gel Pen. Read for yourself and think about what you are using at work and at home. Thanks Steve for your shared insight.

February 6, 2010

Scannable Signatures New In QuickBooks Pro 2010

Filed under: Fraud Alerts — fraudjournal @ 2:08 AM
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Today’s post is to alert everyone to a potential fraud risk created by the newest version of accounting software by INTUIT. QuickBooks Pro 2010 now has a feature to digitally scan signatures. “Let’s print checks!”

Each year, Forensic Accountants, Fraud Examiners and Law Enforcement find out the hard way about all those new bells and whistles the accounting and tax software companies offer. This year, it’s INTUIT’s new 2010 version of their well-known and well used QuickBooks accounting software. Most of the changes they  make are to allow customers to keep up with the trends and compliance requirements for tax and financial reporting. However, sometimes the changes are the result of customer complaints and wish-lists. Digital signatures are now part of the real estate and legal community. And so INTUIT has complied with the trends and wishes of customers. And just so you know, it is not the function that is the fraud risk, it is that it came without any security features.

My point? If you have purchased or are considering upgrading to the new 2010 version of QuickBooks software, please be forewarned that you will need to update your company policy to authorize who uses this feature, and the consequences for misconduct or fraud.

Oh…and help out the fraud community, PLEASE. When you have a moment; write and/or call INTUIT to ask that the signature feature contain some sort of security feature. I am sure they would love to hear from you!

February 3, 2010

Skimming at the Gas Pump

Filed under: Fraud Trends — fraudjournal @ 2:17 AM
Tags: , ,

Steve Pednault of Forensic Accounting Services LLC in CT, stated in his blog that skimming at the gas pumps has increased. Most of us have become aware of attachments to ATMs that skim debit cards at banks, but fraudsters are now hitting the gas stations. For more details here is a link to Steve’s blog:

Protect yourself by being informed and aware.

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