Fraud Investigation Custom Research Essay

Fraud Investigation

Abstract

          As a general statement, fraud is as old as human existence; in one form or another, for as long as human beings have possessed something of value, there has been someone else who has deceptively taken the valuables from their rightful owner.  In the 21st century, given the complexity of international monetary systems and super fast Internet technology, the scam has been elevated to an art form, creating perpetrators and victims at an incredible rate.  In this paper, various forms of fraud and scams will be presented and discussed in an effort to better understand the modern world of fraud.  To begin the analysis, one of the classic weapons used to bring perpetrators to justice, the expert witness, will be discussed.

The Nature of the Expert Witness

          Luckily, for every individual who would use their knowledge of technology, finance, and the classic con game to victimize the innocent, there is likewise someone of equal knowledge and experience who will help in stopping the fraud criminal- the expert witness.

          The reality of the nature of the expert witness is that he or she, to be effective, must be a subject matter expert at the core, surrounded by the ability to combine drama, communication, charisma and self promotion to have credibility (Peterson, et al, 2004).  Witnesses that not only know the subject that they are testifying or consulting about, but also are able to make others agree with them and like them as individuals, most successfully undergo the transformation into expert witnesses that get results.  Ironically, in the specific areas of fraud and scams, many former scammers make convincing expert witnesses because they have refined the skills of manipulating others through years of fraud and cons.

          Using an expert witness correctly, one has to do more than simply bring him or her into the courtroom and let them loose; rather, there are steps to be taken.  The expert witness must be educated on the background of the case that they are testifying in so that they can present well and overcome objections to their presentation, be drilled in the answering of the difficult questions that are likely to arise, and while doing all of this, be prepared and look professional.  A professional looking, knowledgible and prepared expert witness has a huge advantage in court.

          Taking all of the positive attributes of the prepared expert witness into account, in fairness, there are also disadvantages to using the expert witness.  If he or she has gained a great deal of knowledge about fraud, for example, through a career in crime, their questionable character could take away from their testimony.

E-Fraud Scams

          In keeping up with cutting technology, the modern scam artist has developed an arsenal of E-fraud scams that work exceptionally well in the fast paced society of the 21st century; some of the most popular are as follows:

          Sniffing, in terms of Internet technology, is a variation on the classic phone wiretap in a sense, whereby a scammer will “sniff out” someone who is online, using computer programs to illegally gather information from the online user, which can range from somewhat harmless information such as Websites visited, up to an including the theft of credit card and bank information, etc (Micci-Barreca, 2003).

          Spoofing involves the false representation of an individual as another online, or in some cases, the false representation of an illegitimate business to be legitimate or a totally different company altogether.  Simply put, spoofing is false identity, and can take on several major forms, such as password fraud, whereby one pretends to be someone else to gather a password, and then uses that password to assume yet another identity, usually to obtain cash or goods under someone else’s name;  Website hijacking, which involves a legitimate Website being taken over by criminals, who in turn use it to collect credit card numbers, social security numbers, or any other personal data that can be used for theft; and falsified identity, which involves all of these online scams and more to assume another person’s identity to illegally obtain cash, goods, services, etc., while pretending to be someone else (Micci-Barreca, 2003).

          In the classic discussion of logic and reasoning, many people can recall the five step deductive process that is used to determine if a statement, theory, equation, etc is true or false (Albecht, et al, 2006).  This process, in the hands of the con artist, can be a useful tool, as general conclusions can be drawn about the likely behavioral patterns of the group of people that the criminal is targeting, such as the elderly, college students, etc, and scams can be built to victimize the chosen targets.  Likewise, however, fraud investigators can use this type of deduction to assemble a profile of the criminal, which will aid in catching him or her in the commission of full blown fraud.

Prevalence of Fraud in Bankruptcy and Divorce Cases

          Generally speaking, the prevalence of fraud in bankruptcy and divorce cases has as much to do with the nature of these types of cases as it does with human nature itself.  By their very nature, divorce and bankruptcy cases involve the endurance of unpleasant inquiries and actions on the part of the parties involved, such as the attachment of future wages earned, the seizure of assets and physical property, and the age old struggle of one party against another.  All of these facets of the cases tend to motivate the human mind, as a means of self preservation, to attempt to hide assets so that they cannot be taken, underestimate earnings so that less will be payable in the future, and generally falsify records and statements- the very definition of fraud itself (Peterson, et al, 2004).

          Perpetrators in bankruptcy and divorce cases can hide assets, and do hide assets, in a variety of ways.  A popular way to do so is to stash funds in offshore bank accounts, which are rooted in foreign countries that are not legally compelled to provide account balances and the like to domestic investigators.  Tangible assets, such as homes, vehicles and jewelry, are routinely hidden by being “sold” to an accomplice at a very low stated price, which gives the perpetrator fewer assets to be taken away.  In reality, the asset is not out of the physical possession of the perpetrator, so they enjoy the use of the asset without the legal consequences.

The Nigerian 419 Advance Fee Fraud

          To conclude, no discussion of fraud and scams would be complete without some words about the Nigerian 419 Advance Fee Fraud, so named because of the code of international law, 419, which outlaws the scam itself (Wells, 2004).  The basic premise of this scam, which has been carried on for decades via fax as well as online, is that con artists in Nigeria (which has very few fraud laws) will prepare official looking government documents and present them to the potential victim.  These documents tell a story of vast sums of money that the false Nigerian government official needs to deposit in the victim’s bank account in order to withdraw them later due to political unrest and so forth; in exchange for the use of the victim’s bank account, he or she is promised an “advance” of the funds as a sort of commission for their help.  In reality, once the “Nigerian official” receives the victim’s bank account information, the information is used first to clean out all of the funds from the victim’s account and later to obtain credit cards, loans, etc in the victim’s name.  Net effect, the victim is robbed of thousands of dollars with little recourse.

          The Nigerian 419 scam is so successful, again mostly due to human nature.  Greed overpowers reasoning ability, and few people think that they will be victims of a scam, and because they don’t realize the risk involved, they falsely think that they are risking nothing and can easily gain hundreds of thousands of dollars for little effort.

Summary

          As a final word, let it be understood that for all of the tools to fight fraud in the 21st century human nature, both to be a victim and predator, virtually guarantees an indefinite future for fraud and scams.

                            References

(Albrecht et al., 2006)  (Albrecht W Albrecht C C Albrecht C O 2006 Fraud Examination)Albrecht, W., Albrecht, C. C., & Albrecht, C. O. (2006). Fraud Examination (2nd ed.). Phoenix:  Thomson Southwest.

Micci-Barreca, D. (2003, September). Unawed by Fraud: New Techniques and Technologies Have Been Enlisted in the Fight against Online Fraud. Security Management, 47, 75+.

Peterson, B. K., & Buckhoff, T. A. (2004). Interstate Business College: A Case Study in Fraud Examination. Issues in Accounting Education, 19(4), 505+.

Wells, J. (2004). Foreign Advance-Fee Scams: There Are Many Variations of These Con Games. Journal of Accountancy, 197(4), 58+.