In Memoriam
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Written By:
Global Fraud Focus
Why should Americans care about fraud outside the U.S.?
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Date:
January 1, 2014
Read time: 6 mins
Think of the U.S. as one very big sweet shop. Bad guys from all over the world will go to great lengths to steal that candy. They will hatch plots and commit crimes in far-flung foreign countries, but the target will be America.
Perhaps, many Americans (and a handful of fraud examiners) may think that they should only be concerned about fraud within their borders. However, many fraud schemes are hatched overseas for U.S. consumption. Here we list just a few frauds that originated outside the U.S. but targeted Americans. Use this information when your U.S. friends are feeling a bit insular about fraud.
PRIMO COUNTERFEIT GREENBACKS
The global post reported in May that Peru had overtaken Colombia as the top producer of false U.S. dollars with some 17 percent of all fake bucks in circulation.
These aren’t poor-quality photocopies but high-grade, offset-printed counterfeits. Though many of these counterfeit greenbacks are destined for the U.S., they’re also headed for the black markets of Argentina and Venezuela, which have currency controls and poor economies. These false dollars greatly affect the U.S. and world economies. (See “Peru: Counterfeit currency king,” May 28, 2013, minnpost.)
CHINESE OZONE-DEPLETING GAS, FAKE BRANDS, IP THEFT AND MORE
The New York Times reported that Carlos Garcia was sentenced to 13 months in prison for illegally importing into the U.S. an ozone-depleting coolant gas made in China. In three separate operations, he arranged for the routing of gas through the Dominican Republic by telling smugglers how to fake invoices and get the gas past customs. (See “As Coolant is Phased Out, Smugglers Reap Large Profits,” by Elisabeth Rosenthal and Andrew W. Lehren, Sept. 7, 2012.)
Reuters reported the U.S. and China joined forces in a month-long operation that resulted in the seizure of 243,000 counterfeit electronic goods, some of which carried fake Apple and Blackberry brands. (See “U.S., China team up to seize counterfeit goods in joint operation,” by Deborah Charles, Reuters, July 31.)
Theft of intellectual property rights could cost U.S. businesses more than $300 billion a year — equivalent to the annual value of U.S. exports to Asia, according to a report by the Commission on the Theft of American Intellectual Property. “The exact figure is unknowable, but private and governmental studies tend to understate the impacts due to inadequacies in data or scope,” according to the report.
U.S. CATCHES WORLDWIDE CREDIT CARD FRAUD
In February, USA Today reported that the U.S. Justice Department had cracked an international credit card fraud case, which raked in more than $200 million. The ring apparently started small but grew to involve 28 states and eight countries. By 2012, the criminal gang had created more than 7,000 false identities to obtain more than 25,000 credit cards. Millions of dollars were wired to Pakistan, India, the United Arab Emirates, Canada, China and Japan. (See “U.S. cracks international credit card fraud ring,” by Gary Strauss and Christine Dugas, February 5.)
U.S., CHINA COOPERATE IN NABBING BUSINESS DECEIVERS
The U.S. Securities and Exchange Commission’s Cross-Border Working Group reported that it had charged a China-based company and its CEO with fraudulently misleading investors. This is the latest in more than 65 foreign issuers or executives against whom fraud cases have been brought.
This company began falsely reporting significant increases in business operations almost immediately after becoming a publicly traded company, according to the SEC. U.S. investors rely daily on information provided by publicly traded companies. There’s a worrying trend that some foreign companies appear to be providing false information to increase money from stock sales and so mislead American citizens. This case also involved corruption; the CEO attempted to pay off a senior accountant assigned to investigate the case. (See “SEC Charges China-Based Company and CEO in Latest Cross-Border Working Group Case,” June 20, SEC press release.)
VIRTUAL CURRENCY TRANSLATES TO REAL FRAUD
In May, the U.S. arrested the founder of Liberty Reserve, a virtual currency exchange based in Costa Rica, and five employees. They’re facing charges including conspiracy to commit money laundering and operating an unlicensed money transmitting business. (See “Cyber crime: without a trace,” by Kara Scannell, ft.com, May 31.) Preet Bharara, the U.S. Attorney for Manhattan, alleged the “black market bank” has laundered $6 billion in criminal proceeds in six years.
Now, The Financial Times reports that U.S. authorities are cracking down on other virtual currencies in a fear that U.S. citizens are using them to evade tax. Some of these currencies can be traded anonymously, which means they may be used to hide money from the Internal Revenue Service. (See “US to crack down on virtual currency tax fraud,” by Kara Scannell, ft.com, June 10.)
CONTACT CENTERS PLUS EUROPOL REPORT
Fraud Watch, issue 3, volume 21 reports that organized fraud rings are attacking contact centers; 79 percent of executives of these centers report that account takeover and social engineering represent the majority of fraud, according to the Aite Group. Aite, interviewed executives at 19 of the top 40 U.S. financial institutions and found that contact center losses are often understated and not that well understood. (Companies use contact centers to manage all client contact through telephone, fax, letter, email, online live chat and other mediums.)
In the same issue, the publication reports that Europol has published the most comprehensive threat assessment ever undertaken in Europe. (See “EU Serious and Organised Crime Threat Assessment.”) Now you may ask, “Why should Americans be concerned with a Europol report?” Well, the simple answer is that any crimes that occur in the world will eventually affect the U.S.
The Europol report estimates that some 3,600 organized criminal groups operate from within Europe worldwide. It underlines how Italian organized crime groups are operating globally but keep a low profile, which makes it difficult for law enforcement to detect their presence.
The main activities of these groups are money laundering and large-scale drug trafficking, but they’re also involved in corruption, counterfeiting and the trafficking of toxic waste. The immense assets organized crime groups have — one group alone is estimated to generate revenues of up to £44 billion a year — make it easy for them to infiltrate legitimate economies and inject much-needed liquidity into struggling business.
PHISHING AND SCAMMING
Phishing scams from overseas are well-known, but every now and then there are variations, and a new fraud morphs from the old. That was the case recently when U.S. citizens were the target of emails, which purported to come from the regional auditor of the National Association of Unclaimed Property (NAUPA).
According to the office of Clint Zweifel, Missouri state treasurer, the phishing email comes from “Mrs. Alexis James, the Regional Auditor of the National Association of Unclaimed Property” who writes that she came across an “unclaimed fund worth more than 23million dollars that you shared the same name with the next of kin to the fund, the fund have been unclaimed for years.”
The sender of the email asks the recipient for his name, email and phone number “so that I can send you detailed information on the modalities of this proposition.” This scam, unlike typical Nigerian email frauds, actually sounds like it could be true because NAUPA is a real organization. Because of the syntax and the unusual “23million dollars” reference, these emails could be from overseas. (See “Email scam targets Missourians for unclaimed property,” KTVI, Jefferson City, Mo., on Missouri State Treasurer Clint Zweifel’s site.)
The U.S. Federal Trade Commission (FTC) reports that fraudulent Jamaican telemarketers are calling people in the U.S. to tell them they’ve won a sweepstakes or lottery.
“The fraudulent telemarketers typically identity themselves as lawyers, customs officials or lottery representatives, and tell people they’ve won vacations, cars or thousands — even millions — of dollars. ‘Winners’ need only pay fees for shipping, insurance, customs duties or taxes before they can claim their prizes,” according to the FTC.
AMERICANS NEED TO BE AWARE OF GLOBAL FRAUD
These are just a handful of frauds and scams that originated outside the U.S. but targeted Americans. Fraudsters all around the world have their faces pressed up against of the glass of the U.S. candy shop. Americans should clean the storefront glass and see those criminals who want what you have. They need to know the types of fraud that criminals outside the U.S. are committing. And you, if you’re an American fraud examiner, would be serving your community well to warn your fellow citizens of the global fraud environment.
Tim Harvey, CFE, JP, is director of the ACFE’s UK Operations and a member of Transparency International and the British Society of Criminology.
Richard Hurley, Ph.D., J.D., CFE, CPA, is a professor at the University of Connecticut (Stamford) School of Business.
U.S., CHINA COOPERATE IN NABBING BUSINESS DECEIVERS
The U.S. Securities and Exchange Commission’s Cross-Border Working Group reported that it had charged a China-based company and its CEO with fraudulently misleading investors. This is the latest in more than 65 foreign issuers or executives against whom fraud cases have been brought.
This company began falsely reporting significant increases in business operations almost immediately after becoming a publicly traded company, according to the SEC. U.S. investors rely daily on information provided by publicly traded companies. There’s a worrying trend that some foreign companies appear to be providing false information to increase money from stock sales and so mislead American citizens. This case also involved corruption; the CEO attempted to pay off a senior accountant assigned to investigate the case. (See “SEC Charges China-Based Company and CEO in Latest Cross-Border Working Group Case,” June 20, SEC press release.)
VIRTUAL CURRENCY TRANSLATES TO REAL FRAUD
In May, the U.S. arrested the founder of Liberty Reserve, a virtual currency exchange based in Costa Rica, and five employees. They’re facing charges including conspiracy to commit money laundering and operating an unlicensed money transmitting business. (See “Cyber crime: without a trace,” by Kara Scannell, ft.com, May 31.) Preet Bharara, the U.S. Attorney for Manhattan, alleged the “black market bank” has laundered $6 billion in criminal proceeds in six years.
Now, The Financial Times reports that U.S. authorities are cracking down on other virtual currencies in a fear that U.S. citizens are using them to evade tax. Some of these currencies can be traded anonymously, which means they may be used to hide money from the Internal Revenue Service. (See “US to crack down on virtual currency tax fraud,” by Kara Scannell, ft.com, June 10.)
CONTACT CENTERS PLUS EUROPOL REPORT
Fraud Watch, issue 3, volume 21 reports that organized fraud rings are attacking contact centers; 79 percent of executives of these centers report that account takeover and social engineering represent the majority of fraud, according to the Aite Group. Aite, interviewed executives at 19 of the top 40 U.S. financial institutions and found that contact center losses are often understated and not that well understood. (Companies use contact centers to manage all client contact through telephone, fax, letter, email, online live chat and other mediums.)
In the same issue, the publication reports that Europol has published the most comprehensive threat assessment ever undertaken in Europe. (See “EU Serious and Organised Crime Threat Assessment.”) Now you may ask, “Why should Americans be concerned with a Europol report?” Well, the simple answer is that any crimes that occur in the world will eventually affect the U.S.
The Europol report estimates that some 3,600 organized criminal groups operate from within Europe worldwide. It underlines how Italian organized crime groups are operating globally but keep a low profile, which makes it difficult for law enforcement to detect their presence.
The main activities of these groups are money laundering and large-scale drug trafficking, but they’re also involved in corruption, counterfeiting and the trafficking of toxic waste. The immense assets organized crime groups have — one group alone is estimated to generate revenues of up to £44 billion a year — make it easy for them to infiltrate legitimate economies and inject much-needed liquidity into struggling business.
PHISHING AND SCAMMING
Phishing scams from overseas are well-known, but every now and then there are variations, and a new fraud morphs from the old. That was the case recently when U.S. citizens were the target of emails, which purported to come from the regional auditor of the National Association of Unclaimed Property (NAUPA).
According to the office of Clint Zweifel, Missouri state treasurer, the phishing email comes from “Mrs. Alexis James, the Regional Auditor of the National Association of Unclaimed Property” who writes that she came across an “unclaimed fund worth more than 23million dollars that you shared the same name with the next of kin to the fund, the fund have been unclaimed for years.”
The sender of the email asks the recipient for his name, email and phone number “so that I can send you detailed information on the modalities of this proposition.” This scam, unlike typical Nigerian email frauds, actually sounds like it could be true because NAUPA is a real organization. Because of the syntax and the unusual “23million dollars” reference, these emails could be from overseas. (See “Email scam targets Missourians for unclaimed property,” KTVI, Jefferson City, Mo., on Missouri State Treasurer Clint Zweifel’s site.)
The U.S. Federal Trade Commission (FTC) reports that fraudulent Jamaican telemarketers are calling people in the U.S. to tell them they’ve won a sweepstakes or lottery.
“The fraudulent telemarketers typically identity themselves as lawyers, customs officials or lottery representatives, and tell people they’ve won vacations, cars or thousands — even millions — of dollars. ‘Winners’ need only pay fees for shipping, insurance, customs duties or taxes before they can claim their prizes,” according to the FTC.
AMERICANS NEED TO BE AWARE OF GLOBAL FRAUD
These are just a handful of frauds and scams that originated outside the U.S. but targeted Americans. Fraudsters all around the world have their faces pressed up against of the glass of the U.S. candy shop. Americans should clean the storefront glass and see those criminals who want what you have. They need to know the types of fraud that criminals outside the U.S. are committing. And you, if you’re an American fraud examiner, would be serving your community well to warn your fellow citizens of the global fraud environment.
Tim Harvey, CFE, JP, is director of the ACFE’s UK Operations and a member of Transparency International and the British Society of Criminology.
Richard Hurley, Ph.D., J.D., CFE, CPA, is a professor at the University of Connecticut (Stamford) School of Business.
The Association of Certified Fraud Examiners assumes sole copyright of any article published on www.Fraud-Magazine.com or ACFE.com. Permission of the publisher is required before an article can be copied or reproduced.
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