Pacemaker Data Betrays Host in Fraud Case

GUEST BLOGGER

Jeremy Clopton, CFE, CPA, ACDA, CIDA
Director, Big Data & Analytics, Digital Forensics
BKD, LLP | Forensics & Valuation Services

As the world of unique ways to investigate fraud expands, investigators in Middletown, Ohio, have given us the latest in ways of using data to solve a case. Not data from an accounting system, building access records or an Amazon Echo (see last month’s post) — this time it was data from a pacemaker. According to the article, a man was “charged for arson and fraud after law enforcement used data gleaned from his pacemaker to uncover an alleged plot to cheat his insurance company.” The man in question was attempting to collect more than $400,000 in damages caused by a fire at his home. However, the story he told of the exertion he underwent to pack suitcases and throw them out a window didn’t quite line up with the story his heart told. Police obtained a search warrant and went after the electronic records of his pacemaker. They quickly discovered that the heart doesn’t, in fact, lie. When I first read this story, I was initially shocked a pacemaker could be used this way. The more I thought about it, however, I quickly realized that it is an obvious application of analytics.

Using analytics to detect fraud often involves the application of pattern recognition technology. That can mean looking for specific patterns indicative of a fraud, looking for patterns contrary to your expectations or finding patterns where you wouldn’t expect. In this particular case, it was the absence of a pattern where one was expected. So, how does one go about applying analytics to a case like this? The same way you apply analytics in any situation — following a predictable framework.

Strategic question: Is Mr. Compton’s story plausible?

Objective: Identify indications of exertion of effort consistent with description of actions.

Data: Pacemaker electronic records.

Procedures: Trend analysis of heart rate, demand on pacemaker and heart rhythms before, during and subsequent to actions in story.

Analyze results: Patterns don’t show signs of increased exertion that would have been present based on story.

Manage results: Investigate other possible reasons for inconsistent pattern.

At its core, this is the same framework and application methodology for analyzing trends in financial or other data. What differentiates this from typical applications of analytics in investigations is the willingness to get data outside of traditional systems. As the Internet of Things grows and expands, the opportunities to go outside these traditional systems will also grow. More devices — wearables, virtual assistant devices, vehicles, etc. — will generate more data than ever before. Each of these will provide an opportunity to evaluate patterns in data compared to expectations. 

The challenge is this — how will you begin to leverage these non-traditional data systems in your investigations?

Do You Feel Lucky?

GUEST BLOGGER

Kathy Lavinder
Owner and Executive Director, Security & Investigative Placement Consultants

Are you gambling with your career? Remember the old song The Gambler? “You got to know when to hold 'em, know when to fold 'em. Know when to walk away and know when to run.” A Kenny Rogers song may not be an obvious place to look for career guidance, but it turns out that there’s some good career advice tucked into his memorable lyrics. Let’s look at the four scenarios Kenny lays out:

Know when to hold ‘em – If you’re in a work environment where you are engaged by your current responsibilities, regularly encounter new and varied professional challenges (cutting-edge fraud investigations, for example), enjoy the team you work with, and feel appropriately compensated and appreciated by your employer, then you should probably stay put. With no compelling reason to exit, the prudent option is to ‘hold ‘em’ and continue your professional growth in your current environment. Employers value loyalty and employees who exhibit the maturity to know when they are in a good spot. The fraud employment market is fairly robust at present so you may need to rebuff occasional overtures from recruiters, as flattering as they may be. If you’re at all tempted, do a risk/reward analysis and certainly look before you leap.

Know when to fold ‘em – If you’re unhappy with your work (for example, your fraud case load is one-dimensional or monotonous), there isn’t any upward mobility, or you don’t like your boss or your employer, it may be time to look for a new professional opportunity. Before you begin email blasting your résumé, stop and think things through. What kind of role do you want? What kind of employer – size, mission, culture, etc. – would be more appropriate? Learn from your unhappiness in order to get it right next time. Do your due diligences as you explore options.

Know when to walk away – This scenario really is rolling the dice. It may work out, but it may not. In my view, it’s rarely a smart career move to walk away without lining up a new job first. Employment gaps are not viewed favorably by most employers. Walking away also entails quitting. This can suggest a lack of persistence, determination or the ability to deal with adversity. The better option is to confront your issues, try to find better outcomes, or if that’s not possible, exit gracefully after landing your new professional opportunity.

Know when to run – If your employer is facing strong headwinds and there are serious challenges to the viability of your organization, put your career search into high gear. Do not literally run to the door, but get out in front of the bad news and adversity and make a concerted effort to find a new job. This advice applies to companies facing possible bankruptcy, shuttering of operations, reductions in force or technological developments that are disrupting the entire sector. Don’t be the last person left to turn off the lights. Stay abreast of developments and issues relevant to your employer and have your career parachute and action plan ready. 

CFE Navigates Cultural, Ethical and Investigative Challenges

MEMBER PROFILE

Andy Egloff, CFE
Fraud Investigations Manager EMEA, Dow Europe GmbH
Horgen, Switzerland

No day is like another for Andy Egloff, CFE and Fraud Investigations Manager for Dow Europe. As the investigations manager for Europe, the Middle East and Africa, Egloff faces more than just the usual challenges of fraud's improving technology and evolving trends. "I am confronted with many different cultural, ethical and investigative challenges," Egloff said. "It's not just about conducting research, reviewing data and documents, and making investigative decisions. It is also about keeping ethics and compliance committees informed, consulting with legal counsel, involving human resources, communicating with relevant stakeholders and coordinating with outside agencies and authorities."

What made you decide to become a Certified Fraud Examiner (CFE)?

It was by coincidence that I became a fraud and corruption fighter. I spent the first decade of my career in the financial sector, assisting customers in investing money rather than tracing assets. It was my exposure to insurance fraud cases and experience in risk assessment that triggered my interest in fraud examination. It eventually allowed me to transition into audit and, more specifically, anti-corruption and financial investigation. It is the combination of a challenging, interesting, diverse but also very rewarding work by being able to reduce the detrimental if not devastating effects of fraud and corruption that led me to pursue my career in this profession.

What trends are you currently seeing in fraud investigations? Do you see any trends specific to your region?

Crime has – unfortunately – gone global. In my view, the primary differences in diverse regions are the different cultures and value systems, not so much the modi operandi, although the state of technological development can make a difference.

Fraud and financial crimes are becoming more and more complex – as far as the schemes, the tools, but also the legal challenges (e.g. data protection and privacy laws in different jurisdictions) are concerned. In particular the risk of high-tech crimes is constantly increasing. One of the challenges associated with this trend is that today a large set of skills is needed including specialists with legal, accounting, information technology, fraud examination, law enforcement and other backgrounds to successfully detect but also prevent fraud. This requires a team approach, often across borders.

What were some of the more challenging tasks you've faced as a CFE?

There are many challenges a CFE faces every day. However, in my experience, it is often less the task itself but more the constraints and surrounding circumstances that can be challenging. Managing expectations of stakeholders, management and whistleblowers can be far more challenging than the investigation itself. The other challenges are resources. With appropriate resources – be those financial or human – almost any financial investigation can lead to good results, but resource constraints and cost/benefit considerations can jeopardize investigations. Also time constraints, often in combination with scarce resources, create challenges. Lastly, legal and political challenges in the form of restricting requirements or conflicting interests can hamper investigative progress.

Read Andy's full profile here.