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Using the Internet to Investigate Fraud

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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” The “element 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 Concealment Conversion
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 Where can the Internet assist with fraud investigation?
Motivation triangle Pressure / Incentives Opportunity Attitude / Rationalization Element triangle Theft Act Concealment Conversion

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 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 /
Notoriously inaccurate! / These two are linked Better quality sites, costs to get information “Deep web search” engine Shows links to other sites 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 Public and college libraries

15 Auction Sites

16 Photo / Video Sites /

17 Blogs
Icrerocket also for searching social networks, images

18 Social Networks 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

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

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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