Category: Scams

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Business Fraud and Embezzlements

Recent headlines from the Eastern District of Missouri, U. S. Attorney’s Office:

DeSoto Woman Sentenced for Embezzling $1.6 Million from Grandview School District
October 13, 2017

Kinloch Official Sentenced for Stealing Money from the Kinloch Fire Protection District
October 25, 2017

Former Chief Financial Officer Sentenced for Stealing $2.8 million from Company
November 6, 2017

The 2016 American Association of Certified Fraud Examiners (ACFE) Report to the Nations found that the median loss to businesses due to fraud was $150,000.00.

Most of these frauds could have been prevented with proper internal controls and due diligence on the part of the businesses. Looking at the court cases of the above three crimes cited, all involved individuals who were trusted by the organization and were given carte blanche to handle the organization finances with little or no oversight.

As a business owner, prevention of fraud, waste, and abuse can be achieved with proper internal controls and appropriate oversight. The loss from fraud and embezzlement is not only monetary. To quote a business owner from one of the above cited cases:  we “thought we had a significant problem until we spent the next three months of our lives going through everything, including looking at the front and back of 44,000 checks…”

What can business owners do to protect themselves? Having strong internal controls are mandatory.  Businesses can also watch for behavioral red flags for fraud and embezzlement as noted from the 2016 ACFE Report to the Nations:

  • Living Beyond Means (45.8%)
  • Financial Difficulties (30%)
  • Unusually Close Association with Vendor/Customer (20.1%)
  • Wheeler –  Dealer Attitude (15.3%)
  • Control Issues, Unwillingness to Share Duties (15.3%)
  • Divorce / Family Problems (13.4%)
  • Irritability, Suspiciousness or Defensiveness (12.4%)
  • Addiction Problems (10%)

Businesses can be defrauded on many fronts: Internally by employees, managers, officers, or owners of the company, or externally by customers, vendors, and other parties.

Simpson Security and Investigative Advisory Group, LLC has trained fraud investigators, forensic accountants, and Certified Public Accountants (CPA’s) on staff to assist businesses in fraud prevention, fraud awareness, and fraud detection

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Traveler Warning

Travelers’ laptop scam

Recent analysis from the FBI and other government agencies demonstrates that malicious actors are targeting travelers abroad through pop-up windows while they are establishing an Internet connection in their hotel rooms.

Recently, there have been instances of travelers’ laptops being infected with malicious software while using hotel Internet connections. In these instances, the traveler was attempting to set up the hotel room Internet connection and was presented with a pop-up window notifying the user to update a widely used software product. If the user clicked to accept and install the update, malicious software was installed on the laptop. The pop-up window appeared to be offering a routine update to a legitimate software product for which updates are frequently available.

The FBI recommends that all government, private industry, and academic personnel who travel abroad take extra caution before updating software products through their hotel Internet connection. Checking the author or digital certificate of any prompted update to see if it corresponds to the software vendor may reveal an attempted attack. The FBI also recommends that travelers perform software updates on laptops immediately before traveling and that they download software updates directly from the software vendor’s website if updates are necessary while abroad.

Anyone who believes he or she has been a target of this type of attack should immediately contact a local FBI office and promptly report it to the IC3’s website at www.ic3.gov. The IC3’s complaint database links complaints together to refer them to the appropriate law enforcement agency for case consideration. The complaint information is also used to identify emerging trends and patterns.

Source:  www.fbi.gov;  “Malware Installed on Travelers’ Laptops Through Software Updates on Hotel Internet Connections”, May 21, 2012