Entrepreneur Raises Fraud Awareness in India


Apurva Joshi, CFE, is the founder and CEO of Fraudexpress, based in Solapur, India. Joshi created Fraudexpress as a digital media company to help increase fraud awareness, and provide news, views, training and other services for anti-fraud professionals. For her work as a fraud fighter and entrepreneur, she was recently featured in a book by bestselling author Rashmi Bansal.

What inspired you to start Fraudexpress?
I founded Fraudexpress at a time when India was witnessing some of the biggest scams in its history. These scams were quantified to the tune of 15-20 percent of the country’s Gross Domestic Product (GDP). There was a big movement in India against corruption at different levels. Politicians were fighting in the Parliament, people were agitated and the media was covering their efforts. Everyone wanted to protect public money. But none of the anti-corruption crusaders were talking about strengthening our youth in India.

Fraudexpress was started with the objective of equipping Indian students with anti-fraud tools and training. Initially we created campaigns to create awareness about insurance frauds, banking frauds and others on social media; then we published newsletters and books. Today there are 11 titles published by Fraudexpress that address frauds in India. 

You were featured in the book Arise, Awake: The Inspiring Stories of Young Entrepreneurs Who Graduated from College Into a Business of Their Own by renowned author Rashmi Bansal. How did Ms. Bansal come to find you and include you in her book?
Ms. Bansal and I are connected through social media platforms. When she proposed to write her next book on the theme of young entrepreneurs, I gave her a brief of my work through email. Out of thousands of replies she chose to write about my journey as a forensic accountant and a female entrepreneur. 

You recently mentioned that fraud is still a taboo subject. How do books like Arise, Awake help provide more awareness of what anti-fraud professionals are doing to prevent and detect fraud?
Ms. Bansal explains business in very simple words. Fraud is a taboo subject, very few like to talk about it – at least in India. Youths shy away from this domain. But when an author like Ms. Bansal, who is popular among young readers, writes about anti-fraud efforts, it becomes an endorsement of our work. Ms. Bansal’s books sell millions of copies, so when a story about anti-fraud efforts is explained to millions, to youths and in layman’s language, it encourages students to take up fraud fighting as a career option.

During your career, you have also worked as a research analyst. How did your research skills serve you in the anti-fraud profession?
Our research is always aimed at quantification. Also, I have always supported numerous research projects, including studies on insurance fraud and corruption. In India, our research papers are considered benchmarks for academics and are often quoted.

What advice do you have for other fraud examiners who would follow in your footsteps?
I would always recommend earning a global certification like the CFE, apart from local accreditations (like CFAP or CBFA). I also recommend investing in technological solutions that enhance their efforts and provide added insight.

Read Joshi's full interview on ACFE.com.

Fraudsters Exploit Weakness in Apple Pay


Mark Scott, J.D., CFE
ACFE Research Specialist

Most of us carry around smartphones that are more intelligent than we are. And for many of us, our smartphones permeate almost all aspects of our lives. We use smartphones in place of watches, alarm clocks, maps, music players, and it seems that very soon, we will use them to replace cash and credit cards.

Unfortunately, because criminals are adept at identifying and exploiting the weak links in new technologies, the ever-expanding capabilities of smartphones have created new avenues for fraud.

Consider the recent news about the high rates of fraud in Apple Pay, Apple’s mobile electronic payment system that launched in October 2014. Apple Pay was meant to improve credit card security, but according to some reports, the new service makes it easier for criminals to commit credit card fraud.

But, it’s important to note that the Apple Pay “fraud problem” has nothing to do with security flaws in the Apple Pay mobile transaction protocol — the Apple Pay mobile-payment system itself hasn’t been hacked. Instead, fraudsters are using Apple Pay as a vehicle to make fraudulent purchases with stolen credit cards by exploiting weaknesses in the bank-side process used to approve new credit cards loaded into Apple Pay.

Before credit card data can be used for Apple Pay transactions, the bank that issued the card must verify that it’s valid and is being used by the appropriate person. Unfortunately, there are some credit card issuers with weak verification processes for the Apple Pay mobile-payment system; of course, the fraudsters focus their efforts on exploiting such weaknesses. 

What happens is a form of account takeover in which the fraudsters load already stolen credit card data into the Apple Pay platform, allowing them to create a fraudulent digital credit card that they can use to make fraudulent purchases in brick-and-mortar stores.

The fact that Apple Pay provides criminals a means through which they can use stolen card data to commit fraud in brick-and-mortar stores is a development that concerns online security expert Brian Krebs: “Apple Pay makes it possible for cyber thieves to buy high-priced merchandise from brick-and-mortar stores using stolen credit and debit card numbers that were heretofore only useful for online fraud.”

This situation highlights the creativity and inventiveness of fraudsters. While Apple Pay was touted as a safer alternative to credit cards and perhaps the most secure method of payment available, enterprising criminals took little time to identify and exploit the security weakness in this emerging technology for financial gain. 

It also points to the risks in placing too much reliance on new and unproven technologies, and illustrates the old adage that security is only as strong as the weakest link. In a world where we’re more digitally connected than ever before, speed is essential, but moving impetuously can be unsafe.

The Shared Traits of Those Committing Fraud Against Elderly Family Members


Annette Simmons-Brown, CFE

Let's examine the case of "William," the adult son of a victim. Since 1998, William's mother (we'll call her Debra) authorized him to manage her financial accounts that had a balance of $3 million to $4 million. However, she didn't authorize William to withdraw funds from these accounts, and she never initiated the execution of a power of attorney (POA) instrument.

Over the next 11 years, William systematically transferred funds from his mother's accounts to pay his bills and to supplement his accounts. He also opened at least two credit card accounts in his mother's name and tried to hide bank statements from her. By 2009, her accounts were overdrawn. Debra — and her other adult children — finally detected William's thefts and reported them to the police. William was ultimately charged with and convicted of one felony count of theft by swindle over $35,000; he was given a stayed prison sentence of 42 months and ordered to pay restitution of $110,500.

(This is one of many cases in Hennepin County in recent years criminally charged when a POA instrument was absent; thus, the lack of a POA instrument doesn't necessarily prevent criminal charges of financial crimes against the elderly.)

The Hennepin County Attorney's Office (HCAO) in Minneapolis, Minnesota — for which I am a paralegal in its complex crime unit — has long had attorneys specifically assigned to the prosecution of financial exploitation of vulnerable adult (FEVA) crimes. A review of 15 intra-familial FEVA cases charged by the HCAO within the past three years, in which the victims were elderly and related by family to the defendants, reveals a depressingly uniform fact pattern:

  • The life circumstances of the defendants and the victims were similar.
  • The manner and speed with which the defendants accessed the victims' funds were similar.
  • The degree of the thefts was similar.
  • The mindsets of the defendants as revealed in case investigation, litigation and conviction were — you guessed it — similar.

In all 15 cases, the victims were single and either widowed or long divorced. The youngest was 58 years old — a man who had been injured by a car accident and then required assistance with daily living activities and transportation. The oldest was 90.

At least 12 of the victims required professional care for daily living and health problems, either in-home or in an assisted living facility. At least three of the victims experienced memory loss or other cognitive dysfunction.

These were the family ties:

  • Eleven of the victims were parents of at least one of the defendants (in two of the cases involved husband-and-wife defendants).
  • Two of the victims were the defendants' grandparents.
  • One victim was the defendant's aunt.
  • One victim was the defendant's sister.

Six of the 15 defendants — all of whom were responsible for paying the victims' home- or assisted-living care costs from the victims' accounts — defaulted on these payments, which resulted in the threatened termination of care or even the threatened eviction of the victims from their facilities. In six cases, the amounts stolen from the victims (within the date range of the charges) exceeded $100,000 — the lowest was $107,348 and the highest was $250,196. In eight other cases the defendants stole $14,046 to $71,500.

In every case, the defendants used the victims' funds to finance their lifestyles. They accessed the victims' bank accounts using checks, ATM withdrawals, debit card payments, counter withdrawals and online transfers from the victims' accounts straight into their own accounts.

They used the victims' credit cards for their purchases and accessed the victims' funds to pay the credit card balances. They also transferred money from victims' investment accounts into the victims' bank accounts and spent that cash.

In one egregious case, the defendant took out a mortgage on a real estate parcel that was part of her father's trust estate (for which she was co-trustee) that she and her brother were due to jointly inherit. She used the proceeds of that mortgage to pay off the mortgage on another real estate parcel within the trust estate that she was due to solely inherit. This devious move left her with an unencumbered property but left her brother with the shaft.

In 12 of the 15 cases, the victims executed a POA. Judging from the defendants' spending patterns after the POAs were executed, it's clear they all felt they "owned" the victims' funds or at least had joint ownership. They failed to remember, or deliberately disregarded, that the POA confers more responsibilities than rights. Most importantly, the fiduciary responsibility is to spend the principals' money to benefit the principals rather than themselves, always.

They also all failed to remember, or deliberately disregarded, that a financial transaction always leaves a paper trail. And when their conduct came to light, the paper trail told the story far better than an interview with an enfeebled, distraught victim ever could. And they all failed to realize that their conduct couldindeed come to light, the subtleties of modern-day money transfers notwithstanding.

In 10 of the 12 cases in which a POA instrument was present, the defendants were charged with at least one count of felony — financial exploitation of a vulnerable adult — and several received an additional felony of theft by swindle. In the remaining cases, the defendants were charged with a felony of theft by swindle of amounts over various thresholds. Seven of the cases have resulted in felony convictions, one case has been sent to diversion, two cases have been dismissed and five are pending disposition.

These examples are a fraction of elderly financial crimes cases charged worldwide. Financial crimes against the elderly are growing internationally because many countries are experiencing graying populations. I can easily see the day when crimes like these replace employee theft as the standard-issue blue jeans of fraud.

Read part one of this article on Fraud-Magazine.com, and read how Annette looked at the growing incidence of family members who defraud their aging relatives and the similarities of these miscreants to traditional occupational fraudsters.