Food fraud and more

Food Fraud

Food is not safe from fraud. Counterfeits, dilutions, substitution and mislabeling are among the many tactics fraudsters use to infiltrate the global food market. According to the Food and Drug Administration, food fraud affects 1% of the global food industry at a cost of $40 billion per year. Fabricating details about an animal’s true origin along with dilution or substitution were the most prevalent types of fraud committed from 2012 to 2021. A common example of this is diluting an expensive extra virgin olive oil with a cheap vegetable oil.

To fight against product fraud, the Food Fraud Prevention Think Tank suggests that consumers ask about the type of product, whether they can recognize the difference between products, what is known about the retailer or supplier, whether the online supplier is from a reliable source and how complaints are addressed. (See “Food fraud secretly infiltrates kitchens across America — here’s how to avoid it,” by Andrea Miller, CNBC, Jan. 15, 2023.)

‘Office Space’ movie inspires copycat crime

A software engineer in Washington state stole over $300,000 from his employer using malicious software edits modeled after the 1999 movie “Office Space.” Ermenildo Valdez Castro reportedly diverted customer shipping fees on the e-commerce site Zulily to an account he owned on Stripe, a payment-processing site. He then edited Zulily’s software code to double charge customers and manipulate merchandise prices, completing more than 30,000 transactions linked to 25,000 customer email addresses from February to June of 2022.

Castro admitted that he had named his scheme after “Office Space,” a black comedy involving workers who decide to infect the company’s IT system with a virus and steal money to extract revenge for cost cutting and bad management. Castro was charged with two counts of theft and identity theft and was scheduled to be arraigned in Seattle on January 26. (See “Software engineer allegedly stole $300K from an e-commerce site by copying Office Space” by Jess Weatherbed, The Verge, Jan. 6, 2023.)

South Korean executives convicted in $1.5 billion V Global scam

In South Korea, six top-level executives at the now defunct crypto exchange V Global were convicted in late 2022 for defrauding investors of $1.5 billion in what was described as a pyramid scheme.

Police say nearly 100,000 investors were tricked by the scheme that promised returns of 300% in operations that ran from July 2020 to April 2021. Structured like a pyramid scheme, V Global reportedly had various levels of investors, who were paid to bring in new members. The scam was exposed in May 2022 after the collapse of Terra’s stablecoin rattled market confidence in the crypto asset class. The case has prompted an increase in regulatory scrutiny in South Korea’s crypto industry. (See “South Korea: Top executives of scam V Global exchange convicted,” by Wahid Pessarlay, CoinGeek, Dec. 31, 2022 and “CEO of South Korea’s V Global US$2 bln crypto pyramid scheme gets 25 years in prison,” by Danny Park, yahoo!finance, Jan. 15, 2023.)