31
Aug/1164

San Francisco Giants and Embezzlement: Unexpected Combination?

Much has been written about the risks associated with employee embezzlement, especially in light of the current state of the economy, employment and the declined financial climate in general.  Yet day after day I receive 10-20 new Google alerts of news stories involving embezzlement around the country.

In this latest case capturing headlines due to the victim organization being the San Francisco Giants, much can be learned from what little has been publicized about the breaking case thus far.

One particularly interesting detail is that the embezzlement was not known by the organization, nor was it detected by any of the internal controls one would think would be implemented within such an organization.  Rather, as is common in so many cases, the suspect did something outside of their employment that triggered the discovery.  One can more than speculate that had it not been for the suspect triggering her own scheme, the organization may have never learned of her theft (also very common).

In this case a letter written by the suspect supporting a loan application, sent by the potential lender to the employer (Giants) to be validated, is reported to be responsible for identifying the thefts.  For the San Francisco Giants, the drastic change in the lending industry in response to past lending fraud, requiring validation and corroboration of applicant-provided information, may have saved the organization from an even larger loss.

Where were the internal controls?

Who authorizes, processes, reviews, reconciles and records the payroll at this and every organization?  Fraudulent payroll schemes are common and should be easily prevented and/or detected before reaching such large amounts as with this case involving over $1.5 million.  At a minimum, the payroll details of those who have access to payroll should be scrutinized regularly to ensure such a scheme could not occur for long, a recommendation I have been making for twenty-plus years.  This individual is reported to have had an annual salary of $80,000.

Here’s a link to one of the several articles:

http://abclocal.go.com/kgo/story?section=news/iteam&id=8336001

Filed under Battle on Fraud 64 Comments »

11
Jul/1152

New Wireless App – Depositing Checks Using Your Cell Phone?

A recent commercial on tv highlighted a new app to be launched in the near future, perhaps as early as this summer.  The app will allow a smart phone user to take a picture of a check to be deposited, and transmit the picture to their bank.  The user will not have to physically go to the bank, nor present the actual check for deposit with the bank.

I see the convenience of this app, being able to open your mail and make your deposits without ever leaving your house.  This could be especially handy during inclement weather, or if you have family members under your care who can’t be left alone (young children, older adults).

However, I would be remiss as a fraud examiner if I didn’t ponder how this new app could effect the incidents of fraud.  A real problem already exists with counterfeit, altered and stolen checks being cashed and/or deposited, along with multiple types of scams, including one whereby unsuspecting individuals are solicited to deposit checks, only to retain a portion and transmit the residual funds.  Often to perpetrate schemes involving counterfeit, altered or stolen checks, individuals (“mules”) are drafted to receive, cash or deposit the checks.  Once completed, the individuals forward the funds received to their “employer.”

The present schemes rely on tellers, clerks and other “live” individuals who handle cashing or depositing checks to look for signs indicating the checks may be counterfeit, altered or stolen.  With the release of the new app, there will be no teller interactions.

It will be interesting to see what safeguards are put into place with this new app, and also how long before this scheme is exploited once the app is released.

Filed under Battle on Fraud 52 Comments »

9
May/116

High Speed Impact of Race Car Into Tree: As We Watched It Happen

Working on an ambulance for the past 15 years, I have seen the results of many accidents and incidents, a few bad ones, but never observed them as they occurred.  That is until yesterday.

A car traveling like a race car through the neighborhood in the middle of a Sunday afternoon.  Kids (my kids, nieces and nephews) playing on the sidewalk near the street, cars parked in the street out front with relatives getting into them, and along comes the race car, again!  The second time since I arrived, potentially the fourth time in total total.  Each time you could hear it coming.

With the sound much like the Indy 500, the driver races at top speed past the house, skids and slides in the street two houses down, and proceeds to spin around in the street, smoking the tires with his engine blarring.  Off like a bullet, the driver skids again, spins 180 degrees, and continues.  Spinning once again, he continues to race the engine, spin the tires, pour off smoke and screams away.  All with the kids standing less than fifty to a hundred feet away, to as close as the width of the street away as he approaches the house.

As the race car attempts to speed away, crossing past the kids, the relatives getting into their car parked in front, and all the neighbors watching what he was doing, the tires grab and instantly the car lurches out of control and into a large tree, causing instant destruction of the car.  Right across the street (twenty or so feet) from my kids in the front yard and the parked cars in front of the house.

Expecting the driver to be impacted, we were all amazed when the driver crawled out of what was left of his Camaro race car, head bleeding, and ran through the backyard where he proceeded to run through the woods along the highway.  State and local police, along with their tracking dog… never caught him.

To see it live, up close and personal was surreal.

Filed under Beyond Fraud 6 Comments »

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