What is Criminal Identity Theft?


Robert K. Minniti, CFE, CPA, CVA, CFF

On July 7, King5.com reported that King County officials entered two charges of felony identity theft against Gary Wayne Bogle. According to Washington man charged with felony ID theft, by Danielle Leigh, Bogle used his brother's identity to obtain free health care and attempted to avoid a criminal record in his own name. His brother ended up with false convictions and a destroyed credit because of unpaid hospital bills fraudulently entered under his name.

Financial identity theft occurs when someone misappropriates your personal information to open new accounts, or uses your existing bank or credit accounts to make purchases. The above case shows a newer type of identity theft — criminal identity theft — that's spreading across the country and can be even more damaging than having a criminal destroy your credit rating.

Historically, criminal identity theft meant a criminal would obtain a driver's license or state identification card using the victim's information, including their photo. The criminal would provide this identification to police officers when they were pulled over for a traffic stop or while being arrested for a crime. They'd sign for the ticket and then miss the court hearing. Or they'd be arraigned and released pending trial and then miss the trial. Because no one appeared in court, the judge would issue a bench warrant for the arrest of the victim, whose stolen personal information was used by the actual criminal.

Often the victims of this type of identity theft find out about the crime when they're arrested or terminated from their job because of an outstanding warrant. They also might struggle to find employment because some companies conduct pre-employment background checks on job applicants. Take, for example, aCalifornia woman who was detained six times by law enforcement, arrested four times, spent 20 days in jail on no-bail warrants and even had her children removed from her care by child protective services — all because she was a victim of criminal identity theft.

Read the full article, and find out tips for protecting yourself from criminal identity theft, at Fraud-Magazine.com.

ACFE Conference News Updates: Canadian Fraud Report, Calling all Super Heroes & More


Mandy Moody, CFE
ACFE Content Manager

After a few months of toying with the idea to begin reporting on more of our global events, we have officially launched a new, and much improved, FraudConferenceNews.com. We wanted to highlight more conferences, interview more speakers and cover more topics. Basically, we wanted to give you more stuff.

Here are some of the latest updates that you might want to check out:

Fraud Report to Be Released at Canada’s Largest Gathering of Anti-Fraud Professionals
According to the Association of Certified Fraud Examiner’s latest report, Canadian fraudsters were more likely to receive no punishment from their employers than being asked to resign. More than 200 anti-fraud professionals will receive an early-access, exclusive look at this report during the 2016 ACFE Fraud Conference Canada, taking place in Montreal, September 11-14. Read more.

Calling all Super Heroes
We are excited to officially announce that registration for next year's conference is open. Dust off your cape, and maybe your boots, too, and plan to attend the 28th Annual ACFE Global Fraud Conference in Nashville, Tennessee, June 18-23, 2017. Read more.

You Gotta Know When to Hold 'Em...Behind Bars
When you think about Las Vegas, you probably think about the glitz and glamour of dazzling slot machines, beautiful people, spectacular shows, high-stakes casinos and a skyline that most would recognize immediately. What you might not think about is what happens behind the house. According to Sharon Tibbits, CFE, Executive Director, Fraud Control Group at MGM Resorts International, fraud is a concern in many areas of the casino industry. Read more.

How the Media Can Help Preach Fraud Awareness
While fraud examiners usually do most of their work behind the scenes to uncover fraud, they are often forced to turn over evidence and findings to organizations that keep the story of embezzlement under wraps. No company wants to freely admit that wrongdoing happened under their purview; however in order for people to understand the scope of fraud, some stories are best shared with the public. The onus to tell the story lands not on anti-fraud professionals, but another important piece in fraud awareness: the media. Read more.

We hope you enjoy this updated site and please let us know your thoughts! Find more conference news at FraudConferenceNews.com.

Uncovering the True Cost of Fraud


John Warren, J.D., CFE
ACFE General Counsel

A common and persistent challenge for anti-fraud practitioners who deal with occupational fraud is how to measure the impact of these crimes. At a basic level, any organization needs to understand what its revenues and expenses are in order to operate efficiently. Yet occupational fraud is an expense that many organizations are either unwilling or unable to account for. This puts the anti-fraud professional in a bind. How can we justify funding for anti-fraud programs or explain the value of our services if the organizations we serve do not understand the threat?

Ultimately, it is the job of the anti-fraud community to educate our clients and employers about the impact of occupational fraud. If we as a profession cannot make a compelling case for our own services, then who can? But as it turns out, there are challenges to putting a number on the damage caused by occupational fraud.

First, it is extremely difficult to determine the full extent of occupational fraud losses because so many schemes go undetected. If somebody walks into a bank with a gun and steals $100,000 from the vault, the bank knows it has been robbed. But if a bank manager embezzles $100,000 through phony invoices or payroll fraud, it is possible no one will even realize there’s been a crime.

Plus, even when an organization detects the fraud, it may not be able to calculate the true cost of the crime. Did we find every phony invoice from the bank manager, or just the ones he admitted to? Were there other schemes we weren’t aware of? And once the bank has caught the fraud, it may decide not to report it for fear of bad publicity or lost customer confidence, which means that the true cost of fraud ends up underreported.

The second major challenge anti-fraud professionals face is measuring the value of fraud prevention. We know, both intuitively and from experience, that it is much better to prevent a fraud than to catch one after it has happened. But how can we quantify that value? If we spend $50,000 on enhancing anti-fraud controls, what was the return on that investment? How much money did we save in terms of frauds that never happened? 

When the ACFE published the first Report to the Nation on Occupational Fraud and Abuse 20 years ago, it was with the goal of helping our members answer these questions. We surveyed our members to gather information from cases of occupational fraud they had investigated, and we used that information to compile the first report, which offered quantifiable data on the frequency of various schemes, the costs associated with those schemes, the characteristics of the perpetrators and the qualities of the victims. This was statistical information our members could use to demonstrate the significant threat of occupational fraud and the value of implementing anti-fraud programs.

In March of 2016, the ACFE published its ninth edition of the Report to the Nations, our most complete study yet. In addition to information on costs, schemes, perpetrators and victims, readers can find data on the most effective ways to detect occupational fraud, benchmark their own anti-fraud efforts against those of other companies or agencies, see the relative risk of different types of occupational fraud within the various parts of their organization or within their industry as a whole, and find information measuring the effectiveness of various anti-fraud controls. We encourage all members to read the report, and to share it with their colleagues, clients, employers and anyone else who has an interest in learning about occupational fraud.

The ACFE has received a great deal of praise for the research contained in the Report to the Nations. It is perhaps the most widely quoted study on occupational fraud anywhere in the world, and it has contributed greatly to the general body of knowledge in the anti-fraud field. We are proud of the report and the positive impact it has had for ACFE members throughout the world.

What is often overlooked in the praise for the work our research team does is the generosity of the CFEs who supply the case information that goes into the report. Our study only succeeds because thousands of CFEs from allover the world take the time to submit detailed information about cases they’ve investigated. These CFEs are not compensated for their submissions and they are not required to provide them. Those who provide case information for our study do so out of a desire to serve the greater good and advance the common body of knowledge for everyone in our profession. It says something important about the quality of our association when so many of its members are willing to share their time and knowledge in order to support a project like the Report to the Nations. Speaking on behalf of the ACFE staff, we are all deeply grateful to all of the CFEs who contributed to our study and we consider ourselves very lucky to work for, and be a part of, the Association of Certified Fraud Examiners. 

You can read more about ACFE courses, events and products can help you uncover fraud in our latest Resource Guide.