Fraud Basics

It's not just VCRs they're after anymore



Fraud examiners and auditors at most organizations are cognizant of the risks of tangible assets mysteriously vaporizing. But it’s so much more difficult to keep track of proprietary digital information such as trade secrets, customer lists, product details, marketing strategies and PII.

In a previous job I had at a law enforcement organization, another auditor asked me which assets were most susceptible to fraud. Most likely, he was expecting the common answer of inventory, equipment and supplies. However, I immediately thought instead of the sensitive and confidential information stored in our police files.

Value of information

While not an “asset” per the accounting definition, information found in police files is invaluable to law enforcement organizations. Certainly, police officers can’t perform their jobs without names, addresses and criminal record information. Unfortunately, those outside of policing are also interested in this data. And fraudsters are willing to pay for it.

Consider a 2018 case out of the Netherlands where a former police officer was sentenced to five years in prison for selling confidential information to criminals. Criminals paid the former cop more than 80,000 euros (almost $100,000) in exchange for information on police investigations. (See Cop Gets 5 Years for Selling Police Info to Criminals, by Janene Pieters, NL Times, Feb. 19, 2018.) Such cases occur more frequently than you might think. And it’s not just those within organized crime rings who are willing to pay for confidential information.

In a 2017 case out of St. Louis, Missouri, three former police officers were accused of selling personal information of those who’d been involved in car accidents to a chiropractor and his wife. The couple used the information to contact the victims of the car accidents and offered them free chiropractic services. The chiropractor then told the patients to exaggerate their pain to try to get insurance settlements. Of course, the chiropractor would receive a portion of that settlement. (See Missouri chiropractor and cop plead guilty to accident kickback scheme, by Andy Marso, Kansas City Star, Dec. 8, 2017.)

Confidential information, to the right person, can be more valuable than any tangible asset.



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By Anonymous