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Using the Internet to Investigate Fraud William N. Dilla, CPA, Ph.D. December 17, 2010.

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Presentation on theme: "Using the Internet to Investigate Fraud William N. Dilla, CPA, Ph.D. December 17, 2010."— Presentation transcript:

1 Using the Internet to Investigate Fraud William N. Dilla, CPA, Ph.D. December 17, 2010

2 Person of the Year 2010

3 Presentation Objectives  We will learn about: – Using the Internet to develop a predication of fraud – How a fraud investigators might use the Internet – Using the Internet for background checks – Protecting one’s self on the Internet

4 Two Fraud Triangles  The “motivation triangle” – Pressure / Incentives – Opportunity – Attitude / Rationalization  The “element triangle” – Theft Act – Concealment – Conversion

5 The Motivation Triangle  Pressure / Incentives – Living beyond means – Vice (gambling, drugs, etc.) – Financial Emergencies – Bonuses or stock options (financial reporting fraud)  Opportunity – Poor internal controls – Override of internal controls – Collusion  Attitude / Rationalization – Dishonest individual – “Everyone else is doing it” – “They owe it to me” – “I’ll just borrow the money”

6 The Element Triangle  Theft Act – Rarely observed directly  Concealment – Often causes anomalies, investigate with: Analytical procedures Data mining Examination of documents  Conversion – Sales of stolen assets – Living beyond means Investigate with wealth analysis – Perpetrator brags to others

7  Motivation triangle – Pressure / Incentives – Opportunity – Attitude / Rationalization  Element triangle – Theft Act – Concealment – Conversion Where can the Internet assist with fraud investigation?

8 Aviva, USA Case Exercise: Pretend you are an investigator who has just discovered a predication of fraud involving Phyllis and Marla Stevens. Perform an Internet search to gather information supporting your case.

9 Additional Information for Stevens’ Case  Current residence – Des Moines, IA  Previous residence – Indianapolis, IN

10 Aviva, USA Case  Alleged $5.9 million fraud over four years  Used terminated employee identity to generate fraudulent commission payments  Another Aviva employee noticed a discrepancy (“accidental” discovery)  Alleged perpetrator (Phyllis Stevens) and spouse (Marla Stevens) owned considerable property and had made substantial political contributions  Substantial cash withdrawals made before alleged perpetrator’s arrest

11 Categories of Available Information  Free websites  Proprietary websites  Databases only accessible to law enforcement

12 Starting Point—General Purpose Sites  google.com  bing.com  yauba.com – Privacy safe – Allows search by source type (e.g., news, images, document type) – Easy to navigate  Learn how to use advanced features

13 People Search Sites  spokeo.com – Notoriously inaccurate!  zabasearch.com / intelus.com – These two are linked – Better quality sites, costs to get information  pipl.com – “Deep web search” engine – Shows links to other sites  peekyou.com – Provides links to multiple sites  others?? – search term “people search sites”  Exercise: find yourself on one of these sites

14 News Sites  Free resources  Proprietary resources – factiva.com – nexis.com  Public and college libraries

15 Auction Sites  ebay.com  craigslist.com  searchtempest.com

16 Photo / Video Sites  flickr.com  picasa.com  images.google.com / images.bing.com  youtube.com  video.google.com

17 Blogs  technorati.com  icerocket.com – Icrerocket also for searching social networks, images

18 Social Networks  linkedin.com  twitter.com  facebook.com  weddingchannel.com  lococitato.com – Shows maps of relationships between facebook users

19 What if the information you’re looking for is “private”?  “Friend” person  Attempt to  What if you don’t want to use your real identity? – See next slide

20 Pretexting  Private investigators will set up “fake” accounts  For fun, look up: – Jorge Beale – Jinger Rytand  NOT a strategy for non-professionals!

21 Background checks on the Internet  New hires  New clients  Free sources – Many of the sources we’ve discussed already, plus: – – Is the job candidate’s online information the same as what they gave you? See “LinkedIn’s top 10 overused resume phrases” at CNN.comCNN.com

22 Other Background Check Resources  Partly free – Individual information BRB Publications – Business information (Dun and Bradstreet) – Charity information  Entirely fee-based – Personal information summary – Online background check

23 Protecting Yourself  “Opt-out” of background check information possible, but not easy  Proprietary privacy services available  Social networks, blogs, etc. – Set privacy settings – Careful who you friend – Careful what you share!!! – See “The internet and the end of privacy” at CNN.comCNN.com

24 Summary  Internet searches useful for: – Preliminary fraud investigation – Basic background checks  Hire a professional for more involved investigations  Be careful what you post and who you friend!  For more on this topic: – Cynthia Hetherington – – Look under “Training”  Electronic version of this presentation: –


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