ACFE Insights

Executive Creates Anti-Fraud Cooperation Across a Continent

2012-05-24T20:45:23Z

MEMBER PROFILE

Giuseppe Tritto
Vice President, Head of Anti-Fraud and Corporate Governance
BNP Paribas
New York, N.Y.

As the vice president and head of anti-fraud and corporate governance, Guiseppe Tritto knows how wide fraud investigations can span. From Miami to Vancouver, Tritto supervises and monitors all corporate and investment banking anti-fraud efforts in North America for BNP Paribas. Aligning those efforts across an organization, and a continent, can be a daunting, but necessary task. “By nature, controls, compliance and audit are not seen as the friendliest departments within a financial institution,” Tritto said. “Creating a spirit of cooperation with business lines is always a challenge. Over the years I have noticed an increased awareness from the business lines about our responsibilities and tasks, which are not aimed at penalizing business, but preventing negative events.”

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

We are in the U.S. corporate and investment banking field and we do not have a lot of exposure to retail fraud. That being said, we have received several requests for support for Internet-related fraud schemes. Currently the level of sophistication of these schemes is remarkable and requires more in-depth review of the materials and particular attention to details.

Please describe your most memorable case and its resolution (to-date if it’s a fresh case). Feel free to use pseudonyms for suspects if the case is ongoing and no judgment has yet been made.

When I worked for the Italian government as a special agent for the Italian Treasury I uncovered a major scheme involving sensitive figures. The scheme focused on a government insurance agency involving fraud, corruption, money laundering and bribery on a large scale. It eventually resulted in the seizure of hundreds of millions of dollars and the arrest of several public figures.

What advice would you give to someone hoping to follow a similar career path as you?

Believe in what you do and provide the best service based on ethics, knowledge and a spirit of cooperation. Sometimes what we uncover is not pleasant, but nevertheless our mission is to prevent fraudsters and white-collar crimes criminals from exploiting our organizations.

What do you consider your greatest career achievement?

The position I hold now was awarded to me as the result of the creation of an anti-fraud program me and my colleagues implemented in North America. In Italy, I would note the case I mentioned in the previous question as I felt I provided a great service to the community and was well received by the local authorities.

Read more ACFE member profiles in the ACFE Career Center.

Sentinels Come in All Shapes and Sizes

2012-05-22T15:03:40Z

GUEST BLOGGER

Timothy Hediger, CFE, CIA, CISA
Owner and Consultant, Polaris Risk Services, LLC

It’s a tremendous honor to talk with fellow CFEs at the 23^rd Annual ACFE Fraud Conference & Exhibition this June in Orlando and to share my whistleblowing experience. There are many things that I am passionate about: woodworking, listening to Stevie Ray Vaughan, reading and learning new things. But my greatest passion, and probably yours, is my chosen vocation as a fraud examiner. That passion and my belief that doing the right thing really means something are the reasons my family has persevered over the past few years. You see, I am a sentinel, a whistleblower.

I was the director of internal audit at one of the U.S.’s largest not-for-profit organizations that provided jobs for people with disabilities. Our company was supposed to help these people - from a teenager with a severe form of autism, to a soldier returning from Iraq with post-traumatic stress disorder, to a senior citizen who has cerebral palsy. Unfortunately, my company was cheating the U.S. Department of Defense out of a no-bid contract. The organization was not accountable to the government, the disabled or to the public that allows 501(c) organizations to operate.

I reported these issues to management in writing on 17 different occasions and the following happened:

I was denied a raise
I was given a written warning
My coworker and fellow plaintiff was fired
My audit reviewing the no-bid contract was cancelled
I disclosed the problems with Corporate Counsel and External Auditors
I was demoted
I was a “lay off of one,” a way of saying I was fired

The entertainment industry depicts wearing a recording device for the Federal government as a lot sexier than it really is, and conveniently forgets to mention the nerve-wracking idea of a wire-wearing novice being discovered. In fact, that was one of the scariest propositions that I have had to go through in my professional life.

I never, ever want to go through an event like that again! When you have a wife and a newborn daughter to care for, it’s not easy to sacrifice your job for truth. However, it was comforting to know that the U.S. Department of Justice and other agencies found merit in the argument we made: http://www.justice.gov/opa/pr/2011/July/11-civ-902.html.

While in Orlando, please feel free to stop by, introduce yourself and say ‘hi’ to a sentinel at my session, “The Landscape of Whistleblowing: A Personal and Professional Perspective” on Wednesday, June 20.

You Are Not Alone: Finding, Changing and Growing a Career

2012-05-11T19:03:50Z

AUTHOR’S POST

Mandy Moody
ACFE Social Media Specialist

I still remember the questions that ran through my mind when I heard the president of my former company say, “Mandy, we are going to have to let you go” back in the spring of 2009. How will I make my car payments? What could I have done differently? Where is the nearest bar?

As a life-long perfectionist and overachiever, I was dumbfounded to discover that I was “one of those people,” a casualty of a dwindling economy and unpredictable layoffs. All of a sudden the future did not look as bright as the keynote speaker at my college graduation promised it would be.

However, after picking my ego up off of the floor, seeking out advice from experienced professionals and researching resume best practices, I was able to rebound quickly and find a job that eventually led me to the front door of the ACFE. In the end what appeared to be a dark cloud turned out to be a blessing in disguise. Granted, I know it is not that easy for everyone, but I was thankful for the expert advice I received from people just like those that will be on-hand, ready and willing, to help attendees at this year’s Career Connection at the ACFE Annual Fraud Conference & Exhibition, June 17-22 in Orlando.

Here are just a few of the highlights you can expect to see at the Career Connection:

NEW! Career Fair: representatives from some of the nation’s top employers like Capital One, Walt Disney World and ING Direct will be on-hand at the Career Connection’s first-ever Career Fair in the Exhibit Hall, Monday evening, June 18 from 3:00-7:00 p.m.
Career strategists will answer questions related to the anti-fraud profession. Schedule a private session to discuss career decisions like phasing into a new career, transitioning from the public to the private sector, elevating your role within your current organization, establishing yourself within your new role and defining your professional goals ($50 for 50 minutes). There will also be two strategists on hand for quick walk-up appointments.
Professional development-related presentations: 15-minute presentations focused on pitfalls to avoid in your career, negotiating a salary without leaving money on the table and more.
Opportunity to win a free Comprehensive Résumé and Cover Letter Review ($75 value). Veteran hiring manager Donn LeVie Jr., who has helped thousands of job-seekers create attention-getting cover letters and résumés, will provide you with an annotated résumé and cover letter evaluation that includes detailed suggestions for improvement. Stop by the Career Connection booth to enter the drawing.

We look forward to seeing you in Orlando. Whether you are searching for a new job, a career change or just looking for some advice, be sure to stop by the Career Connection in the Exhibit Hall.

Collaborating on a Casebook: The View from the Grammar Police

2012-05-09T18:26:45Z

GUEST BLOGGER

Laura Hymes, CFE
Managing Editor

When I began working at the ACFE 3½ years ago, I had almost no knowledge of common fraud schemes and the various methods that fraud examiners use to prevent and detect them. What I did have was a background in publishing and an interest in continuing to develop and edit books. Fast forward to today and not only have I had the opportunity to work on three of Dr. Joseph T. Wells’ casebooks (Internet Fraud Casebook, Financial Statement Fraud Casebook and the forthcoming Bribery and Corruption Casebook), but I’ve even earned my own Certified Fraud Examiner (CFE) credential.

Reading firsthand accounts of investigating and uncovering fraud drove home the immediacy of white-collar crime in a way I had not experienced before. For me, it added that human element that can be lost so easily when I’m reading a textbook or manual. Suddenly I knew the people behind the investigations, had working relationships with them, and understood their senses of humor and writing styles. If I didn’t quite grasp one of the finer points in a case, I had direct access to the examiner writing it, and every author from whom I sought clarification was kind and generous in explaining the nuances that a novice might not appreciate.

My experiences working on the Bribery and Corruption Casebook: The View from Under the Table were no different. Dr. Wells and I usually begin the casebook process by brainstorming new ideas, and this time around we decided corruption was the way to go. After we chose the topic for this new collection, we sent a request to CFEs for case submissions. When we reviewed submissions we were looking for a good mix of private industry and public corruption cases. This step is always the most difficult; we receive so many excellent ideas — hundreds for this latest collection — but there simply isn’t room to include them all.

After the cases have been selected, the real fun begins. That’s when I get to start collaborating with practitioners in the field who investigate white-collar crime daily. We work in drafts, communicating and discussing ideas at each stage. I move commas around, add adjectives and flesh out descriptions, and ask annoying questions like, “Can you make the difference between that kickback and this illegal gratuity more apparent?” For their part, the writers take my grammar-police tendencies in good humor and respond to my questions thoughtfully and in ways that, I hope, add value to the cases for our readers.

John Wiley & Sons Publishing released the new Bribery and Corruption Casebook: The View from Under the Table in April. I hope you enjoy reading the stories and learn something from the experienced ACFE members who investigated and wrote the cases — I certainly did.

And Dr. Wells and I are already in the brainstorming phase for our next book, so stay tuned!

Fraud by the Numbers: The 2012 Report to the Nations

2012-05-03T18:27:56Z

GUEST BLOGGER

John Warren, J.D., CFE
Vice President and General Counsel

As most readers are probably aware, every two years the ACFE publishes a new edition of the Report to the Nations, a global study on occupational fraud. This is one of our most important initiatives and one of the things we are most proud of as an organization. The Report provides information on the costs, methods, victims and perpetrators of occupational fraud – information that simply cannot be obtained anywhere else in the world.

We are now putting the finishing touches on the 2012 Report, which is scheduled to be released to the public May 8. I have personally been involved in the production of every edition of the Report since 1996, and I can confidently say that the 2012 Report is the best and most complete study we have ever done. It contains a tremendous amount of information about how frauds are detected, the effectiveness of various controls, the characteristics of fraud offenders, the impact of fraud in various regions of the world, and more. The Report should be required reading for any anti-fraud professional and we hope it is something our members can use to educate their own clients and organizations about the risk they face from occupational fraud.

Our staff puts a tremendous amount of work into making sure the Report contains accurate, insightful information that will be useful in fighting fraud. The ACFE research department spends months reading every case we receive, organizing the data, analyzing it and compiling it into the final Report. And our graphic design team does a tremendous job taking the thousands of pieces of data we have assembled and organizing it so that key facts are accessible and easy to read.

But the ACFE staff is not the only group responsible for the information you see in the Report to the Nations. The data we compile and present to you is only available because of the wonderful contribution of Certified Fraud Examiners (CFEs) from around the world who took the time and effort to participate in our survey and provide information about specific fraud cases they had investigated. In the 2012 study we received nearly 1,400 cases of occupational fraud, which gives us a tremendous data set with which to work and allows us to produce what is widely recognized as the world’s most comprehensive study on occupational fraud. It is a testament to the dedication of our members that they are willing to give their time and share this information not for any personal gain or notoriety, but simply to contribute to our growing understanding of occupational fraud and to support the anti-fraud community.

If you have been a member of the ACFE for any length of time, you have no doubt heard our founder and Chairman, Dr. Joseph T. Wells, CFE, CPA, and our President and CEO, James Ratley, CFE, talk about the ACFE’s focus on being the best association in the world. We work to achieve that goal through the outstanding efforts of our highly trained and dedicated staff and our leadership’s constant commitment to excellence. But the quality of our organization extends far beyond ACFE headquarters; we also have the best members in the world, and the Report to the Nations is evidence of that fact. As you read the 2012 Report in the coming weeks, I have no doubt you will find information that is informative and helps you in your career. Please keep in mind the contributions of all the committed CFEs who made this Report possible and who support the ACFE, their fellow anti-fraud professionals and the communities and organizations in which they work and live every day.

The 2012 Report to the Nations on Occupational Fraud and Abuse is available in electronic form on ACFE.com.

EEOC Updates Guidance for Employers Using Arrest and Conviction Records

2012-05-01T15:49:39Z

GUEST BLOGGER

Lester Rosen, J.D.
CEO, Employment Screening Resources

On April 25, 2012, the Equal Employment Opportunity Commission (EEOC), the agency that enforces federal laws prohibiting employment discrimination in the U.S., issued updated Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964.

On a Q & A page, the question on how the EEOC’s updated Enforcement Guidance differs from earlier policy statements is answered:

It discusses disparate treatment analysis and gives examples of applicants with the same qualifications and criminal records being treated differently because of race or national origin in violation of Title VII.
It explains the legal origin of disparate impact analysis.
It explains two circumstances where employers may consistently meet the “job related and consistent with business necessity” defense: 1) The employer validates the criminal conduct exclusion for the position in question in light of the Uniform Guidelines on Employee Selection Procedures; or 2) The employer develops a targeted screen considering the nature of the crime, the time elapsed, and the nature of the job, then provides an individualized assessment to determine if the policy is job related and consistent with business necessity.
It states that federal laws and regulations that restrict or prohibit employing individuals with certain criminal records provide a defense to a Title VII claim.
It says state and local laws or regulations are preempted by Title VII if they “require or permit the doing of any act which would be an unlawful employment practice” under Title VII.

The Enforcement Guidance also recommends “best practices” for employers using criminal records:

Eliminate policies or practices excluding people from employment based on any criminal record.
Train managers, hiring officials and decision makers about Title VII and its prohibitions on employment discrimination.
Develop narrowly tailored written policy and procedures for screening criminal records.
Determine specific offenses that may demonstrate unfitness for performing such jobs.
Determine the duration of exclusions for criminal conduct based on all available evidence and include an individualized assessment.
Record the justification for the policy and procedures.
Note and keep a record of consultants and decision makers on how to implement the policy and procedures consistent with Title VII.
Limit inquiries about criminal records to records for which exclusion would be job related for the position in question and consistent with business necessity.
Keep information about criminal records confidential and only use for the intended purpose.

Mr. Rosen will share best practices on using background checks as part of your anti-fraud program at the 23rd Annual ACFE Fraud Conference at his session, Employment Background Checks: Stopping Employee Fraud at the Point of Entry.

3 Ways To Get Quick, Affordable CPE

2012-04-27T18:37:21Z

GUEST BLOGGER

Leslie Simpson, CFE
Membership Director

As a Certified Fraud Examiner, I find myself constantly thinking of where I’m going to find interesting CPE that allows me to stay up-to-date with the happenings in the anti-fraud profession. If you are like many professionals, training budgets are tight, which can make finding timely and interesting CPE options a bit of a challenge. You are not alone; in fact, we field similar questions from others in the same boat. Look no further, here are three ways to get quick, affordable CPE from the ACFE:

Archived Webinars are available to ACFE members at no cost and offer 1 CPE credit per webinar. This is probably the simplest way to earn CPE credit. All you have to do is login to ACFE.com and select “My Account,” and you’ll find these free webinars under the announcements section. Recent topics include:
- ACH/Wire and Online Banking Fraud: The Impetus Behind FFIEC's Guidance for Layered Security,
- Transaction Auditing and Monitoring: Protection Against Mistakes and Organized Fraud
- There's Something in the Air: What's on the Horizon in the Mobile Cyber Threat and Fraud Arena
- Manage the Risk of Inefficiency and Occupational Fraud in Day-to-Day Business Processes
- Emerging Technologies to Detect and Prevent

Tip: Be sure to check back regularly because the ACFE adds new webinars 4-6 times a year.

Fraud Magazine CPE Quizzes are another affordable way to earn CPE credit. For only $69 you can earn 10 hours of fraud-related credit. Simply read the feature articles and columns from any five issues of Fraud Magazine^® and complete the quizzes located at the back of the printed issues (you may also retrieve the CPE quizzes online

Online Self Study Courses allow you to expand your anti-fraud knowledge while earning anywhere from 2 to 20 NASBA-compliant CPE credits. Prices range from $59 to $159 for ACFE members and are available in a variety of multimedia formats like DVD, CD-ROM and workbook. An added bonus, the ACFE offers several courses that focus on ethics, helping you satisfy your fraud and ethics requirements at the same time.

These are only three low-cost ways to earn CPE credit; however, the ACFE offers a variety of seminars and conferences worldwide, live webinars and self-study courses on a wide range of topics. If you have any questions or would like help determining the best CPE option for you, I encourage you to call, email or chat with an ACFE Member Services Representative. We are here to help and are more than happy to do so. Happy learning.

Why Won’t Regulators Just Tell Us What They Want?

2012-04-24T18:10:57Z

GUEST BLOGGER

Daniel Tannebaum, CFE
Head of Compliance - Americas, Travelex and Chief Compliance Officer, Travelex Currency Services Inc.
New York, NY

When I worked for the U.S. Treasury Department, I almost always began my public remarks with the nine most terrifying words in the English language, “I’m from the government and I’m here to help.” Americans always made light of those remarks from President Reagan in 1988, but when did civil servants stop serving the taxpayer and begin to embody that statement?

For all of my adult life I’ve worked in varying compliance roles with the government, in the private sector, back to the government and then ultimately back to the private sector. In all of that time I’ve faced the same question from multiple perspectives: “Just what are the regulators looking for?”

In my role at the Office of Foreign Assets Control (OFAC) I provided guidance and clarification to the financial services industry on how to best comply with OFAC regulations.

In Summer 2005, the five functional U.S. banking regulators (Federal Reserve, FDIC, OCC, OTS and NCUA) joined forces to release a landmark compliance document. The consolidated Federal Financial Institutions Examination Council (FFIEC) Examination Manual, the so-called “bible” of consolidated supervision guidance, was to serve as a critical piece of any institution’s compliance program as now the regulators were using one uniform examination practice. This document contained the key components of all AML compliance programs, something that previously differed from regulator to regulator.

Sounds great, right?

That wasn’t the entire story. As conversations with regulators continued, it became evident that the examination outline laid out in the manual was essentially the bare minimum that a company could do in order to pass an examination. Many compliance officers asked, “But, how could I not only pass, but excel in an examination?” The response typically given is consistent with what most government employees say, “I’m sorry, I can’t help you with that.”

Speaking from personal experience, when I was a compliance officer at OFAC, my department’s mission was that of guidance and clarification. That same team is now charged with “enforcement and case evaluation.” How, within just five years, can a mission so pure and helpful to American businesses change so harshly?

OFAC isn’t alone, as other regulators have seemingly changed their tone, now honing in on enforcement rather than assistance. As we’ve all seen, fines have grown exponentially in the compliance space over the past five years. We’re at the point now that a $1 billion penalty may not have the same impact that an $80 million fine had in 2005.

So back to my original point, why can’t regulators just share with us how we can run clean businesses? It seems relatively counterintuitive as we all try to ensure that our organizations are stable and are providing good product offerings. Why make the relationship more adversarial than is necessary? As I write this article I’m preparing my company to be examined by one state in the union who has given us conflicting requests for the upcoming examination.

And the cycle continues…

Tannebaum will address these questions and more at during his session, “How to Build an Effective AML/OFAC Compliance Program” at the 23^rd Annual ACFE Fraud Conference & Exhibition in Orlando, June 17-22, 2012. Already have some thoughts? Share them in the comment box below.

Segregation Of Duties: Remember, Trust Is Not A Control

2012-04-12T18:54:01Z

GUEST BLOGGER

Sheila Keefe, CFE, CPA
CFO, Professional Power Products Inc.

Segregation of duties aims to deter fraud by eliminating the ability of any one individual to complete enough steps in a transaction that they are able to both steal and conceal. With properly designed segregation of duties, employees can still steal, but they would have to enlist the help of a co-worker, increasing the possibility of detection. According to the soon-to-be-released Board Member and Audit Committee Survival Guide, conspiracies are hard to maintain over the long-term, making segregation of duties an appealing fraud deterrence tool.

The following table illustrates an advisable segregation of duties. However, not all organizations have sufficient staff to allow appropriate segregation of duties to be accomplished using just finance department staff. Creative organizations can make use of the receptionist and the owner to handle tasks that cannot be adequately segregated with one- and two-person finance departments.

When owners endeavor to pick up critical control duties, they are most likely to retain check-signing authority. Some owners stop there, assuming that seeing all checks written will effectively limit embezzlement. Not so fast; there are other ways fraudsters manipulate the accounting records to conceal their wrongdoings. Additional steps owners should consider performing include opening bank statements and periodically (perhaps quarterly) reviewing credit memos, General Journal entries, changes to the master vendor file and the master payroll file.

Segregation of duties, scalable to the size of the organization, remains one of the most effective fraud deterrence tools and remains within reach for even the smallest organizations. Remember, trust is not a control.

Read more of Sheila’s insights on her blog, Business Done Right.

A Chapter Out To Make A Difference In Its Community

2012-04-12T18:32:11Z

GUEST BLOGGER

Jeff Kubiszyn, CFE
Chapter Development Manager

Involvement in an ACFE chapter can be much more than just an inexpensive lunch. Not only does participation in a chapter offer you the chance to earn CPE credits, network and develop leadership skills it also opens the door to opportunities for members to have a positive effect in their community. Members in the Pacific Northwest (U.S.) chapter are prime examples.

The Pacific Northwest chapter is very active in its community. Chapter members routinely volunteer their time to groups and schools. Last year the chapter added to the growing list of organizations it supports, and this has carried over into 2012.

The chapter began a joint program with the King County, Wash. Prosecutor’s Office Elder Abuse Project to assist seniors in need. Several chapter members volunteered to provide advice and counsel on elder abuse cases and provide volunteer fraud examination services.

The chapter also collaborates with the City of Bellevue, Wash. Police Department to provide volunteer fraud examination services. Chapter members meet with detectives to review cases and documentation, speak with victims, advise detectives during the investigation, summarize accounting details and provide help to officers in recognizing other violations. The volunteers contribute 10 hours a month and go through a rigorous application process.

For some, the experience gained is invaluable. As one volunteer put it, "it gave me the experience I needed, but couldn't find in traditional accounting jobs, to prepare for full-time employment fighting fraud." This year the chapter hopes to have additional members volunteer to continue this pro-bono fraud examination work for the department.

Supporting local law enforcement agencies and fraud victims alike is one of the many ways ACFE chapters give back to the community. Contact your local chapter if you want to help serve your community.