The Top 5 Frauds of 2013

AUTHOR’S POST

Mandy Moody, CFE
ACFE Social Media Specialist

As we say farewell to one year and look ahead to a new one, we would like to look back and take note of the top fraud cases that brought many people, cities, states and countries together. While these top five fraud stories of 2013 seemingly highlight the “bad guys,” we would like to pay tribute to all of the “good guys” out there who saw these cases through investigation, prosecution and, for some, sentencing. So here’s to all of the investigators, fraud examiners, attorneys, auditors, accountants and government officials who worked behind the scenes to get these stories where they belong: on the front pages of Financial Crime sections all over the world.

Here are our top five frauds of 2013:

  1. Cars, Houses & Horses
    Dubbed as “one of the worst abuses of public trust” in the state of Illinois’ history, the embezzlement case involving a devoted city bookkeeper stole international headlines when it was finally settled in February. Rita Crundwell was sentenced to almost 20 years, the same duration as her fraud, for stealing $53 million from the small town of Dixon, Ill. Crundwell used her home town’s hard-earned money almost as a weekly allowance to pay for vacations, properties, cars and an extravagant horse-breeding hobby. Thankfully, even all bad things must come to an end.
  2. Ahab’s Whale Wounded
    The Hunt for Steve Cohen began years ago, but it wasn’t until July that his company, SAC Capital was officially indicted on four counts of securities fraud and one count of wire fraud for insider trading dating back to 1999. The future looks grim for the already shrinking company facing some long and grueling legal battles.
  3. The Citadel Falls
    In June, a cyber gang responsible for creating a massive network of malware came crashing down. “Citadel,” the name of the network of botnets, stole more than $500 million from the bank accounts of more than 5 million infected computers over an 18-month period. Microsoft led the coordinated effort with more than 80 other entities worldwide to take down one of the largest cyber crime rings in the world. Lights out, Citadel.
  4. The GlaxoSmithKline of 2013 Award Goes To…
    Last month, Johnson & Johnson, one of the U.S.’s biggest pharmaceutical companies, settled one of the largest health care settlements in the country’s history. J&J agreed to pay $2.2 billion ($1.72 billion for civil settlements and $485 million in criminal fines and forfeited profits) for promoting three drugs not approved by the Food and Drug Administration (FDA). This quote from Zane Memeger, U.S. Attorney for the Eastern District of Pennsylvania, pretty much sums it up: “J&J's promotion of Risperdal for unapproved uses threatened the most vulnerable populations of our society - children, the elderly and those with developmental disabilities.”
  5. Biggest Mortgage Fraud Settlement Ever
    Also last month, JPMorgan Chase settled the U.S.’s largest-ever mortgage fraud case for $13 billion. Picking up Bear Stearns and WaMu might have seemed like a great idea in 2008, but the ghosts of the financial crisis’ past came back to haunt JPMorgan. Oh yeah, and they were also responsible for millions of faulty mortgages. One victory in a battle sure to go on longer than the Game of Thrones.

Want to read other stories from 2013? You can find more of the year’s top fraud headlines on our news blog, FraudInfo.com

March Badness: Last Month’s Biggest Fraud Stories

AUTHOR'S POST

Mandy Moody
ACFE Social Media Specialist

Reformed fraudster falls off the wagon
Former entrepreneurial whiz kid and convicted fraudster, Barry Minkow, struck a deal with federal prosecutors over his most recent fraud scheme involving Lennar Corp. Minkow’s first appearance in the spotlight was when he founded his wildly successful carpet cleaning business at just 16. He then reappeared in 1988 after after it was discovered his business was Ponzi scheme and sentenced to seven years in prison. Upon his release, Minkow claimed to be reformed, established the Fraud Discovery Institute, helped out the FBI and became a minister. However, his reformation was short-lived, as we witnessed his public fall from grace last week. Read more.

Judge denies dismissal of Texas brothers’ fraud suit
Brothers Charles and Sam Wyly are accused of using offshore entities to hide stock transactions involving four of their companies, thus breaking SEC reporting requirements and profiting more than $550 million over 13 years. U.S. District Judge Shira Sheindlin swiftly rejected the requests for dismissal and declared the show must go on. Read more.

Stewardess can’t handle the weight of coin fraud
The assistance so kindly offered by a customs official to a Lufthansa flight attendant struggling to lift her suitcase at a German airport led to the discovery of an international coin fraud ring totaling more than $8.4 million. Six people were arrested and are suspected of rebuilding smuggled coins that had been taken out of circulation and were disposed of as scrap metal. The investigation is ongoing while the operation has been grounded…for now. Read more.

Read more fraud news at FraudInfo.com.

Are there any stories I missed? Leave your comments below.