Tag: Current

By Dave Oswald, Forensic Restitution

The rise of the internet and digital devices has transformed the way we live and work, bringing unprecedented levels of convenience and efficiency. However, with these benefits come new risks, and cyber fraud has emerged as a major concern for individuals and businesses alike.

Cyber fraud is a type of crime that exploits digital systems and technology to steal sensitive information, money or property. It can take many forms, including phishing scams, identity theft, ransomware attacks, and more. Cyber criminals use a variety of techniques to carry out their schemes, including social engineering, malware, and hacking.

One of the most common types of cyber fraud is phishing. Phishing attacks involve sending fake emails, texts or social media messages that appear to be from a trusted source, such as a bank or government agency. The message typically contains a link or attachment that, when clicked or downloaded, installs malware on the victim’s device or directs them to a fake login page to steal their credentials.

Another growing threat is ransomware, which involves encrypting a victim’s files or locking them out of their device, and demanding payment in exchange for the decryption key. Ransomware attacks have become more sophisticated in recent years, with some attackers even threatening to release stolen data unless a ransom is paid.

To stay safe and secure online, there are several steps individuals and businesses can take. First, it is important to use strong, unique passwords and two-factor authentication whenever possible to prevent unauthorized access. Regularly updating software and using antivirus and anti-malware software can also help protect against attacks.

Additionally, it is important to be vigilant and skeptical of any unsolicited messages or requests for personal information. Always verify the authenticity of a message or website before entering sensitive information, and never click on suspicious links or attachments.

In summary, the rise of the internet and digital devices has brought many benefits, but also new risks, especially in the form of cyber fraud. By understanding the latest trends and techniques used by cyber criminals and taking appropriate precautions, individuals and businesses can stay safe and secure online.

For more articles from Forensic Restitution, check out their blog Forensic Insights

By Dave Oswald, Forensic Restitution

With the ever-evolving landscape of the business world, accounting and financial professionals must stay vigilant in their efforts to detect and prevent fraud. The COVID-19 pandemic has further accelerated this trend, with remote work, digital transformation, and economic uncertainty all presenting new risks for companies. In this blog post, we’ll explore five of the most common and pressing fraud schemes that organizations need to be aware of in 2023.

Cyber Fraud:
Cyber fraud has been on the rise for several years, and it’s only becoming more prevalent with the increasing dependence on technology and remote work. From malware and ransomware to password cracking and phishing scams, cyber criminals have a range of tools and techniques at their disposal. This year, companies must be particularly vigilant in their cybersecurity efforts, as fraudsters are likely to take advantage of the ongoing pandemic to target businesses and individuals alike.

Vendor and Seller Fraud:
Fraud by vendors and sellers is another common type of financial crime. From fictitious billing to duplicate invoice payments and check tampering schemes, it’s essential that organizations remain aware of these schemes and have processes in place to detect them. This year, it’s more important than ever to work closely with suppliers and ensure that they are adhering to best practices and established protocols.

Payment Fraud:
Payment fraud continues to be a major concern, with false transactions, lost or stolen merchandise, and false requests for refunds all falling under this umbrella. Companies must be proactive in their efforts to detect and prevent payment fraud, using data analytics, fraud investigation techniques, and computer-aided auditing methods to uncover any irregularities.

Healthcare Fraud:
Healthcare fraud is a significant issue, with schemes ranging from billing for services not rendered to misrepresenting the provider of service. In this year, it’s essential to have robust internal controls and a well-trained staff to identify and prevent healthcare fraud. Certified Professional Accountants (CPAs) can play a critical role in detecting and preventing healthcare fraud, leveraging their expertise in financial analysis and investigation to uncover any fraudulent activity.

Identity Theft:
Identity theft is a growing concern, with two main types: traditional identity theft and synthetic identity theft. Traditional identity theft involves a criminal stealing an individual’s personal information, while synthetic identity theft involves a fraudster using a combination of real and fabricated information to create a new identity. This year, organizations must remain vigilant in their efforts to protect sensitive personal information and ensure that their cybersecurity measures are up to date.

Combating fraud requires a multi-disciplinary approach, leveraging the expertise of accounting, financial, and legal professionals, along with the use of advanced data analytics techniques. With these tools and techniques, organizations can better detect and prevent fraud, reducing their exposure to financial crime and other risks. To stay ahead of the curve, companies should invest in the training and development of their staff, ensuring that they have the skills and knowledge necessary to detect and prevent fraud in the business world of 2023.

For more articles from Forensic Restitution, check out their blog Forensic Insights

By David Debenham

In our paper last month, we found that the difference between those who committed opportunistic fraudsters were more likely to be overconfident to pull off a fraud than those who might actually have the ability to do so, but who feared all of the “unknown-unknowns” that could catch them out.   These overconfident people falsely transfer their brilliance in one field into their abilities in fields they know nothing about such as fraud.  Their body language, vocal tone, and rates of participation suggest confidence because of this false transference. This means that these overconfident individuals speak more often, speak with a confident vocal tone, provided more information and answers, and acted calmly and relaxed as they work with their peers in the midst of perpetrating a fraud. In fact, overconfident individuals were more convincing in their displays of ability than individuals who were actually highly competent in their tasks, who, when questioned, become nervous when their conduct is called into question.  The over-confident do not say “I’m really good at this.” Because for them they are past that stage: Instead, they led their “ability” speak for itself as they explain in great detail what they do, and how they do it, in a calm and relaxed way.’  These status seekers who believe their competence at coding transfers into their ability to play poker, chess, or commit fraud, will want to demonstrate this by simply participating more and exhibiting more comfort with any task you put to them, and that is the key to catching them out.¹

The key is to enlist the fraudster’s advice in solving the various issues in your case, much as Columbo does in virtually every episode.   So long as you don’t appear to be as capable as the suspect (and how could you be considering their status and yours?) you can simply pose a serious of problems and let the fraudster solve them for you, all the while incriminating himself. Consider Columbo’s “Bye-bye Sky High IQ Murder case”. Genius accountant Oliver Brandt has been embezzling funds in order to keep his high-maintenance wife in fine frocks and tropical getaways. His business partner Bertie Hastings has just found out – and he must be killed.  Oliver shoots him and rigs an umbrella to take the murder weapon up a chimney. He puts a heavy dictionary on the arm of a chair, balancing precariously.  Oliver then starts a record player playing by pushing the start button, which eventually leads to the sound of two shots fired sometime later when Oliver is safely ensconced in a room full of witnesses who have just entered the adjoining room.  The sound of a body falling between the two shots alarms the witnesses.   The group runs into the room to see Bertie shot. In the confusion Bertie pockets the Dictaphone. Later Oliver recovers the umbrella and disposes of the murder weapon.  Columbo asks if the record had the shots. Of course not.  There were caps in the umbrella that were exploded as soon as the arm of the record player moved.  So too the dictionary was pushed off the arm of the chair by the movement of the arm of the record player, so in sequence it was cap explosion, dictionary fall (“the body”), and second cap explosion. At each stage Columbo suggests a hypothesis and the overconfident “high IQ” Oliver sets him straight, until at the end there is no more mystery to resolve.  Interview technique has outwitted the overconfident murder.   So too, for you.  Enlist the overconfident fraudster to incriminate himself.

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1. Tom, P. (2012, August 14). Why are people overconfident so often? It’s all about social status. Haas News | Berkeley Haas. https://newsroom.haas.berkeley.edu/why-are-people-overconfident-so-often-it ↩︎

By David Debenham

The premise of this parable is that if a frog is put suddenly into boiling water, it will jump out, but if the frog is put in tepid water which is then brought to a boil slowly, it will not perceive the danger and will be cooked to death. The story is often used as a metaphor for the inability or unwillingness of people to react to or be aware of sinister threats that arise gradually, step by step, over time rather than immediate obvious dangers. I see it differently. I see it as an example of the chasm of comfortable complacency.  One author calls it “The peculiar longevity of things ‘not so bad’.[1] The idea is that people stay in these zones of complacency, or “not so bad”, called “beta regions” because things are not so bad as to motivate them to leave, and also the alternative is not so good as to motivate them to leave.  They are stuck in a beta region of inertia or complacency.  Society pushes conformity, mediocrity and normality because it is both safe, and “not that bad”.  Over time grooves become ruts, and patterns become habits. One day we waking up with a bucket list of things we wished we had done, when at one point or another they were achievable with a little effort and imagination.

 Ironically, a nagging injury, a mild cold, or a less than ideal relationship – if they were slightly worse, we might get the injury checked out, take cold medicine, or break up with that person. Once it is severe enough, we take it seriously and are able to resolve it faster.

Why is this important to the field of fraud investigation?   Too often fraud victims are in the beta zone, where they are not so bad off that they have no “felt need for change”— no desire to go to the police or recover the monies wrongfully taken from them.  Those victims need to see (1) the discrepancy between where they are and where they could be by taking action, (2) assurance that the desired state is achievable, (3) that the desired state is more in keeping with their core values, (4) a path to getting to the desired state, and (5) a support team to accompany them to the desired state.  While you may not be the person to lead the transition team from where the victim is and where they could be, you may want to advise and support that leader.

[1] https://www.uclascnlab.com/s/Gilbert-D-T-Lieberman_PeculiarLongevity.pdf