5 Signs That Your Employee is Embezzling From Your Company – White Collar Crime Wednesday

 

When most people think of White Collar Crimes, they usually think of Bernie Madoff or the Enron scandal.  They never think that they could be a victim of a white collar crime.

According to the Association of Certified Fraud Examiner’s 2012 Report to the Nations, the estimated median loss for small organizations (fewer than 100 employees) that were the victims of  fraud were $147,000. The report indicated that small organizations are the most common victims in fraud instances at 31.8 percent, which also happens to be the highest rate of any business size category. For example, organizations with 100 to 999 employees had a fraud incident frequency of 19.5 percent; 1,000 to 9,999, 28.1 percent; and 10,000 plus, 20.6 percent.

The five most common fraud schemes for organizations with fewer than 100 employees in the ACFE report were: billing fraud, corruption, check tampering, skimming and expense reimbursement fraud. Corruption schemes deal with crimes such as bribery, illegal gratuities and kickback arrangements. The largest number of perpetrators in the entire study, 41.5 percent, had been with the organization between one and five years, most of them had a college degree and worked in the accounting area.

The following five signs can be subtle indicator(s) that your employee is embezzling from you.  Usually the most trusted and longest employed workers are the ones that decide to turn to fraudulent activities for various reasons such as; sickness in the family, divorce, mid-life crisis, gambling, substance abuse problems or sending children to college.

The scary part about some of the signs, is that they are also indicators of a good, dedicated employees.  This is why it’s imperative to perform a background check on a prospective employee, as well as set up a system of financial checks and balances.

Investigations that the CMP Protective and Investigative Group have conducted for our clients have revealed the following signs that may be initial indicators that a fraud is occurring in your business.

1. They Make Allies
There’s nothing wrong with co-worker cohesiveness, it should be encouraged but there’s a difference between being friendly and making strategic alliances. An opportunistic “con” may seek out someone a little higher on the totem pole to befriend.  Perhaps someone who has the authority to approve expenses, generate invoices or sign checks.  Since they are “friends” the one with the authority may not question expenses or check requests lacking proper documentation. Expanding on their social network, are they increasingly friendly with vendors? 

2. They Don’t Take Vacation
No, it’s not because they are dedicated to their job.  If they never take vacation, then their fraudulent activities can continue to go unnoticed, because there’s no one to question why certain things are being done, or not done.  

3. They Often Stay Late
After everyone has gone home and the office is vacant, they can get things done.  Not work per se, but swapping the fraudulent generated invoices for the actual ones, going through petty cash, or even stocking up on office supplies. 

 4. They Take On More Responsibilities and Duties
Take notice if they are in a financial position at your company.  If they are offering to take on more work, such as cash collection, depositing checks or cash at the bank, bank reconciliations and invoicing, this could be a red flag.  There needs checks and balances set-up with quality control checks by other employees or an outside investigative firm.  One person having sole responsibility of the financial transactions of a business means that they can create fake transactions, record them, take the payment for them and repeat this process without anyone knowing.

5. They Appear to have an Excessive Lifestyle
As an employer, you know how much your employees make.  Yes, they can always have second or consulting jobs outside of the time they are working for you.  However, if they are driving a nicer car than you, wining and dining at the nicest restaurants in town, owns a boat and wears expensive suits, you may be footing the bill for all those purchases.  Even if they are low-key in the office, criminals usually feel the need to brag or show off to some extent.  If they seem to be living a Dr. Jekyll and Mr. Hyde lifestyle on the weekdays and weekends, this may be an indication.  One of the white collar crime’s that we documented in our blog several few weeks ago explained what was found after the employee was found to be embezzling millions and millions of dollars. 

What is the difference between executive protection and security guards?

Executive Protection
Your security is our business (TM).

The difference between executive protection and security guards.

Executive protection identifies threats before they materialize.

Security guards address altercations as they arise.

Each individual and organization has unique security requirements.
-Risk and Threat Assessment
-Advance Logistical Evaluations

Secure the area, wherever you are.
– Executive Travel Coordination
– Have access to armor plated cars and explosive detection devices.

Who do we protect at CMP Protective and Investigative Group?
-Diplomats
-Politicians
-High Level Executives
-Celebrities

How do we protect?
A combination of brains and brawn.

Brawn
Former law enforcement and military professionals are trained in hand to hand combat and weaponry.

Brains
Able to identify threats based on intelligence regarding the protectee and pinpointing threats.

Clippers Donald Sterling Racist Recording – How are recorded voices analyzed to be proven as authentic?

I’m sure that you’ve heard about Clippers owner, Donald Sterling’s alleged racist conversation with Clipper’s archivist (also known as Donald Sterling’s former mistress)   Ms. V. Stiviano.  If not you can listen here.

In short, Shelly Sterling (Donald Sterling’s wife) is currently embroiled in a lawsuit with

Ms. V. Stiviano alleging that she used her good looks and charm to embezzle more than $1.8 million of the Sterling family money, including a Ferrari, two Bentleys and a Range Rover.  Shelly alleges in the suit that Ms. V. Stiviano “engages in conduct designed to target, befriend, seduce, and then entice, cajole, borrow from, cheat, and/or receive as gifts transfers of wealth from wealthy older men whom she targets for such purpose. Plaintiff is informed and believes and thereon alleges that one such target was Donald Sterling.”

Recordings were released to the media (Ms. V’s team neither denies nor confirms how they were released) contain several racist remarks from Donald Sterling to Ms. V. Stiviano about everything from her Instagram account containing pictures with “black people” such as basketball great, Magic Johnson, to who she chooses to publically associate with.

The Clippers made an official statement saying “We do know that the woman on the tape — who we believed released it to TMZ Sports — is the defendant in a lawsuit brought by the Sterling family, alleging that she embezzled more than $1.8 million, who told Mr. Sterling that she would get even.”  Shelly Sterling has said that she is not sure if the voice on the released recordings was her husband’s.

Clippers President Andy Roeser said that the recording does not reflect Donald’s beliefs. He also said Donald is “upset and apologizes for sentiments attributed to him.”

At CMP Protective and Investigative Group, we are fact finders and have been involved in cases that needed Audio Forensics to determine if they recordings are authentic.  A hotly debated and racially charged case like this cannot be based on “he-said-she-said”, but be analyzed by professionals to determine the correct course of action.

How are recorded voices analyzed to be proven as authentic?

Audio Forensic Voice Identification uses the combination of critical listening and sophisticated software to determine if the recordings are authentic.

First thing that the Audio Forensics Expert does is make an exemplar.  In this case Donald Sterling would be re-recorded using the same medium as the original recording, I would guess either a cell phone app that records conversations when prompted or perhaps a digital recorder that would pick up the conversation if it was put on speaker phone. I would think that the conversations took place on Ms. V’s cell phone, in one of the released conversations you can hear her ordering food or drink, you usually can’t do that on your house line or landline.

Mr. Sterling would be asked to say the phrases that were recorded on the conversation in question, multiple times.

The Audio Forensics Expert would follow a sequence of forensic steps, sometimes going back and repeating them to prove, without a (professional) reasonable doubt their findings.  The Audio Forensics Expert would also have to document their investigative process and be able to justify and explain every step of their forensic investigation in court.

Critical Listening

An Audio Forensics Expert would critically listen the two samples, noting any similarities or differences between the recordings.  Some of the smallest nuances include:

• The way words are said, especially if the person has a distinguishable accent.
• How words are started and ended (do they have a lisp when it comes to t’s s’s p’s or f’s).
• Pauses in the sentences.
• Breathing patterns.
• If the Forensics Expert wasn’t trained in Linguistics, some may bring an Linguistics expert into the case to work along-side with.

Spectrograph Analysis

Using sophisticated software, the electronic measurement of the sound range shows what the average pitch is and if it was mechanically altered.

There are many variables to consider such as:

• How was it recorded?  In the case of the recording in question, was the app recording right off the phone or was it put on speaker phone?  If the app was recording the direct conversation it’s more of an accurate recording, because the level of background noise, static and the overall pitch is truer than if it’s captured from further away by a digital recorder that will also pick up the sound of the room, such as reverberations that may slightly alter the pitch.

• Was the person under duress?  The voice can change if a person is scared, angry, nervous etc.  Emotions during the original recording and the exemplar vary.  If Mr. Sterling was upset with Ms. V over the Instagram pictures compared to a nervous Mr. Sterling sitting down and repeating the conversation to be as the exemplar, his voice may reflect the change in emotions.

• Time frame from when the voice was recorded.  Our voices change overtime, one of the nationally accepted standards for comparing voices is within six years.

According to the Board of Recorded Evidence, the following are the voice identification requirements accepted in the scientific community.

Standards for Comparisons Determination

The following are the standards accepted nationally by all professional organizations involved with voice identification, including the FBI, the Audio Engineering Society, the International Association for Identification, and the American Board of Recorded Evidence:

Identification

At least 90% of all comparable words must be very similar aurally and spectrally, producing not less than twenty (20) matching words. The voice samples must not be more than six (6) years apart.

Probable Identification

At least 80% of the comparable words must be very similar aurally and spectrally, producing not less than fifteen (15) matching words.

Possible Identification

At least 80% of comparable words must be very similar aurally and spectrally, producing not less than ten (10) matching words.

Inconclusive

Falls below either the Possible Identification or Possible Elimination confidence levels and/or the examiner does not believe a meaningful decision is obtainable due to various limiting factors.

Possible Elimination

At least 80% of comparable words must be very dissimilar aurally and spectrally, producing not less than ten (10) words that do not match.

Probable Elimination 

At least 80% of the comparable words must be dissimilar aurally and spectrally, producing not less than fifteen (15) words that do not match.

Elimination

At least 90% of the comparable words must be very dissimilar aurally and spectrally, producing not less than twenty (20) words that do not match.

 

 

Airport Security Concerns Raised Over Stowaway Teen in Wheel Well

Several days ago, a 16-year-old boy living in San Jose, California managed to climb the perimeter fence at the San Jose Airport, venture across the tarmac, up to the idled planes and climbed into a wheel well of a jet that was preparing on going to Maui.

The boy endured the 5½ hour flight, survived temperatures estimated to be 80 degrees below zero, as well as lack of oxygen due to an altitude of 38,000 feet.  Experts feel that the boy had most likely passed out and are astonished that he survived and has most aviation experts stumped.

Authorities are working to determine how the boy slipped through multiple layers of security including wide-range video surveillance system, German Shepherds and police officers riding Segway’s around the airport.  The boy was seen on the security footage scaling a fence without barbed wire on top and running towards the planes.

The boy’s father made a statement that he wanted to go back home to Somalia and that he wasn’t doing well in school in the U.S., because of a learning disability.

What if this wasn’t the case of a homesick teen running away?  It’s amazing that this boy was able to not only gain access to the tarmac, but board and stay on a plane successfully.  The city of San Jose, which owns and operates the airport, is not pressing charges.

According to the FAA, there have been a 105 know stowaway cases who have snuck aboard international flights since 1947. On average only 1 out of 4 (24%) of them survived.

It about time that we take airport security seriously and find the necessary funds to make it happen.  In this particular case, we were fortunate that this was only a teen trying to make his way back to his native country. As a national security expert, it’s very troubling that anyone was able to make it aboard a jet undetected, which opens the door to all sorts of possibilities of what could happen if someone looking to commit a terrorist act against a U.S. airliner undetected. When are we going to understand that if these repeated security breaches are not addressed the next time may lead to a catastrophic event.

#myNYPD – Thoughts on the #myNYPD Twitter Campaign

Officer John Pike gives a homeless man shoes, a tourist captures the moment.

Usually I save Wednesdays for “White Collar Crime Wednesday”, but I felt the need to comment on the NYPD’s Twitter campaign.

On Tuesday, the Twitter account of the New York Police Department asked people to post pictures of themselves and NYPD officers on Twitter and hashtag it #myNYPD.

I’m sure the NYPD was looking for a smiling person standing in front of a row of mounted police officers, posing with the iconic NYPD police vehicles, posing with a group of cops in Times Square or some other feel-good PR campaign. From my years as an officer with the NYPD and especially when I worked in the Times Square area, there were countless times that visitors and tourists to the Big Apple would ask if they could take a picture with me. They sometimes were nice enough to send me a copy once they developed their pictures.

 Leave it to the people of Occupy Wall Street to post pictures of alleged “police brutality” complete with their sarcastic remarks.

The right to protest is in our Constitution, however, it doesn’t mean people can protest any way they want.  I’ve been interviewed often on national news shows about Occupy Wall Street. I also wrote a post about the April 4^th, 2014 “Wave of Action” which was meant to re-occupy public places that were occupied during the original Occupy movement. It was also kick off a 4 month spree of protesting in various ways, both legal and sometimes not.

As I was promoted through the ranks of the NYPD, eventually becoming a Detective – Investigator responsible for the Crisis Management for the City, I was present for countless demonstrations, plane crashes, riots and the 1993 World Trade Center Bombing.  Call me biased and maybe I am, but I look at the #myNYPD campaign differently.

I remember #myNYPD running towards the WTC on 9/11 while everyone was running away, never to return home, numerous police officers giving their lives (the ultimate sacrifice) to save other people’s lives, cops being killed execution style, etc. There are great cops that are still out there, like Officer Larry DePrimo who bought a barefoot, homeless man boots in the dead of winter and the men and women who join the force to protect and serve people they have never met.

Understandably there are some bad apples, that applies for any particular working group of people standing in a room together, such as the (former) University of California Davis Officer John Pike who pepper sprayed a group of students who were peacefully sitting on the campus as passive protesters. There will always be the good cop / bad cop struggle.

The funny thing about any particular picture is that it captures a split second in time.  It’s easy to take a picture and post the second where an officer apprehends a protester who is openly using drugs, obstructing the flow of traffic, banging on drums until 5 a.m. in a residential area. 

No one seems to mention that many of the protesters arrested, were violently resisting arrest, hence the pictures of an officer having to put people up against cars, use their baton or use more than one officer to assist in restraining someone while lawfully arresting them.

Don’t get me wrong, I’m not outright defending all the documented acts of aggressive police behavior. There will be some behavior by officers that exceeds what would normally be acceptable, but the vast majority of officers go to work each day, not knowing if they will be returning home to their families after their tour.  What seems obvious to me is that you can’t determine what is in a single photo, without seeing what lead up to that split second that was caught on a camera lens.

 

My early NYPD days.

What can be found using computer forensics?

What can be found by doing computer forensics?
The identification, extraction reservation, interpretation, and documentation of computer evidence. Some of this information may be deleted or “hidden” that may serve as useful evidence in a legal matter.

Computer forensics may be helpful in various cases:
Copyright Infringement
Money Laundering
Intellectual Property Theft
Fraud
Sexual Harassment
Spoliation
Destruction on Information
Corruption
Hacking
Divorce

How do you perform computer forensics?
The computer with information has it’s hard drive removed by Certified Computer Forensics Examiner.

Using special forensics hardware, the hard drive is completely imaged (copied) to a blank hard drive.

Pictures
Installations
Files
Factory Reset
Flash Drives
Dates Created
Dates Deleted
Deleted Files
Hidden Files
Downloaded Emails
Data

The computer forensics analyst sorts through the transferred data stored on the new evidentiary hard drive, rather than compromise the original.

The report should be admissible for court or hearing purposes. The forensics specialist should be able to give expert court testimony.

Can my IT do computer forensics?
NO! Unless they are a Certified Computer Forensics Examiner.
All stages of a computer forensic investigation should be considered important. For evidence to be admissible in court it must be reliable.

Follow the Guidelines
Association of Chief Police Officers Good Practice Guide for Computer Based Electronic Evidence or ACPO Guide.

1. No forensic examination should change the data on a computer or storage media which may be subsequently relied upon in court.

2. In circumstances where a person finds it necessary to access original data held on a computer or storage media, that person must be competent to do so and be able to give testimony explaining how the data was retrieved and the guidelines that dictated their actions.

3. An audit trail or other record of all processes applied to computer-based electronic evidence should be created and preserved in accordance with Federal and State evidentiary rules. An independent third-party should be able to examine those processes and achieve the same result.

4. The person in charge of the investigation has overall responsibility for ensuring the safekeeping of all evidence and data that is retrieved from the subject’s hard drive and ensuring all these principals were adhered to.

For more information contact us.

How to Secure My Cell Phone? Part III of the Spyware Series

Part III – How to Secure My Cell Phone?

This three part series concerning cellphone spyware has in the previous weeks concentrated on Is There Spyware on my Cell Phone and How to Remove Spyware on My Cell Phone. Now in the final in the spyware series is How to Secure My Cell Phone.

Secure Your Cell Phone

No matter how many times you reset your phone or update your operating system (OS), prevention is always the best method, rather than treatment.  Spyware can be installed in only a few minutes if someone has physical access to your cellphone.

Here are a few ways to protect your cellphone:

Install a Security App

Lookout Mobile Security comes with a free and paid version for both Android and iPhones.  It has a feature that alerts you if someone has attempted to install spyware on your phone.

Password Locking Feature

All phones come with a password lock feature, if your phone is left unattended for a period of time.  I find it shocking that everyone doesn’t have this active!  It’s the easiest way to keep someone from physically installing spyware on your phone.  If you have this feature already, change your password every few months, someone could easily see you type in your code while casually looking over your shoulder. It is after all only four digits.

Use a Password App

AppLock requires a password for every app you install or delete.

Keep in mind, a majority of spyware is installed physically, perhaps while you’re in the shower, cooking, answering a landline call, going to the bathroom, etc. Remember, spyware is a hidden app in your phone.  If you were to utilize one or better two of these methods, it would make it almost (but not entirely) impossible for someone to install spyware on your cellphone.

The CMP Protective and Investigative Group is a full service investigative firm. We are quite tech savvy and our investigative staff and forensic techs routinely perform cellphone and computer forensics for our clients.  If you feel that you’re cellphone has been compromised contact us to set up a consultation

Discussing the One Year Anniversary of the Boston Marathon Bombings

One of my interviews regarding the one year anniversary of the Boston Marathon Bombing and what we have learned from it.

Background Checks – What can you find out?

Where did the term “Ponzi” scheme come from? – Charles Ponzi, Father of the Ponzi Scheme

 Where did the term “Ponzi” scheme come from?

Charles Ponzi is the Father of the “Ponzi” scheme.  Charles Ponzi was best known for the financial crimes he committed when he conned investors into giving him millions of dollars and paid them their returns with other investors’ money.

In 1918, Charles Ponzi got the idea for the scheme that would earn his name a place in criminal infamy.  It started when he (Ponzi) received a letter in the mail from a company in Spain that contained an international reply coupon (IRC), which is a coupon that can be exchanged for a number of priority airmail postage stamps from another country. Ponzi realized that he could turn a profit by buying IRCs in one country and exchanging them for more expensive IRC’s from another country.  

Ponzi’s would send money to people working for him in other countries, which would buy IRCs and send them back to the United States. Ponzi would then exchange the IRC for stamps worth more than he paid for them, and then sell the stamps. Ponzi reportedly made more than 400% on some of these transactions.

Ponzi began to seek investors to turn even higher profits. He promised investors outrageous returns of 50% in 45 days, or 100% in 90 days. Ponzi paid these investors using money from other investors, rather than with actual profits – similar to the scheme in the Bernie Madoff case.

Ponzi’s scheme began to unravel in August 1920, when The Boston Post began to investigate his returns. The investigation set off a run on Ponzi’s company, with investors trying to pull their money out of it.  Financial analyst Clarence Barron, noted that to cover the investments made with Ponzi, 160 million IRCs would have to be in circulation.   However, only 27,000 actually found.

Charles Ponzi was arrested on August 12, 1920, and charged with 86 counts of mail fraud. Owing an estimated $7 million, he pleaded guilty to mail fraud and subsequently spent 14 years in prison.  Once he was released Ponzi was deported from America and died penniless in Rio de Janeiro, Brazil on January 18, 1949.

The CMP Protective and Investigative Group has assisted our private clients and law firms at investigating these types of fraudulent acts and has acted as a liaison between our clients and prosecutorial agencies. Our investigative is comprised of former law enforcement detective and forensic experts who assist our clients in recovering their stolen money and getting the scammers prosecuted.