Faces of Fraud E-Book

Martin T. Biegelman

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 463

Veröffentlichungsjahr: 2013

Beschreibung

The ultimate tool for understanding, investigating and preventing fraud Fraud is an evil with a life of its own that leaves a financial, repetitional, and emotional toll on its victims. While monumental scandals, such as Enron, WorldCom, and Madoff's Ponzi scheme make the front pages, fraud is a daily occurrence impacting companies and individuals alike. Faces of Fraud reveals must-know characteristics of fraudsters and the skills needed to outwit them. Recognized Fraud Fighting Expert Martin Biegelman draws from his 40 years of experience fighting fraud to profile not only the key traits fraudsters share, but also the qualities fraud examiners must possess to be successful. * Each chapter contains stories from actual cases that the author investigated * Profiles the must-know characteristics of fraudsters and the skills you'll need to outwit them * Reveals the traits of accomplished fraud examiners * Explores the best practices in fraud detection, investigation and prevention to cultivate in order to maximize success * Written by fraud fighting expert Martin T. Biegelman Although fraud will never be completely eradicated, there is much that can be done to reduce the number and size of frauds that take place in any organization. Boiling down the key lessons the author has culled from his long career, Faces of Fraud entertains and informs with stories from real cases the author investigated over his long career, and imparts useful tips you can start using right away in the fraud examination field.

Leseprobe

Table of Contents

Praise for Faces of Fraud: Cases and Lessons from a Life Fighting Fraudsters

Title Page

Copyright

Dedication

Preface

Acknowledgments

Chapter 1: The Fraudster Mindset

A Silver-Tongued Devil

Sell the Sizzle, Not the Steak

Dr. Donald Cressey and the Fraud Triangle

Fraud Diamond

Fraud Theories

Fraudster Mindset

Notes

Chapter 2: A Short History of Fraud in America

Growth of Mail Fraud

Green Goods Swindles

Grifters

Baker Heirs' Swindle

Golden Age of Fraud

Rise of Boiler Rooms and Bucket Shops

Other Frauds over the Years

Enactment of the Mail Fraud Statute

The Continuous Onslaught of Fraud

Notes

Chapter 3: Use Your Imagination

The Mob Stings Fraudsters

Making the Typewriter Talk

Where the Law of Gravity Doesn't Apply

Welfare for the Deceased

The Value of Imagination

Chapter 4: Make Yourself Lucky

Fraudster Stupidity Is Your Friend

One Man's Trash Is an Investigator's Gold

Let Them Talk

Arson for Profit Case: Impeaching the Defense Expert

One Federal Agent's Attention to Detail

Look and You Shall Find

Don't Take No for an Answer

If You Don't Ask, You Will Never Know

Notes

Chapter 5: Patience Is a Virtue

Stopping a Fraud Scheme

New York State of Fraud

Recommendations to Prevent Property Insurance Fraud

Chapter 6: Fraud Can Be Murder

Good Humor Ice Cream Scandal

Bad Ham and Bribes

Golden Needles Acupuncture

Blast from the Past

Security Guard Indignity

Next Time Dead

Notes

Chapter 7: Arrogance and Recidivism

If You Are Here, You Are Not As Smart As You Think You Are

Arrogance Is Common

Arrogance and Recidivism Often Go Hand-in-Hand

Arrogance and Rebate Fraud

Making It a True Federal Case

Fraudsters Say and Do the Darndest Things

Notes

Chapter 8: Informants and Whistleblowers: The Good, the Bad, and the Ugly

Managing Confidential Informants

Informants Gone Bad

Falling in Love with an Informant

Nightmare Informants

A Rogue FBI Agent Strikes a Deal with Two Devils

Avoid a Failed Investigation

Notes

Chapter 9: A Tale of Deceitful Pitches and Vendor Kickbacks

History of American Chemical Industries

Description of the Fraud Scheme

Detection and Investigation

The Continuing Investigation

Prosecution

Special Circumstances

Fraud Prevention

Chapter 10: Cruise to Nowhere

Description of the Fraud Scheme

Detection

Investigation

Factoring of Credit Card Charges

Investigative Reporting

Execution of Search Warrant

Circularization

Undercover Trip

Prosecution

Special Circumstances

Fraud Prevention

Investigative Best Practices

Note

Chapter 11: Who's Who of Fraud: A Story of Vanity and Deception

The Making of a Fraudster

Fraud Scheme

Investigation

Prosecution

Special Circumstances and Additional Fraud

Postscript

Chapter 12: Kids and Coins: Scoundrels without a Conscience

Genesis of the Fraud

Description of the Fraud Scheme

Investigation

Prosecution

Special Circumstances

Fraud Prevention

Notes

Chapter 13: More Tips, Best Practices, and Lessons

Become a Subject Matter Expert

Documents, Documents, and More Documents

Remember the Boy Scout Motto

Why I Love Liars

Fraudsters Love Expense Report Fraud

San Francisco Metergate

Yellow Pages Invoice Scam

Best Laid Plans of Mice and Men Often Go Awry

Notes

Chapter 14: Power of Prosecution and Prevention

Fraud Prevention for Individuals

Fraud Prevention for Business Organizations

Fraudsters Are the Same Everywhere

Fraud Is the Golden Goose for Criminals

It's Déjà vu All Over Again

Sadly, Fraud Is Here to Stay

Notes

About the Author

Index

Praise for Faces of Fraud: Cases and Lessons from a Life Fighting Fraudsters

“Martin has done it again. He has written another book with tons of great tips for anyone seeking to detect, investigate and prevent fraud or corruption. Martin has relied upon his exceptional 40-year career to write this interesting and informative compilation of lessons learned and best practices. The beauty of the book is that it provides one with the opportunity to experience some of what Martin has lived in fighting wrongdoing while working for the government and in the private sector. The take-away is practical guidance for dealing with possible fraud and corruption, no matter what the situation.”

—Karen A. Popp, Sidley Austin's Global Co-Chair of the White Collar Group, and former New York federal prosecutor, Department of Justice official, and Associate White House Counsel to President Clinton

“A compelling look into the minds and methods of fraudsters and those who chase them. Faces of Fraud reaffirms the adage that fraud schemes are limited only by the imagination. It also demonstrates that fraud investigators have kept pace with their quarry, relentlessly pursuing fraudsters who have made their schemes opaque and complex. Mr. Biegelman's advice on preventing fraud and conducting fraud investigations is worth the price of admission.”

—Jan Lawrence Handzlik, Partner and Chair, Anti-Corruption and FCPA Practice Group, Venable LLP

“Martin Biegelman is the real deal; he's been there, he's done that. Based largely on his experiences as a federal agent, Faces of Fraud provides rare insight into the operation of major fraud rings from the perspective of the one who broke them up. It's a fascinating, invaluable guide for those who either want to investigate fraud or who want to avoid becoming a victim.”

—Doug Behm, Attorney and former federal prosecutor

“There is no one more qualified to write a book on the detection, investigation and the prosecution of fraud and fraudsters than Martin T. Biegelman. In his latest book, Faces of Fraud, Martin shares with the reader his many years of fraud-fighting experience and the investigative techniques he used to bring hundreds of fraudsters to justice. His chapter on the use and control of confidential informants is unparalleled anywhere. His latest book is sure to become the definitive work on Fraud Fighting!”

—John E. McDermott, U.S. Postal Inspector (retired), Corporate Compliance Investigator

“Because fraud has so many faces, those who fight it can never stand still. Knowledge is our greatest (and sometimes only) weapon. Regardless of whether you are a beginner or a seasoned anti-fraud professional, you can't help but benefit from Martin's candid analysis and discussion of the many cases he has investigated. I thoroughly enjoyed this this peek into his remarkable career and experiences.”

—John D. Gill, J.D., CFE, Vice President–Education, Association of Certified Fraud Examiners

“What a fascinating look into the mind of fraudsters! Martin has worked side by side with fraudsters for 40 years, the right side. His case studies are riveting. Anyone who intends to protect their fortune or help others protect their fortune will find Faces of Fraud worth a fortune.”

—Roy Snell, CEO, Society of Corporate Compliance and Ethics

“Regardless of your profession, if you are intrigued by fraud, how it reveals itself, how it is detected, investigated and prosecuted, you must read this book. Every cleverly titled chapter pulls the reader into a world of intrigue, mystery, discovery, excitement and sometimes serious danger. The reader feels he is in the midst of the case, at the side of the investigator, boots-on-the-ground, witnessing real-life events unfold, as if for the very first time. The book doesn't stop there. It offers even more to its readers. It provides guidance on how best to investigate the many complex varieties of fraud. It describes processes and procedures to follow and provides tips and recommendations from investigative lessons learned. Simply put, Faces of Fraud is a book that has it all.”

—Rebekah J. Poston, Partner, Squire Sanders LLP

“Faces of Fraud contains a line that reads, ‘Remember to always use your imagination in the detection, investigation, and prevention of fraud and other crimes.’ Clearer words were never spoken about fighting fraud. That they come from the pen of Martin Biegelman is no surprise. Few fraud investigators possess the depth and breadth of investigative experience and analytical prowess that he does. It is a gift to the entire fraud-fighting profession that he has seen fit to put his 40 years of practical wisdom between the covers of this new must-read.”

—Peter Goldmann, CFE, President, White-Collar Crime 101/FraudAware

“Mr. Biegelman's conversational tone belies his deep and insightful understanding of fraud and its prevention, detection, and investigation. With this latest highly readable book, he has surely cemented his place as one of the world's foremost authorities on the topic of economic crime. Utica College is proud of its relationship with Mr. Biegelman, and our faculty and students are grateful for his ongoing support, expertise, and guidance as chair of the Economic Crime Institute's Board of Advisors.”

—Todd S. Hutton, President, Utica College, Utica, New York

“Marty's latest book is a comprehensive guide on fraud detection, investigation and prevention with interesting fraud-fighting experiences designed to help readers spot, not only the red flags, but the earlier yellow flags of fraud.”

—George A. Stamboulidis, Esq., Managing Partner of the New York office and co-head of the White Collar & Corporate Investigations Team, BakerHostetler LLP

Faces of Fraud is an excellent primer on the history and evolution of fraud. Mr. Biegelman provides detailed and valuable insights from his long and successful career investigating a wide variety of fraud schemes. Mr. Biegelman also discusses numerous investigative techniques that aided him in conducting his many successful investigations. Faces of Fraud includes numerous well told examples of investigations ranging from simple to complex and covering the gamut of fraud schemes including mail, wire and bank fraud, identity theft, coupon and rebate fraud, telemarketing boiler rooms, insurance, healthcare, and accounting fraud to name a few.”

—Peter Sullivan, Director, Global Security, Monsanto Company

“In Faces of Fraud, Martin Biegelman shares the highly innovative and successful investigative techniques that he used during an incredible 40-year career investigating financial crimes. Anyone interested in the investigation and prevention of fraud will find Faces of Fraud an invaluable resource.”

—Patricia A. Pileggi, Partner, Schiff Hardin LLP

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Copyright © 2013 by John Wiley & Sons, Inc. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:

Biegelman, Martin T.

Faces of fraud : cases and lessons from a life fighting fraudsters / Martin T. Biegelman.

pages cm

Includes bibliographical references and index.

ISBN 978-1-118-00274-2 (hbk.) - ISBN 978-1-118-22171-6 (ePDF) (print) - ISBN 978-1-118-26026-5 (Mobi) (print) - ISBN 978-1-118-23545-4 (ePub) (print) - ISBN 978-1-118-55691-7 (O-Book)

1. Fraud. 2. Fraud investigation. 3. Fraud-Prevention. I. Title.

HV6691.B4738 2013

363.25'963-dc23

For Frank Citera, Joe Tomaino, and Bob Paschel.

Preface

I have lived my life fighting fraud and fraudsters. My 40-year career started as a fraud investigator in state and local law enforcement, and later moved to a role as a federal agent tackling more complex fraud and corruption cases. When I retired from law enforcement, I went to work in a forensic consulting practice assisting public and private companies with internal investigations and litigation issues, and designing fraud prevention programs. That was followed by the exceptional opportunity and experience to create and lead Microsoft Corporation's Financial Integrity Unit. There I built a worldwide team of outstanding fraud and corruption fighters to protect Microsoft from financial and reputation risk. The Financial Integrity Unit that I founded continues to be a model for other corporate investigative programs.

After almost nine years at Microsoft, I returned to consulting in a global investigations and compliance practice at Navigant where I share my best practices and experiences with Fortune 500 companies and other business organizations. My client focus is on conducting internal investigations on behalf of corporate management and boards, Foreign Corrupt Practices Act and antibribery compliance, litigation consulting, due diligence, and corporate compliance design and implementation.

In the past 40 years, I have learned many lessons from fighting fraudsters and fraud around the world, including how to spot the unheeded warning signs and how to understand the criminal mindset. I have distilled these lessons into the resulting best practices in fraud detection, investigation, and prevention that are discussed in this book. There are many different faces of fraud and I have seen most, investigating literally thousands of cases over the years. This experience has allowed me to develop proven strategies for investigation and detection that are backed up with real stories (though in some cases the names of people and businesses have been changed) throughout this book.

One thing is certain. Fraud is evil, with a life of its own that shows no sign of abating. I have seen that evil perpetrated in case after case. As I peeled away the onion of fraud in every investigation, I would find layer upon layer of financial and emotional consequences. I came to recognize this as the hallmark of fraud. Sadly, all that I have seen over the years is an increase in the occurrence of fraud and in the level of victimization. We as a society seem to be unable to learn from our past and continue to fall victim to a multitude of scams and schemes. If only we could see what fraud looks like to better defend against it when it stares us in the face. If only we could do a better job of catching fraudsters and preventing this evil. Thus, when I decided to write a book about my decades of conducting fraud investigations and my associated experiences with fraudsters, Faces of Fraud: Cases and Lessons from a Life Fighting Fraudsters was the logical title.

I have been blessed with an amazing career. Early on, a wise detective told me something I would never forget: that I had chosen the right field of employment and I was very lucky. He said that human greed, naiveté, and fraud would always exist, and as such, I would be guaranteed a full and long employment. He was right; fraud has been my life, figuratively speaking, and I have been able to turn my job into my lifelong hobby. Though some people might consider me an expert, I keep learning every day. I've had a lot of wins over the years and also some losses. I am honored to be able to share my fraud-fighting experiences, cases, best practices, and lessons with you.

Acknowledgments

I have had an amazing career, and what has made me successful throughout my career are the great people I have had the privilege of working with—and I would like to acknowledge some of them here.

From the New York State Department of Agriculture and Markets: Peter Calabrese, John Dyson, and Thomas Conway.

From the Brooklyn District Attorney's Office: Doug Behm, Steve Taub, Richard DiBenedetto, Henry Randolph, Andrea Appelman, and Sarah Conley.

From the San Francisco District Attorney's Office: Dave Reuben, Audrey Moy, John Vanderwulp, Kevin Ford, Cathy Holland, Robert Musante, Larry Lawrence, Bob Graham, Wally Hirsch, Chandler Vischer, and Carol Hehmeyer.

From the Postal Inspection Service: John McDermott, Sol Farash, Al Pagano, Lou LaFleur, John LaPerla, Maria Luckas, OC Leonard, Carl Sclafani, Bill Hessle, Randy Cox, Sara Levinson, Tom Reilly, Kevin Kreitman, Manny Cobos, Nefty Carrasquillo, Pat Sweeney, Ken Jones, and Pete Sullivan.

From the U.S. Attorney's Office for the Eastern District of New York: Karen Popp, Mark Kirsch, George Stamboulidis, Jodi Avergun, Sean O'Shea, Leslie Caldwell, Zach Carter, Alan Vinegrad, Loretta Lynch, Joan Azrack, Bridget Rohde, Seth Marvin, Ron White, Pat Pileggi, Joel Cohen, Burt Ryan, Kirby Heller, Greg O'Connell, Gavin Scotti, Ira Belkin, Steve Gold, and Chuck Gerber.

From Microsoft Corporation's Financial Integrity Unit: Brock Phillips, Tammi Johnson, Shannon Grayer, Jerry Bamel, Bob Morgan, Heather Yu, Gaurav Ajmani, Nash Parida, Lynn Sharp, Lou DeCola, Weeshirl Ng, Hao Zheng, Oleg Lykov, Cindy Prudnick, Eddie Hill, Jeff Scobba, Ramon Garcia, and Kim Haistings.

Thank you as well to others I had the honor to work with including Tom Kiernan, Joe Jordan, Chuck Millar, Odell Guyton, Charlie Ferrigno, Scott Alswang, Art Harding, Joel Bartow, Jim Cappiello, Jim Kaiser, Linda Vincent, and Carla Friestad.

A special note of thanks to the Association of Certified Fraud Examiners and their exceptional people including Joe Wells, Jim Ratley, Jeanette LeVie, John Gill, Allan Bachman, John Warren, Kevin Tapauarskas, Dick Carozza, and all the other ACFE professionals.

With each book I write, the more I realize the arduous task it is to produce a manuscript that meets readers' expectations. I could not accomplish that without the guidance of Tim Burgard, my executive editor at John Wiley & Sons. Tim supported me from the initial concept through the finished product. I also want to acknowledge Helen Cho, Stacey Rivera, Nikole Connors, and Kimberly Monroe-Hill at Wiley who have been invaluable in helping me navigate through issues large and small in the production process.

When I wanted someone to read my draft manuscript and give me honest feedback, I again turned to my dear friend, DeWayn Marzagalli. DeWayn, a former federal agent extraordinaire, provided the constructive and thoughtful comments I needed. Writing a book without DeWayn's keen eye and recommendations would not seem right. In fact, this is the fifth book that he has helped me with. Thank you, DeWayn.

Although this work is solely mine and does not reflect the views or opinions of Navigant Consulting, I would like to thank my employer for supporting me in writing this book.

And last but certainly not least, to my wife, Lynn, and son, Daniel, who were indispensable to me, as they spent countless hours reviewing the manuscript and providing insightful feedback. Lynn's constant encouragement, wisdom, and attention to detail were essential. Her patience, as I again spent all my free time engrossed in completing this book, is exceptional and much appreciated.

Chapter 1

The Fraudster Mindset

What does a fraudster look like? Can you tell the evil from his or her face? Are there warning signs one can see so as to be on alert? I have been asked these questions over the years. The fact is there is no easy way to look at a person and know for sure their criminal intent. The faces of fraud are everywhere. Fraudsters may be male or female, young or old, short or tall. Fraudsters are your brothers and sisters, friends and neighbors, people from all walks of life and often those you least expect to scheme and scam. If you had come across Bernard Madoff walking the streets of Manhattan prior to December 2008 and his arrest for the mother of all Ponzi schemes, you would have thought you just saw the face of a 70-year-old grandfather out for a leisurely stroll. Certainly not the monster who stole billions of dollars from people who trusted him and in the process destroyed the lives of so many.