3 Unfiltered Networking Tips

AUTHOR’S POST

Mandy Moody, CFE
ACFE Content Manager

Almost seven years ago, I attended my first ACFE Global Fraud Conference after working at the ACFE for one week. To say I was nervous would be a gross understatement. I am typically a very outgoing person (some would say too outgoing with my opinions), but when I am in a group of people I don’t know or am somewhat intimidated by, I curl up in a tiny ball like a roly poly. I was determined to not let my default ways get the best of me, and I knew that my new role at the ACFE would be tested by the way I handled myself in group settings. So, with weak knees and some self-made confidence, I stepped off the plane in Washington, D.C. to face the beast that is the largest anti-fraud conference in the world.

Here is what I learned:

1. Do your prep work. If you’re an ACFE member, once you register for the conference, you’ll be added to the ACFE Community’s conference group. If you aren’t a member yet, you can join the ACFE's LinkedIn group. Use one of both of these groups to begin scoping out who will be at the conference. It is okay to stalk for professional contacts and future best friends. It's not creepy when it could help you solve a case one day.
2. Dress for success, and by success I mean a parka and memory foam slippers. No really, it gets cold in convention centers and you need to be comfortable. Bring a jacket or sweater, and wear comfortable shoes that will support you walking, standing and sitting. Also, there will be cameras and you will be meeting tons of new people, so look like you are at least a little bit famous. Not too famous, but kind of famous. Think Donny Walberg or Paula Abdul. 
3. Take a step outside of your comfort zone. If you prefer face-to-face networking, try out the mobile app (coming soon!) to connect with someone from your city or industry. If you only prefer to meet people online, take a deep breath, pop an Altoid in your mouth and go to an in-person event. You have nothing to lose, except those few hours of Seinfeld reruns you thought about watching in your hotel room. And, trust me, those episodes will be on again. Here are just a few of the in-person networking events you can try out:
   
   • First-Time Attendee and New Member Reception: Sunday, June 18 from 6-6:45 p.m.
   • Women’s Networking Reception: Sunday, June 18 from 5:30-7 p.m.
   • Welcome Reception: Sunday, June 18 from 7-9 p.m.
   • Industry-specific tables at all General Sessions: June 19-21
   • Attendee Networking Reception: Tuesday, June 20 from 5-6 p.m.
   • Nashville Chapter Networking Event: Tuesday evening (more details coming soon)

The list above is only a few of the ways you can network with other attendees at the ACFE Global Fraud Conference. Visit FraudConference.com for more information and to plan your conference.

Funeral Fraud: Scamming the Dearly Departed

GUEST BLOGGER

Misty Carter, CFE, CIA
ACFE Research Specialist

Scamming the elderly or taking advantage of the mentally disabled are considered among the most repugnant of fraud schemes. But what about when fraudsters scam the deceased?

Believe it or not, many criminals take advantage of those who have died using funeral fraud schemes. These types of frauds come in many forms and mainly target and affect the families of the deceased. One of the most common funeral fraud schemes involves prepaid funeral expenses. According to the Federal Trade Commission, millions of Americans prearrange their funerals by entering into contracts and prepaying all or some of the related expenses. Some states have laws in place to regulate these contracts,. Other states, however, are more lenient, which leaves a window of opportunity for unscrupulous individuals.

Consider the case of James “Doug” Cassity, a disbarred attorney and resident of St. Louis, Missouri. His company, National Prearranged Services Inc. (NPS), engineered a fraud scheme that caused fraud losses of more than $600 million. Cassity devised a scheme to defraud purchasers of prearranged funeral contracts or insurance policies obtained through NPS.

How did the scam work? NPS promised customers that, for a fee, the company would cover all their funeral expenses when they died. Depending on the type of funeral arrangements requested, customer’s fees could run upwards of $10,000. After finding out what customers wanted, NPS determined an agreed-upon price and accepted payment. NPS then made arrangements with the funeral home designated by the customer. NPS supposedly placed the funds in a trust — to be used for safe investments or to purchase a life insurance policy — with a third party in the customer’s name.

What customers didn’t know was that NPS, instead of putting their funds in a trust or life insurance policy, often altered documents by changing deposit amounts and listing the company as a beneficiary. NPS then converted these policies and used the money for risky investments, to pay existing funeral claims, and to purchase personal items. According to court documents, Cassity sold approximately 100,000 prepaid funeral contracts. The scheme was discovered when several agencies reported suspicious practices by NPS to the FBI. Cassity was sentenced to nine years in prison.

There are many other funeral fraud schemes that individuals should also be on guard against. For example, some scammers might try to capitalize on a family member’s unfamiliarity with funeral services and add unnecessary charges to their bill. Some might even insist that a burial casket is necessary even though a body will be cremated and a less expensive cardboard casket could be used.

Some suggestions that can help you minimize the risk of becoming a victim of a funeral fraud scheme are:

• Be informed. Shop around before making a purchase. Take a friend along who might be able to offer a different perspective before you make a final decision.
• Educate yourself about the goods and services, such as caskets or cremations, provided by funeral homes.
• Understand the difference between fees, such as funeral home basic fees and fees for any additional services.
• Carefully read all contracts and any other paperwork before signing.
• Before signing, make sure that you understand the contract language and that all your requirements have been included in the contract.
• If you are considering prepaying, be sure to include specific details about what funeral arrangements have been made in the prepaid contract.

While funeral fraud might at first seem hard to believe, the reality is that wherever there is a cheap buck to be made, fraudsters will find an opportunity. By being informed and aware, people can help protect themselves – and their friends and family – from becoming victims of this insidious type of fraud.

Report to the Nations Regional Reports Give Snapshots Into Fraud Around the World

AUTHOR'S POST

Mandy Moody, CFE
ACFE Content Manager

Over the past year, we have worked on creating regional-specific reports of the ACFE's 2016 Report to the Nations on Occupational Fraud and Abuse. While the full report reflects global trends in occupational fraud, we know that there are important and interesting regional variations in the fraud landscape. To help organizations in different regions understand their risks and benchmark their anti-fraud programs, we created regional sub-reports that provide insight into the costs, schemes, victims and perpetrators of occupational fraud in various parts of the world.

The regional editions we have created so far are:

• Eastern Europe and Western/Central Asia
• Western Europe
• Middle East and North Africa
• Asia-Pacific
• Sub-Saharan Africa
• Canadian

In addition to the reports listed above, be on the lookout in the coming months for two more reports: a Southern Asia edition and a Latin America edition. We hope you enjoy these reports, and please let us know if you have any feedback for us!

You can download all of the PDFs, as well as only the charts and graphs, at ACFE.com/regional-reports/.

Episode Notes for Fraud Talk Podcast: Mailing Madoff

GUEST BLOGGER

Sarah Hofmann
ACFE Public Information Officer

When you think of pen pals, you usually think of kids staying in touch after friendships forged at summer camp. In stark contrast of that sunny scene, for David Weber, J.D., CFE, his pen pal was the result of a U.S. Securities and Exchange Commission (SEC) investigation. Weber, academic director of fraud management programs at the Smith School of Business at the University of Maryland, regularly corresponds with infamous fraudster Bernie Madoff.

In the latest episode of Fraud Talk, Weber describes how the two first crossed paths when Weber was working as the assistant inspector general for the SEC and directed the reporting of misconduct in the Madoff case. After leaving the SEC, and becoming a professor, Weber received an email from none other than Madoff. The two began talking on a regular basis and Madoff even answers questions posed by Weber’s students. “He’s very direct in the emails; he’s not a man that minces words,” Weber said. “He really does express remorse, and he does continue to be of the view, and I agree with him, that the regulatory agencies really failed to do their jobs.”

His close relationship with a man who cheated hundreds of people and organizations out of billions may raise eyebrows, but Weber believes there is more to be gained from talking to convicted fraudsters than refusing to on hear their stories.  

“There’s no question that we can learn from fraudsters,” he said. “As fraud fighters, we are frequently in a position where clearly being proactive is part of our role, but in many cases, when there is spectacular fraud, we are not learning of the fraud until the incident has finally occurred. We are part of the response team.”

Weber likened investigating fraud to coming to the scene of a car crash after the fact. “There are injured people, there are people who need to be triaged, there are cars that are damaged, there is debris in the road,” he said. “Many times, it’s hard to figure out through the victims what transpired, so having any person on the scene who is still able to speak is helpful, even if they were a drunk driver. Even if they were somebody who drove recklessly, hearing what they have to say is very important to reconstructing the scene.”

Weber acknowledges that hearing from fraudsters may be controversial, as anti-fraud professionals understandably don’t want to glamourize their actions. “I have been at the fraud conference many times where I have heard some of these convicted felons speak … and I agree it can put some of them on a pedestal,” he said. “But anything we can get from these people to help us reconstruct the scene, and build a better mousetrap in the future — we should embrace the ability to speak to them.”

To hear more from Weber, register for the 28th Annual ACFE Global Fraud Conference June 18-23 in Nashville where he will be teaching a session on the Panama Papers.

Health Care Fraud Expert Focuses On Cleaning Up Private Practices

MEMBER PROFILE

Dr. Richard Lyschik, DDS, CFE, FAGD
President of Practice Rescue

Dr. Richard Lyschik, DDS, CFE, FAGD, President of Practice Rescue, was in the health care industry for many years before he added fraud prevention and detection to his skillset. While providing management consultation to many practices, he observed a variety of fraud schemes and was disheartened at how many medical professionals were hesitant to do anything about it. He warns that perpetrators in health care fraud schemes can be anyone and that doctors need to get more serious about punishing fraud.

How did you become interested in fraud prevention and detection?
My parents came to America from Austria and I traveled frequently to Europe as a child to visit family. Learning how to calculate exchange rates and even interpret travel schedules made me analyze groups of data. Traveling from country to country introduced me to strict border crossing protocols and accurate documentation requirements. Seeing the world definitely got my CFE analytical training off to an early start.

I later learned how to run three private practices and began to assist other doctors with their office operations. Eventually I became a management consultant for practices across the country and was exposed to a variety of fraud schemes. I was finally able to validate all of the fraud observations I made over the years as a health care provider when I joined the ACFE.

What are the most challenging aspects of investigating health care fraud?
It is shocking at how difficult it is to get doctors to believe that there could be fraud in the practice and just as hard to convince them to clean it up. I am always surprised at how when we initially discover fraud. Many doctors’ first reactions are that they don’t want to “rock the boat.” They don’t want you to upset the cash flow or their associated lifestyle, and they don’t want to go through a stressful firing and hiring encounter. They also worry about upsetting the morale of the employees — they often say, “What are the other staff going to think?” Some doctors believe they can solve the matter by having a staff meeting and others have even naively thought that if they speak to the fraudster the fraud will stop occurring.  

Another type of doctor I’ve encountered is the one who thinks they are untouchable because they can call upon their CPA, their lawyer, or their malpractice carrier to get them out of “hot water.” It is rewarding though when the doctor recognizes the gravity of the fraud — we have assisted in successfully getting fraudsters fired, prosecuted and incarcerated. Unfortunately, there are times when a casual approach is taken and the fraudster mysteriously disappears and moves on to another similar health care business. It’s unfortunate to know the fraudster has access to money, supplies, drugs and confidential patient files again.

What is your most memorable health care fraud case?
I will never forget the office manager who took home the entire office computer while the doctor was on vacation. She had it cloned by her uncle to capture more than 2,000 patient records filled with social security numbers, insurance policy numbers and credit card data. When the doctor returned from vacation, and the patients’ credit card charges appeared on their monthly statements, it was discovered that the office manager went on a shopping spree for jewelry, exercise clothes, diet pills and more. My team assisted the doctor in the proper termination and subsequent prosecution of that employee.

Additionally, other employees in the practice were let go and strict new fraud prevention guidelines were introduced into the practice. The end result is that the practice became more profitable and added a second doctor within a year because of enhanced practice methods and controls. 

Read Dr. Lyschik's full interview on ACFE.com.