Traveling Fraud Museum Looks at Fraud on the Big Screen

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Courtney Babin
ACFE Communications Coordinator

While the Fraud Museum’s permanent home is at ACFE headquarters in Austin, Texas, each year a traveling exhibit featuring selected pieces goes on display at the ACFE Global Fraud Conference. Made up of artifacts, memorabilia, documents, and other pieces of fraud history collected by ACFE founder and Chairman Dr. Joseph T. Wells, CFE, CPA, this year’s Fraud Museum displays financial frauds depicted on Hollywood’s big screen. The pieces reflect on productions like The Wolf of Wall Street, The Big Short and the recent ABC miniseries, Madoff. 

A must-see piece at the 27th Annual ACFE Global Fraud Conference, June 12-17 in Las Vegas is “Fraudulent Russian Investment Notes” from the Russian company MMM. The notes feature a portrait of Sergei Mavrodi, one of three founders of the company. These notes — which are worthless — are a reminder of Russia’s biggest Ponzi scheme. At the peak of its performance, MMM was collecting $11 million daily. Ponzi schemes are distinguished by paying the principal and interest for old investors with money collected from new victims. Because of the multiplier effect, all Ponzi schemes are destined to eventually fail. For this particular scheme, losses eventually reached $1.5 billion, collected from several million investors.

Another piece to check out is the tongue-in-cheek “Wall Street ‘Most Wanted’ Playing Cards” in the Wolves of Wall Street display. This card set hosts caricatures of many corporate titans who have been charged with major accounting frauds. Some of the fraudsters include Ken Lay of Enron, Martha Stewart and Scott Sullivan of WorldCom.

Check out the other fascinating pieces from the far — and recent — past when you stop by the Fraud Museum exhibit. Remember to bring this conference guide with you and take the quiz on the next page. Be sure to submit your answer sheet in the submission box located at the Fraud Museum exhibit and you will be entered to win a $250 gift card (one answer sheet will be drawn at the end of the conference to determine the winner). Good luck! 

Fraud Fighters to Hear From Actor Richard Dreyfuss, U.S. District Judge and More

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Sarah Hofmann
ACFE Public Relations Specialist

Academy Award-Winning Actor Richard Dreyfuss, Judge Jed S. Rakoff, New York Times investigative journalist David Barboza and other experts will address more than 3,000 anti-fraud professionals gathering for the 27th Annual Association of Certified Fraud Examiners (ACFE) Global Fraud Conference in Las Vegas, June 12-17.

Most recently acclaimed for his portrayal of notorious fraudster Bernie Madoff in ABC’s miniseries Madoff, Dreyfuss immersed himself in the role. On portraying the ringleader of the $18 billion Ponzi scheme that would bankrupt hundreds of people and organizations, he said, “I’ve never played such a vivid and living legend of monstrosity … His ability to inflict pain on others was unbelievable.” Dreyfuss is not only known for his acting, but for his political and social activism as well.

Judge Jed S. Rakoff, U.S. District Judge of the Southern District of New York, has made a name for himself rejecting Securities and Exchange Commission settlements with big banks and fighting for the Department of Justice to crack down on fraud, specifically suggesting individual executives should be held accountable in lieu of the corporation as a whole. In an interview with Fraud Magazine, he explained, “While the government never approved fraud per se, it helped create some of the conditions that invited fraud.”

Other keynote speakers include New York Times investigative journalist and author David Barboza, body language expert Steve van Aperen and Halliburton whistleblower Anthony Menendez, CFE, CPA. Convicted fraudster Roomy Khan, who was involved in the Galleon Group insider trading scandal, will also address attendees. She will speak without receiving compensation from the ACFE.

The conference is the world’s largest gathering of fraud fighters and will feature more than 80 educational sessions presented by top experts in the anti-fraud field. Educational sessions will focus on subjects including cyberfraud and cybersecurity, white-collar crime, anti-bribery and anti-corruption practices, risk management, and fraud detection and prevention.

Don’t miss your chance to hear from experts on today’s most pressing fraud and corruption issues. Visit FraudConference.com for more information, video clips, articles and live updates from the conference.

Fraud Displaced During EMV Transition

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Zach Capers, CFE
ACFE Research Specialist

Last year, I wrote about the U.S.’s transition to EMV credit cards and the associated fraud liability shift from card issuers to merchants. The article mentioned the possible side effect of fraud being displaced from in-store to online transactions as has happened in many countries that have undergone similar transitions; one year later, the initial data is in and that possibility is now a reality.

A new report from ACI Worldwide shows that online credit card fraud during the 2015 holiday season increased by 8 percent over the 2014 holiday season. Furthermore, the report shows that 1 out of every 67 online credit card payments was a fraudulent attempt compared to 1 out of 72 the year previous. While there are many factors at play and online purchases continue to increase year over year, the findings correspond with increases expected by industry experts and follow the trends previously experienced by other countries.

Meanwhile, the transition to EMV credit cards has resulted in other forms of turmoil for merchants big and small. Visa was recently sued by Wal-Mart over the card issuer’s insistence on a signature verification system rather than a PIN requirement that Wal-Mart and many others claim would significantly increase security for customers while reducing fraud. Wal-Mart’s central claim is that Visa makes more money by processing signature based transactions than they would with a chip and PIN system, thus profiting at the expense of retailers and their customers.

Another complication wrought by the adoption of the new credit card systems is the slow certification process for new credit card terminals required by last year’s liability shift. A New York Times report in March documented the plight of mid-sized business that were still waiting for their new payment terminals to be certified despite having them in place since the November 2015 deadline. Some merchants argue that relationships between financial institutions and certification firms leave little motivation to speed up this process since uncertified merchants must continue to pay for any fraudulent activity incurred on their terminals.

On Capitol Hill, Wal-Mart and others seem to have an ally in U.S. Senator Dick Durbin who recently assailed the credit card industry’s refusal to allow PIN based transactions and the delayed certification process. The senator also echoed the frustration of many consumers regarding long waits at retail checkout counters caused by slow software processing in new card terminals.

As more consumers adapt to their new EMV credit cards and new merchant terminals are certified and updated with improved software, some of the unexpected issues with EMV adoption will be resolved. Unfortunately, many of the most significant problems with the transition were either widely predicted or entirely avoidable.