Case DescriptionThe fraud began when Jessica Samuelson approached Salvatore Smith about a plan to steal and sell people’s personal information. Salvatore Smith had begun to work at Infodynamics, Inc.

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Case Description

The fraud began when Jessica Samuelson approached Salvatore Smith about a plan to steal and sell people’s personal information.  Salvatore Smith had begun to work at Infodynamics, Inc., a third-party credit-reporting agency that facilitates the retrieval of credit history data.  Infodynamics had outstanding contracts with over 25,000 companies, allowing these companies to check the creditworthiness of potential customers, thus creating a direct line past the three main credit bureaus.  As a customer service representative, Smith could obtain many confidential access codes.  The clients of Infodynamics used these access codes to gain approval on credit requests.  With permission to retrieve these confidential access codes, Smith had the opportunity to commit fraud.

In early 2000, Smith and Samuelson began to steal credit reports.  The two fraudsters sold this information to a group of thugs with known involvement in the black market.  The thugs would pay up to $60 for one person’s personal information.  After some time, the thugs began to provide the two fraudsters with names and social security numbers to help facilitate the fraud process even further.

To convert the information into money, the thugs would use information purchased from Smith and Samuelson to gain access to the victim’s bank accounts and other financial information.  The group of thugs would then take the following steps:

Deplete the bank accounts of the victims through wire transfers.                Change the addresses of the accounts so victims would no longer receive current information about their accounts.                Order new checks using the victim’s bank account numbers.                Order new ATM cards to enable cash withdrawals.                Order new credit cards using the victim’s name.                Establish new lines of credit in the victims’ names.Using these techniques, the fraud ring stole over $2.7 million from consumers over a period of about three years from late 2009 to late 2012.  The most intriguing aspect of the fraud was that Smith quit working at Infodynamics in early 2010, but continued stealing the information for an additional two years. Smith claimed that most of the access codes he had stolen remained unchanged for full two years after he left the company.

Finally, in early 2012, Smith’s increasing greediness led to the detection of his fraud.  Since the fraud began, Smith had purchased a large home for himself and purchased several time-share, also known as fractional ownership condominiums around the world.  He quickly adapted to the “jet set” life of a playboy.  However, Smith was finding it difficult to keep up with his newfound friends who were independently wealthy.  In his attempt to continue living a life of affluence, Smith stole around 15,000 credit reports from Infodynamics by using Ford Motor Company access codes.  In addition, from February to May 2012, Smith again stole a large number of names.  This time, Smith used Washington Mutual Bank access codes to steal 6,000 credit reports.  Finally, in September 2012, Smith made what would be his last big theft of credit reports.  Using Central Texas Energy Supply access codes, Smith stole 4,500 credit reports.

Subsequent to Smith’s use of Ford’s access codes, Equifax, one of the three largest credit bureaus in the United States, began to notice credit report request spikes in Ford’s account.  After Smith’s next two large batches of credit report requests, Equifax decided to investigate further.  Equifax discovered that almost all of the credit report requests came from one phone number, and that the fraudsters ordered requests in large batches of about 100 credit reports.

Your role in this learning demonstration is to assume you are the accountant assigned  to investigate irregularities in Ford’s account.  So far, you have located the physical address associated with the telephone number.  With the help of a law enforcement agency, you obtained a search warrant, secured a computer, and other equipment the fraudsters used to commit fraud.

DELIVERABLE:

Write a report to your supervisor that contains the following sections. Use the template I provide to you for this information.

1)        Basic Background on Fraud

a) Types of Fraud – summarize the major types of fraud and explain which type this case represents.

b) Nature of Fraud – provide an overview of the fraud triangle and use information from the case to illustrate your discussion of each of the three components.

c) Fraud Behaviors – describe the basic behaviors that fraudsters tend to exhibit and provide examples of those behaviors exhibited in this case.

2)        Evidence Gathering

a) Evidence Gathering Overview – Summarize the basic methods used to investigate a fraud that involves theft of information.

b) Evidence Gathering Plan – Develop a plan to uncover physical evidence in this case.  Include the following points:

i) A summary of physical evidence gathering procedures and how you would implement these procedures in this case as appropriate.

ii) A detailed description of how you would proceed to gather data from the computer and Smith’s cell phone, which you seized as a result of the search warrant.

iii) A summary of the basic ways to conceal evidence and an analysis of how the fraud ring may have concealed evidence in this case.

iv) A summary of the basic methods used to obtain documentary evidence and how these methods might apply to this case.

3)        Interview Plan

a) Interviewer characteristics – Summarize the basic characteristics of a good fraud interviewer.

b) Interview Plan – Develop a plan to interview Smith regarding this case.  List the questions you plan to ask in the interview. (This is an exception to the rule to avoid using bullet point lists.)4)        Prosecution Recommendations (assume you are able to gather sufficient evidence that you believe would lead to either a criminal conviction or civil recovery for credit card companies that covered the losses of their customers).

a) Justification for Prosecution – Present the general arguments for or against prosecuting fraud cases from the standpoint of the credit card companies that sustained losses due to the fraud and make a recommendation about whether the credit card companies should proceed.

b) Method of Prosecution – Present a general comparison between civil and criminal prosecution procedures.  Make a recommendation to present to the credit card companies that were harmed concerning which approach they should take and why.  Also, include the possibility of taking both approaches.  Note, law enforcement agencies will not press charges until one or more of the credit card companies presses charges.

PLEASE SEE ATTACHMENT AND REQUIREMENTS

Case DescriptionThe fraud began when Jessica Samuelson approached Salvatore Smith about a plan to steal and sell people’s personal information. Salvatore Smith had begun to work at Infodynamics, Inc.
TEMPLATE: I. Background Information on the Fraud Committed A. Type of Fraud the Case Represents II. Fraud Triangle A. Case Specific Information Related to the Fraud Triangle   1. Opportunity.           2. Pressure.           3. Rationalization. B. Fraud Behaviors Exhibited by the Fraudsters in This Case. III. Evidence A. Evidence Gathering Plan 1. Evidence gathering methods used to investigate the theft of information. 2. Summary of implementation of appropriate physical evidence gathering procedures in this case. 3. Summary of the basic ways to conceal evidence and an analysis of how the fraud ring may have concealed evidence in this case. 4. Detailed description of how to gather data from the computer and Smith’s cell phone seized as a result of the search warrant. 5. Summary of the basic methods used to obtain documentary evidence and how these methods might apply to this case. IV. Interview A. Interviewer Characteristics B. Interview Plan   V. Prosecution Recommendations A. Justification for Prosecution B. Method of Prosecution Requirements: Follow APA style guidelines using in-text citations with page numbers whether information is a direct quote or paraphrased, running head with page numbers, Arial 12 point font, 1 inch margins and double spacing with 0 point before and after, no seriation. ALL direct quotes must be in quotation marks. Exception to APA style guidelines: Do not include an abstract. No pictures, tables, figures, etc., should be included in the body of your report. They can be placed in an appendix to your report but they will not count in the length of your report. Also avoid bullet point lists. Most of the report will be written in essay style responses. Length of fraud report: a minimum of 15 FULL pages (this does NOT include the title page or reference list) Include the following for your fraud report: title page body of the fraud report with required headings (Please see the Fraud Report Required Format for required headings to use in your report. It is posted in Course Deliverable Requirements.) reference list The name of the file for your fraud report should be first name last name Fraud Report. For example: John Smith Fraud Report.docx Use the Template provided in the Course Deliverables Requirements for the headings of your paper.
Case DescriptionThe fraud began when Jessica Samuelson approached Salvatore Smith about a plan to steal and sell people’s personal information. Salvatore Smith had begun to work at Infodynamics, Inc.
Background Information on the Fraud Committed The fraud in this case began in early 2000. Jessica Samuelson approached Salvatore Smith with a plan to steal and sell confidential information. Smith was a customer service representative with Infodynamics and therefore had access to the confidential access codes which are used by Infodynamics’ clients to retrieve credit reports. These reports were then sold by Smith and Samuelson to a group of known criminals who used the information to gain access to victims’ bank accounts and other financial information. The group then used the victim information to drain bank accounts through wire transfers and change addresses on accounts so that the victims would not receive statements showing the activity on the accounts, order new checks and ATM cards to the fraudulent addresses which were then used to drain bank accounts, and obtain credit cards and lines of credit in the names of the victims. We believe that the perpetrators were able to steal large sums of money, at least $2.7 million from late 2009 through late 2012 alone. This is particularly concerning since Smith’s employment at Infodynamics was terminated in early 2010, meaning he was able to continue stealing confidential information for nearly two years after his employment at Infodynamics ended. Smith has explained that he was able to continue to engage in these thefts because the access codes he had obtained were not changed during this period. Smith’s fraud was discovered in 2012 after large increases in the number of credit report requests using a Ford Motor Company access code was raised suspicion at Equifax. Upon further investigation Equifax was able to determine that nearly all of the credit reports requested originated at one phone number in large batches of around 100 reports each. With the help of law enforcement we have been able to locate a physical address associated with the phone number used and as a result of a search warrant we have obtained a computer and other equipment we believe was used in committing this fraud. Type of Fraud the Case Represents a) Types of Fraud – summarize the major types of fraud and explain which type this case represents. there are many ways to classify the various types of fraud, the most common way is to simply divide frauds into those that are committed against organizations and those that are committed on behalf of organizations. In employee fraud, for example—fraud committed against an organization—the victim of the fraud is the employee’s employer.1 p. 9 Another way to classify frauds is to use the ACFE’s definition of “occupational fraud.” The ACFE defines this type of fraud as, “The use of one’s occupation for personnel enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets.”p. 10 Identity theft. Identity theft occurs when someone assumes the identity of another person to purchase goods, engage in criminal activity, or perpetrate fraud. Perpetrators steal a person’s identity by accessing personal financial information such as information that is found on creditor statements, credit cards, bank statements, social security, and other personal documents such as driver’s license. Perpetrators sometimes also gain this infor- mation by going through a victim’s mailbox or trash can.p. 12 Fraud Triangle b) Nature of Fraud – provide an overview of the fraud triangle and use information from the case to illustrate your discussion of each of the three components. three key elements common to all of them. His fraud included: (1) a perceived pressure, (2) a perceived opportunity, and (3) some way to rationalize the fraud as acceptable. p. 34 A perceived opportunity to commit fraud, conceal it, or avoid being punished is the second element of the fraud triangle. In this section, we will discuss fraud opportunities. At least six major factors increase perceived or real opportunities for individuals to commit fraud within an organization. The following list of these factors is not exhaustive, but it does provide a sufficient number of settings to illustrate the role of opportunities in the fraud triangle. 1. Lack of internal controls that prevent and/or detect fraudulent behavior 2. Inability to judge quality of performance 3. Failure to discipline fraud perpetrators 4. Lack of access to information or asymmetrical information 5. Ignorance, apathy, or incapacity 6. Lack of an audit trail p. 39 A. Case Specific Information Related to the Fraud Triangle 1. Opportunity. As a customer service representative, Smith could obtain many confidential access codes.  The clients of Infodynamics used these access codes to gain approval on credit requests.  With permission to retrieve these confidential access codes, Smith had the opportunity to commit fraud. Smith claimed that most of the access codes he had stolen remained unchanged for full two years after he left the company. 2. Pressure. Finally, in early 2012, Smith’s increasing greediness led to the detection of his fraud. Since the fraud began, Smith had purchased a large home for himself and purchased several time-share, also known as fractional ownership condominiums around the world. He quickly adapted to the “jet set” life of a playboy. However, Smith was finding it difficult to keep up with his newfound friends who were independently wealthy. 3. Rationalization. No specific info given in case but there was so much opportunity that there was little need to rationalize. Little controls-likely thought wouldn’t be caught. Maybe thought that he was not directly hurting the people since he only sold the info. B. Fraud Behaviors Exhibited by the Thugs in This Case. c) Fraud Behaviors – describe the basic behaviors that fraudsters tend to exhibit and provide examples of those behaviors exhibited in this case. III. Evidence A. Evidence Gathering Plan 1. Evidence gathering methods used to investigate the theft of information. 2)        Evidence Gathering a) Evidence Gathering Overview – Summarize the basic methods used to investigate a fraud that involves theft of information. 2. Summary of implementation of appropriate physical evidence gathering procedures in this case. b) Evidence Gathering Plan – Develop a plan to uncover physical evidence in this case.  Include the following points: i) A summary of physical evidence gathering procedures and how you would implement these procedures in this case as appropriate. ii) A detailed description of how you would proceed to gather data from the computer and Smith’s cell phone, which you seized as a result of the search warrant. 3. Summary of the basic ways to conceal evidence and an analysis of how the fraud ring may have concealed evidence in this case. iii)        A summary of the basic ways to conceal evidence and an analysis of how the fraud ring may have concealed evidence in this case. 4. Detailed description of how to gather data from the computer and Smith’s cell phone seized as a result of the search warrant. ii) A detailed description of how you would proceed to gather data from the computer and Smith’s cell phone, which you seized as a result of the search warrant. 5. Summary of the basic methods used to obtain documentary evidence and how these methods might apply to this case. iv) A summary of the basic methods used to obtain documentary evidence and how these methods might apply to this case. IV. Interview A. Interviewer Characteristics a) Interviewer characteristics – Summarize the basic characteristics of a good fraud interviewer. B. Interview Plan b) Interview Plan – Develop a plan to interview Smith regarding this case.  List the questions you plan to ask in the interview. V. Prosecution A. Prosecution Recommendations o   Prosecution Recommendations (assume you are able to gather sufficient evidence that you believe would lead to either a criminal conviction or civil recovery for credit card companies that covered the losses of their customers). o   Justification for Prosecution – Present the general arguments for or against prosecuting fraud cases from the standpoint of the credit card companies that sustained losses due to the fraud and make a recommendation about whether the credit card companies should proceed. B. Justification for Prosecution o   Justification for Prosecution – Present the general arguments for or against prosecuting fraud cases from the standpoint of the credit card companies that sustained losses due to the fraud and make a recommendation about whether the credit card companies should proceed. C. Method of Prosecution o   Method of Prosecution – Present a general comparison between civil and criminal prosecution procedures.  Make a recommendation to present to the credit card companies that were harmed concerning which approach they should take and why.  Also, include the possibility of taking both approaches.  Note, law enforcement agencies will not press charges until one or more of the credit card companies presses charges.

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