Spread Fraud Awareness Through Events in Your Community


Sarah Hofmann
ACFE Public Relations Specialist

According to the 2016 ACFE Report to the Nations, organizations lose an estimated 5 percent of their revenues annually to fraud. With fraud being such a costly issue to organizations worldwide, the ACFE created International Fraud Awareness Week to spread information about how businesses and individuals can protect themselves from fraud.

Fraud Week will take place November 13-19, 2016, and offers anti-fraud professionals the opportunity to share fraud prevention knowledge and best practices with members of their communities. One of the best ways to spread fraud awareness is by hosting events that the public can come to in order to open a dialogue about fraud. Discussing fraud in person helps encourage others to ask questions and makes the impact of fraud more real. Events some supporters have put together in the past range from awareness fairs and lunch seminars to movie screenings and 1-day conferences.

This year, FraudWeek.com has a new feature to help promote events that supporters plan to host. The site has a dedicated Events page that will display the date, time, location and supporting organization of events before and during Fraud Week. To see your event on the page, you can submit the relevant details and include any links to further details. The submission will be reviewed and posted.

Throughout Fraud Week, the ACFE will share posts and pictures from supporter-organized events. Be sure to tag your shared photos with #fraudweek for a chance to be featured on ACFE social media channels. As anti-fraud professionals, you can be leaders and educators in your community by using Fraud Week as a platform to spread general awareness of fraud prevention.

Sign up as an official supporter of Fraud Week today!

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.

When It's Okay to Talk to Strangers: Attending a Professional Conference for the First Time


Ross Pry, CFE
ACFE Director of Membership

Attending the ACFE Global Fraud Conference for the first time can be exciting, but also intimidating. With more than 3,000 fraud fighters, 70 breakout sessions, a hall full of exhibitors and the sights and sounds of Las Vegas just a few steps away, where do you start?

I recently spoke with Eric Strom, CFE, who provided advice for first-time conference attendees. Eric will be attending his 11th ACFE Global Fraud Conference this year.

When was your first ACFE Annual Conference? Where was it?
The first conference I attended was the 17th Annual ACFE Fraud Conference in Las Vegas.

What keeps you coming back?
The opportunities to network with different professionals (private sector, legal, law enforcement) who are all involved in fighting fraud is unmatched at any other event. 

What tips would you offer to first time conference attendees?
Bring plenty of business cards and make a point to talk with strangers at every opportunity. After the event, keep in contact with your new friends because they can help with your investigations.

What are the “can’t-miss” events to go to at the conference?
You can't miss the Networking Reception and the closing speech by the fraudster.

There are so many breakout sessions to choose from. How do you pick which ones to attend?Typically start with your track (audit, investigations, legal, etc.) and then branch out if you've already taken a course or if something looks interesting in another track.

What three things should you definitely bring with you to the conference?
Business cards, a cell phone camera to take photos of interesting PowerPoint slides and mouthwash. :)

What is one piece of advice you have for first time attendees to help make their conference a success?
Get out of your comfort zone. Don't hesitate to introduce yourself to someone new and share your passion with them.

Whether this is your first, 11th or 27th ACFE Global Fraud Conference, there are always exciting educational sessions to participate in, connections to make and ideas to take home. I look forward to seeing you in Las Vegas! 

Plan your conference at FraudConference.com.

Convicted Enron CFO Says Committing Fraud is Easier Than Ever

“It is easy to find examples of Enron-like behavior today in companies from the U.S. to Asia,” says former Enron CFO and convicted fraudster Andrew Fastow. In the wake of scandals like the Olympus fraud and the recently uncovered emissions scandal committed by Volkswagen, he believes his story is even more relevant today.
“Committing fraud is easier than ever. The tools available to commit fraud have increased exponentially since the 1990s, even since Enron, and more public companies are taking advantage of them,” he told the Association of Certified Fraud Examiners. He will be speaking at the 2015 ACFE Asia-Pacific Fraud Conference in Singapore November 4-6 and thinks that fraud is not only growing in frequency, but also expanding its reaches globally. He said, “People are people, no matter what country or region they are from. The drivers of fraud and executives’ rationalizations of actions that may be fraudulent are universal.”
It seems like after fraud cases, the first public response is often for the CEO or chairman to step down from the company or organization. While that might placate shareholders and parts of the public, Fastow warns that a more comprehensive overhaul of company culture may be needed. “Culture starts at the top … But it doesn’t start at the top with pretty statements. Employees will see through empty rhetoric and will emulate the nature of top management decision-making. If top management were to make a statement or decision that is misleading, for example, employees will see that clearly, and they will adjust their behavior accordingly in order to emulate it. A robust ‘Code of Conduct’ can be emasculated by one action of the CEO or CFO.”
The 2015 ACFE Asia-Pacific Fraud Conference will be one of the largest gatherings of fraud fighters in the region. Fastow believes that the attendees of the conference serve more than just a clerical purpose, but are actually one of the best tools in the arsenal against fraud. “The role of fraud examiners needs to be reinforced and expanded. Fraud examiners must not just be the police who catch the problem that has already occurred; they must become the conscience of the company.”
Fastow pled guilty to two counts of securities fraud and served a six-year prison sentence. He has since assisted the Enron shareholders in recovering approximately $6 billion and volunteers his time for speaking engagements at training conferences, universities and business groups around the world. As of today, he is the only former Enron executive that has accepted full responsibility for his role in the scandal.
Fastow will speak at the conference along with Christophe Durand, Interpol’s Head of Cyber Strategy, Barry Wong, Vice President and Head of Asia Pacific for customer fraud management for MasterCard Worldwide and James D. Ratley, CFE, the President and CEO of the ACFE.
Register now for your chance to attend the 2015 ACFE Asia-Pacific Fraud Conference November 4-6 at Marina Bay Sands in Singapore.

Freeh Lauds ACFE for Professionalism and Reputation


Dick Carozza, CFE
Editor, Fraud Magazine

“What’s critical about your organization and reputation,” said former FBI Director Louis Freeh during the Monday Working Lunch, “is the interaction and interconnectivity that you bring between the government and the private anti-fraud community and establishment. That did not exist for many years for the most of the history of the FBI.”

Freeh said during his FBI tenure he often had ACFE members accompany him and become heavily involved in investigations. Now as chair of Freeh Group International Solutions, LLC, a Pepper Hamilton LLP group, he continues to closely work with Certified Fraud Examiners (CFEs).

Freeh, during his keynote, shared some of the lessons he learned during his FBI tenure and extolled the virtues of ACFE members. 

“One of the biggest things that has changed is the technology that is available to investigators,” he said. “I just spoke at the second circuit [judges’] conference in New York. And the theme of all the judges in that circuit was the impact of technology on being a judge and particularly focusing on cyber crime, cyber technology and cyber terrorism. There were a number from leading technology companies giving insights as it impacts judges — judges who have to explain complicated cases to juries but also have to understand the provenance and integrity of evidence, which now comes from different platforms.”

Freeh reminisced about the state of technology in 1975 in the New York City FBI office. “In one case, we had … to surreptitiously record an organized crime guy’s conversation so we called our lab and we asked for the best cutting-edge technology they had. So they sent up a pair of shoes. The microphone was embedded in the shoes! Probably they were 12 ½ quadruple E shoes. And the first statement by the subject on the tape was, ‘John, what’s the matter with your feet?’ ”

Though technology is now light years from 1975 microphone shoes, some things have not changed, Freeh said. “The most important ‘value add’ that [ACFE members] bring to the anti-fraud community and the law enforcement community is … incredible experience and depth. 

“It’s not a coincidence that two of your largest government communities [with ACFE members] are the IRS and the FBI. Because the synergies and the ability to share information there is unprecedented in our history,” he said. “You bring, I know from my own investigations, and sitting on boards, tremendous credibility because of your education, your certification, your reputation is just a sterling contribution to the anti-fraud community and the efforts that you bring on behalf of private clients and corporations,” Freeh said. 

“Many of you work for the government by contract or otherwise and that information and that relationship is a very, very special one. It evolved over a long period of time. And the Bureau has evolved over a long period of time,” he said. 

“The disability that the Bureau, and most government agencies have, is that they tend to react to external changes and tend to train, equip and pass statutory authorizations as a result of things that are coming to them from the outside as opposed to proactive, inside innovative thinking,” Freeh said.

He said the first FBI bureau investigators in 1908 — Treasury Department employees — weren’t gunslingers or bank robbery investigators; they were accountants. “They had no weapons; they had no authority to arrest anybody. That didn’t come until 1933. But it evolved due to the necessity of dealing with financial crime.” Then more outside changes influenced the FBI to investigate bank robberies, organized crime and narcotics, he said. 

He said that after 9/11, counter-terrorism has become the necessary, but totally, consuming preoccupation of resources and programs and statutory authority. “Now, finally after the recession, the programs and the focus on serious global economic crime and cybercrime have been resuscitated,” Freeh said.    

You can find more coverage from the ACFE Global Fraud Conference at FraudConference.com.