From Fighting in the Cage to Fighting Fraud

MEMBER PROFILE

Josh Eckmann, CFCI
Registration Compliance Analyst, Allstate
Lincoln, Nebraska 

Many CFEs pride themselves on being fraud fighters, but it’s rare for a fraud fighter to also be an actual professional Mixed Martial Arts (MMA) fighter; Josh Eckmann is one of those few crossover talents. While not yet a CFE, Eckmann is currently participating in the ACFE 90-Day Challenge — a sprint to prepare for, and pass, his CFE Exam. Eckmann has worked in the insurance anti-fraud field for years and finds that pinning down fraudsters in an investigation is more similar to facing down opponents in the cage than one might think.

What steps led you to your current position?  
I started off in the company’s national catastrophe claims team and during that time discovered I had a knack for investigation. I was fortunate enough to find, and be mentored by, a retired Marine Corps counter-intelligence expert who taught me most of what I know. I was promoted to my company’s life insurance division where I found a home for my investigative skillsets. I discovered a large, and vastly unrecognized, problem with the use of life insurance policies to commit multi-lien fraud for mortgages and SBA loans.

It was during that time that I decided to go back to school and earn certification for my investigation skill sets and completed the CFCI program at Utica College in Utica, New York as a distance learner. Eventually I felt a stagnation in my growth as an investigator and worked hard to find a position within my company that would allow me to test my abilities, learn another facet of the business and expand my skillsets and knowledge base. That brought me to my current position that required that I secure the FINRA Series 6 license. Preparing for, and passing, the exam opened my eyes to a whole new world of applications and knowledge for my investigative skill set.

Are there any comparisons between MMA and fighting fraud? Or, has one profession affected the way you see the other? 
There are very few sports or professions in the world that are more taxing on body and mind than MMA. It requires passion, perseverance, and an undying obsession to continuous learning, improvement and results. When the price for giving up or being ill-prepared quite literally could mean your life, you must be tenaciously vigilant. That mindset translates into fighting fraud. When failure and giving up are not options, you seek out additional expertise, angles, insights and details that will get you closer to your goal. MMA is so different from other combat sports in that there are so many options, so many techniques, so many ways to win and so many different styles. Mentally treating a fraudster like my opponent in the cage drives me to study, experiment, trust my instincts, be willing to accept when I am wrong, try a different approach and persist until I am victorious. (Chances are pretty good that said fraudster is not actually going to try to punch me in the face … but even if so, I’ve spent my life preparing for those moments).

What activities or hobbies do you like to do outside of work? 
Outside of work, I spend much of my time training. I have gyms that I frequent and I have made a habit seeking out and training at new gyms that practice different styles of the same martial arts. If I am not in fight camp (eight weeks of extensive training for a specific fight or tournament), then I train three to four days a week. I take one day to focus on getting stronger and all the other days are MMA-specific. During fight camp I train six days a week: four of which are MMA-specific; one day is focused on strength training and one day is focused on endurance training. I specialize in submission wrestling and I spend a considerable amount of my time training in that style. I do like to travel as well, which I get as a two-for-one deal with MMA. Last October I was in Minsk, Belarus at the United World Wrestling Grappling World Championships representing Team USA, where I won the Bronze Medal at 92kg.

I also enjoy reading, mainly nonfiction. I love reading investigative case studies, the different sciences (physics is my favorite) and business journals. Latin dance is a fantastic way to bring body and mind together as well!

Read Josh's full interview in the Career Center on ACFE.com.

Clare Rewcastle Brown to Discuss Money-Laundering Controls Learned from 1MDB Scandal

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Sarah Hofmann
ACFE Public Information Officer

“I think this whole offshore financial structure that’s been allowed to grow like a canker … the whole thing’s got out of control,” said investigative journalist Clare Rewcastle Brown in an interview with the Association of Certified Fraud Examiners (ACFE). 

Rewcastle Brown founded The Sarawak Report and Radio Free Sarawak in 2010 to disseminate news that concerned the Sarawak region of Malaysia and eventually, news surrounding the emerging 1MDB (1Malaysia Development Bhd) scandal. In August 2015, a warrant for her arrest was issued by a Malaysian court for "activities detrimental to parliamentary democracy" and the "dissemination of false reports."

“I think we’re seeing a swing of the pendulum and I think 1MDB’s just kind of cropped up perhaps at the right place at the right time … governments across the world have started to realize that they’ve lost control and populations have lost patience,” she said.

Rewcastle Brown will address anti-fraud professionals from across Europe at the 2017 ACFE Fraud Conference Europe in London, March 19-21. Despite having an arrest warrant issued for her by a Malaysian court, Brown remains optimistic that corruption on a global scale can be defeated. She said, “I do think we’re seeing a lashback and 1MDB is going to be just one example of enforcement agencies hitting back.”

Despite not being able to attend the 2016 ACFE Fraud Conference Asia-Pacific last November in Singapore due to safety concerns, she is committed to speaking in-person at the conference in London. She plans to lay out the intricate timeline of the 1MDB scandal that allegedly began in 2009 and runs through present day.

1MDB is currently being investigated by Swiss, Singh and U.S. authorities. In a question-and-answer session after her prepared remarks in Singapore, Rewcastle Brown addressed what controls she thought could help prevent this type of large-scale money laundering. “I think this case is really an opportunity to hold banks and players in these actions seriously to account. And to make the actors who have broken the rules pay the penalty, seriously. [They should be] absolutely exposed, shamed and embarrassed because we need to put off future, potential situations like this arising again,” she said. “I think that’s the best we can hope to come out of this. By showing at last, that the financial regulators have teeth and that they’re catching up to the global criminal element who have been using our offshore system and far-too compliant financial organizations. If we can get ahead of them, maybe that’s the best way to deal with this particular problem.”

Find out more about the upcoming 2017 ACFE Fraud Conference Europe, and register by February 17 for early registration discounts, at FraudConference.com/Europe.

What Makes a Fraudster Tick?

FROM THE RESOURCE GUIDE

John Gill, J.D., CFE
ACFE VP of Education

It is an unfortunate truth that fraud exists in every country and in every industry. One of the most challenging parts of this continuing fight is understanding what goes on in the mind of someone who commits fraud. What causes one person facing financial hardships to steal from his employer while another finds a more honest way to pay his bills? And what goes through the mind of individuals as they are making that choice — that first decision — to become a fraudster? How do they continue to justify their actions to themselves as they carry out their schemes?

As an anti-fraud professional, it’s important to look for the answers to those questions. You cannot effectively deter fraud unless you have a full and complete grasp of the different motivations and tipping points that might affect a fraudster. I have found that interviewing fraudsters is one of the best tools to truly enter their minds. Each story is interesting in its own right, but when combined, you begin to see the common thought patterns displayed by these perpetrators before, during and after the crime. It is also important to examine different theories offered by experts — both past and present about what causes some people to turn to fraud. 

One thing that has always stood out to me while trying to understand fraudsters is that the Fraud Triangle is alive and well. Every so often, someone argues that the triangle is no longer relevant or needs to be revised. But based on the interviews the ACFE has conducted over just the last four or five years,it is just as relevant now as it was back in Dr. Donald Cressey’s day. His basic theory still holds up: fraud is likely to occur if the subject has some kind of unshareable financial pressure, a perceived opportunity to relieve that pressure, and the ability to rationalize his or her conduct so that there is a lessening of guilt or a feeling of justification.

I am excited to announce that the ACFE has developed a new 1-day class, Understanding the Mindset of a Fraudster. We will also be offering a 4-hour version of the class as a Pre-Conference session at this year’s 27th Annual ACFE Global Fraud Conference. The seminar will examine fraudsters’ behaviors and motivations, as well as the pressures, opportunities and rationalizations for their frauds. Through discussions about human behavior, video interviews with convicted fraudsters and interactive problem-solving, you will gain a deeper understanding of mindsets and personality traits common to many fraudsters.

A good fisherman understands how a fish reacts to different types of lures and water conditions. A good fraud examiner understands how individuals react to different interview techniques and workplace controls. Understanding more about the mindset of a fraudster will better prepare you to catch those people who travel outside the lines to enrich themselves at someone else’s expense. 

Read John's full article and find more training resources in the ACFE's latest Resource Guide.

ACFE Report to the Nations: Fraud in the federal government costs nearly $200,000 each time it occurs

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Sarah Hofmann
ACFE Public Relations Specialist

“Waste, fraud and abuse” has become a pervasive soundbite in the 2016 U.S. presidential election, but just how much fraud is actually occurring in the government? In a study of 2,410 occupational fraud cases investigated by Certified Fraud Examiners (CFEs) between January 2014 and October 2015, 18.7 percent of the reported fraud instances occurred in government entities. Although the instances of reported fraud in the government occurred at an equal frequency between local, state and federal government, cases that occurred on the federal level cost a median of $194,000 each — a noticeably higher level than the median cost of fraud at the local and state government levels ($80,000 and $100,000 respectively).

The Association of Certified Fraud Examiners (ACFE) published the results of its most recent global fraud survey in its highly anticipated 2016 Report to the Nations on Occupational Fraud and Abuse. Other key findings from the 92-page report include (all values in U.S. dollars):

Fraud is incredibly costly. The total cost of the frauds reported in the study was over $6.3 billion, with 23 percent of the cases costing more than $1 million. The study respondents estimated that the typical organization loses 5 percent of its annual revenue to fraud each year. When applied to the 2014 estimated Gross World Product of $74.16 trillion, this translates to potential global fraud losses of up to $3.7 trillion.

Small businesses are especially at risk. The study found that organizations with fewer than 100 employees faced the same median cost per instance of fraud as companies with more employees. However, less than half of the smaller organizations had implemented some of the most basic anti-fraud controls like implementing a fraud hotline, and establishing a management review and code of conduct. 

Hotlines are becoming an expected control in most companies. In the study, CFEs reported that 60.1 percent of the organizations they worked with had a fraud reporting hotline in place, an 8.9 percent increase from the findings reported in 2010.

Physical documents are still key components in fraud. For the first time, respondents were asked how fraudsters attempted to cover their tracks. Even in such a technologically driven world, fraudsters are still relying on creating fraudulent physical documents, altering existing physical documents or destroying those documents.

The Report to the Nations also details findings such as how fraud risks varied by industry, how the implementation of anti-fraud controls affected exposure to fraud, the breakdown of fraud statistics by geographical region and the most common behavioral traits observed among fraud perpetrators.

The 2016 Report to the Nations is available for download online at ACFE.com/RTTN.

Why Hollywood Loves Fraud

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Sarah Hofmann
ACFE Public Relations Specialist

On the big screen and small screen alike, it appears that there’s a new villain in town — fraud. From ABC’s miniseries Madoff, Oscar winner The Big Short, Showtime’s thriller Billions and many more projects in production, fraud seems to be the new hot topic for studios to explore.

The timing of pop culture tackling fraud is undoubtedly tied in some way to the Great Recession of 2008. While fraud is a crime that, by definition, is mainly hidden, the entire world saw how far-reaching the effects can be when big banks began to fail. Script analyst Mars Incrucio explained, “The subprime mortgage crisis in the states left the American public in a state of outrage, and it needed someone to blame. The words ‘banker’ and ‘Wall Street’ suddenly became even more vile and rapacious than they had before. All of this is to say, bankers, brokers, hedge fund managers, and any one percent figures now make for a great bad guy.”

As the dust began to settle on the destruction caused by unethical businessmen, there was another side of human nature that lent itself to being interested in stories of fraud and corruption. Vice President of Education for the ACFE, John Gill, J.D., CFE, explained that movies and shows about fraud can also appeal to a basic curiosity in people. “I think part of it is [the audience asking], ‘Would I ever do something like that?’... People find themselves facing ethical dilemmas more than they think.”

Luckily, Hollywood is beginning to pay attention not only to the greedy villains responsible for fraud; they are celebrating the men and women who uncover these schemes. Incrucio said, “Be on the lookout for the new hero motif, the investigator. These characters use research, wit and hard work to bring down ostensibly greedy and negligent corporate figures. Films such as Spotlight and Truth utilize this character as a direct challenge to the villains beget by the same public outrage.”

In addition to raising awareness about the investigators that ferret out these crimes, seeing more tales of fraud on the screen can lead to the public having an increased awareness of what to lookout for. Gill said, “Many stories are real and the ones that aren’t show an accurate depiction … they’re very helpful to get the word out about some of these schemes … [they] put a face to some of the realities of fraud.”

Whether they serve as PSAs for the general public on red flags to avoid or show entertaining tales of dogged investigators defeating the “evil fraudster,” it’s a safe assumption to make that there will be even more movies and shows in the coming years that show what we already know: fraud is a real issue that needs to be tackled.