Fighting Fraud

How to Establish and Manage an Anti-Fraud Program

By

  • Gerald Kovacich, CFE, CPP, CISSP, Security consultant, lecturer, and author, Washington, USA

This practical reference provides the basics for instituting a corporate anti-fraud program that helps prepare corporate security professionals and other corporate managers for fighting corporate fraud from inside the company. It provides an exceptional foundation for security professionals or business executives involved in developing and implementing a corporate anti-fraud program as part of a corporate assets protection program.The author’s intent is to provide the reader with a practitioner’s guide (a “how-to” book), augmented by some background information to put it all in perspective. The approach used should enable the readers to immediately put in place a useful anti-fraud program under the leadership of the corporate security officer (CSO), or other corporate professional.
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Audience

Corporate security professionals, accountants, investigators and auditors, students in security mgmt programs

 

Book information

  • Published: August 2007
  • Imprint: BUTTERWORTH HEINEMANN
  • ISBN: 978-0-12-370868-7


Table of Contents


Preface

Acknowledgments

Introduction and Premise

Section I: An Introduction To The Wonderful World of Fraud

Chapter 1 The New-Old Global Business Environment

Introduction

Globalization of Business - Benefits to Nation-States

Expansions of the Global Marketplace and their Areas of Operations

Types of Corporations

Corporate Owners and Locations

Corporate Products

The High-Technology Factor

Nanotechnology1

High-Technology Related Frauds and Other Crimes

Advent of the Superhighways4

The Impact of Superhighways on Frauds and Other Crimes

A Short History of Crimes and Other Frauds Via the I-Way

Superhighway Frauds and Other Crimes to I-Way Robberies

I-Way Robbery - Its Prevalence

There Is No I-Way Patrol to Stop I-Way Robbers

Global Connectivity Via the I-Way = Global Exposure to

Attacks by Fraud-Threat Agents and Other Miscreants

Capabilities and Limitations of Law Enforcement

Challenges to Security Professionals and Others

Case Study 1

Case Study 2

Summary

Chapter 2 Corporate Assets, Frauds and Other Terms - What are They?

Introduction

Definition of General Fraud

Specific Fraud Definitions

Corporate Assets

Other Terms and Definitions

Case Study

Summary

Chapter 3 Fraud-Related Laws

Introduction

Some U.S. Federal Fraud-Related Laws

Relevant Consumer Protection Laws for Fraud in the United States

A Few Examples of U.S. Federal Enforcement of Fraud-Related Laws, Approach and Actions

Mail Fraud Statutes (condensed and paraphrased)

Money Laundering

Financial Institution Fraud (Bank Fraud)

Civil Litigation

U.S. Treasury Collection

Securities Violations

Role of Phone Companies

European Fraud-Related Laws

EU Fight Against Frauds

ASIA and Fighting Fraud

Case Study

"Blowing the Whistle" on Defrauders can be Dangerous

Summary

Chapter 4 Corporations Don't Commit Frauds, People Do

Introduction

Are Defrauders a Product of Their Environment, or is it in Their Genes?

Some Criminology Theories

Fraud-Threat Agents

Human Errors - Accidents

Man-Made or Malicious Fraud Threats

Potential Fraud-Threat Agents

Capabilities

Motivation

Access

Catalysts

Inhibitors

Amplifiers

Fraud-Related Factors for Attacking Systems

Relationship of Threat Elements

Case Study

Summary

Chapter 5 Fighting Fraud - Whose Job is it Anyway?

Introduction

Role of Executive Management

Role of Corporate Management

Role of the Corporate Employees

Role of the Ethics Director

Role of the Auditor

Role of the Fraud Examiner

Role of the Chief Security Officer (CSO)

Why the Corporate Security Professional?

Case Study

Summary

Chapter 6 Where There is a Will There is a Way - Fraud Schemes

Introduction

Types of Fraud Schemes

Financial

Credit Card Skimming

Mortgage Frauds

Computer and Telecommunications Frauds

ATM Frauds

Click Fraud

Clip-on Fraud

Securities Frauds

Employment Application Frauds

Identity Theft Scams

"Nigerian Scam"

Accounting Fraud Schemes

Bribery and Corruption

Conflicts of Interest

Purchasing - Four Basic Categories

Inventory17

Investments and Fixed Assets

Payroll and Personal Expenses

Procurement/Contracts

Telemarketing Fraud

Advance Fee Scheme

Common Health Insurance Frauds

Letter of Credit Fraud

Prime Bank Notes

The Ponzi Scheme

Pyramid Scheme

Case Study

Summary

Chapter 7 Fraud Cases and Commentary - Learning by Example

Introduction

Actual Fraud and Fraud-Related Cases

Phishers and Taxpayers

Fraud by Corporate Executives

Foreign Exchange Trading Fraud

Katrina Waste and Frauds

Organized Crime and Cybercrime

Securities Fraud in Cyberspace

Computer Hard Drives Lead to Frauds

Debt-Collecting Frauds

Government Contracting Fraud

Fraud-Threat Agents Can Be Anyone in Any Position

U.S. Securities and Exchange Commission (SEC) Fighting Fraud

Fraud in School Systems

Dead Soldiers and E-Mail Scams

Another Example of Insider Fraud

Executive Management and Accounting Fraud

Merchandise Receipt and Exchange Fraud

Click Frauds

Mortgage Fraud

Government Contractors and Fraud

Frauds and Microsoft Software

Y2K-Related Fraud

Data Storage Conducive to Fraud-Threat Agents

Another Example of Click Fraud

Pyramid Schemes Move on to the Internet

Prepaid Cellular Phone Fraud

Identifying International Corruption

Credit Card Information Theft and Frauds

Hackers, Crackers, Phishers, Oh My!

Urban Legends and Frauds

Medical Research Frauds

Corruption and the War in Iraq

Comments on Identity Thefts as a Vehicle to Fraud

Lobbyists and Corruption

Internet Scams are International

Faking a Medical Condition

Internet Fraud Sweep

ATM Fraud

Social Security Scam

Stamp Fraud

Banker and Identity Theft

Accounting Firm Fraud

Lawyers and Medical Rip-offs

Another Mention of the "Nigerian" Scams - Variations on a Theme

Case Study

Summary

Section II: Establishing and Managing an Anti-Fraud Program

Chapter 8 The International Widget Corporation

Introduction

IWC Background Information

Key Elements for the CSO to Consider

Getting to Know IWC

IWC's Business Plan

Strategic Business Plan

Tactical Business Plan

IWC's Annual Business Plan

IWC and the History of Its CSO

Key Elements of IWC's Annual Business Plan

Anti-Fraud Program Planning

IWC's Departments of Primary Importance to the CSO

IWC Vision, Mission, and Quality Statements

Plans

Other IWC Plans and CSO Support

Case Study

Summary

Chapter 9 Establishing an Anti-Fraud Program

Introduction

IWC's Anti-Fraud Program

Anti-Fraud Program Project Planning

IWC Anti-Fraud Program Project Planning and Management

Anti-Fraud Program Project Team

Anti-Fraud Drivers - The First Major Task in Anti-Fraud Program Development

IWC Anti-Fraud Program Requirements - Policies96

Risk Assessment - The Second Major Task in Developing an Anti-Fraud Program

Basics of IWC's Risk Assessment Process97

Threats

Natural Threats

Man-Made Threats

Vulnerabilities

Risks

Assets Protection Risk Assessments

Assets Protection Risk Analyses

Developing Anti-Fraud Defenses

Three Key Ingredients in an Anti-Fraud Program's Defenses

IWC's Anti-Fraud Policies

Anti-Fraud Requirements and Policy Directive

Anti-Fraud Procedures

The CSO and Security Department's Anti-Fraud Accountabilities

Off-Site Corporate Facilities

Recruiting Anti-Fraud Professionals

Case Study

Summary

Chapter 10 Managing an Anti-Fraud Program

Introduction

CSO Leadership

Management versus Leadership

Meeting Customers' Expectations

IWC Internal Customers

IWC External Customers

IWC Executive Management Expectations of a CSO

Managing Risk

Security's Vision, Mission, and Quality Statements

Managing the IWC Anti-Fraud Program

Planning

Some Aspects to Incorporate into an Anti-Fraud Program Plan

Budgeting

Controlling

Quality, Process Improvement, and Assessment of Organization Performance

Process Management

Performance Management

Using Technology to Deliver Anti-Fraud Program Support and Services

Managing Quality and Management Oversight

What is Risk Management As It Relates to IWC's Anti-Fraud Program?

Managing and Reducing Risks to Corporate Assets

Program for Managing Anti-Fraud Defensive Risks

Responding to Fraud Incidents

Managing Fraud Threats

Case Study

Summary

Chapter 11 Winning through Teaming

Introduction

Anti-Fraud Program Team Building

Executive Management as Team Members

Teaming with IWC Executive Management Through a Business Approach

Teaming with Corporate Peers

Teaming and Dealing with Office Politics

Teaming with Your Security Managers

Teaming with Your Security Staff

Teaming and Dealing with Satellite Offices in IWC Headquarters in the United States

Teaming and Dealing with Satellite Offices in Foreign Lands

Case Study

Summary

Chapter 12 Anti-Fraud Functions

Introduction

Anti-Fraud Project Team Functional Tasks

Anti-Fraud Functions

Anti-Fraud Program's Non-Security Team Functions and Members

Case Study

Summary

Chapter 13 Are We Winning the Battle? How Do We Know?

Measure it!

Introduction

Measuring an Anti-Fraud Program's Costs, Benefits,

Successes, and Failures

Common LOE Measurement Techniques for Each Function

Examples of Metrics by Function

Investigations and NCIS Metric Chares

Examples of Anti-Fraud Investigations Metrics

Process Measurements

Case Study

Summary

Section III: The Fraudulent Future

Chapter 14 What Will the Fraudulent Future Hold for Corporations?

Introduction

Globalization of Business to Continue

Employees of the Future

The Future Global Corporation

Future of Fraud Attacks on Corporations

Future Anti-Fraud Protection Needs of Corporations

Case Study

Summary

Chapter 15 The Impact of High Technology on Fraud

Introduction

High-Technology Frauds

High-Technology Anti-Fraud Defenses

Case Study

Summary

Chapter 16 What the Security and Other Anti-Fraud Professionals Must Do Now to Personally Prepare to Combat Tomorrow's Frauds

Introduction

Becoming and Staying Proactive and Aggressive in Fighting Fraud

Getting a Fraud Education

Gaining Fraud-Related Certifications

Associations

Gaining Anti-Fraud Experience

To Conduct or not to Conduct Fraud Lectures and Write Fraud Articles

Case Study

Summary

Chapter 17 Summary and Final Thoughts

Introduction

Summary

Final Thoughts

hat Others Think About the Anti-Fraud Leadership

Position in a Corporation

Toby J. F. Bishop, CFE, CPA, FCA, President and Chief

Executive Office, Association of Certified Fraud Examiners

World Headquarters

In Conclusion-My Thoughts

Some References

End of Line

About the Author

Index