Preventing and Detecting Fraud at Small and Mid Sized Companies

On the heels of the release of the , there is no better time than now to evaluate your company’s internal controls on occupational fraud. The report, which is released biannually by the Association of Certified Fraud Examiners (ACFE), gathered data acquired between January 2008 and December 2009 and includes countries outside the United States for the first time.

We’ll touch on only a few of the findings, but we want to stress how critical it is to determine what internal controls your company can utilize to prevent fraud from seriously affecting your bottom line. Since we deal with many mid-market companies, we know companies of that size have limited resources to establish internal control. It’s not always easy to take a step back and identify your own company’s vulnerabilities, but it will help determine what steps need to be made.

Below are some of the highlighted findings from the 2010 Report and questions to think about. As a reminder, Stone Carlie is holding a here in St. Louis on December 15th to help you and your company improve your internal controls to decrease the chances of fraud.

  • An estimated 5% of annual revenue is how much the typical organization loses to fraud. How much would that take out of your company’s annual revenue?
  • The median loss caused by occupational fraud cases in the study was $160,000… but nearly one-quarter of the frauds involved losses of at least $1 million.
  • Small companies are disproportionately victimized by occupational fraud, due to the lack of anti-fraud resources. What does your company do to protect itself from fraud?
  • The frauds last a median of 18 months before being detected. If you’ve had any cases of fraud in your company, how long did it take to discover these cases?

We understand the current economic climate has had a dramatic effect on many businesses, especially small and mid-size ones. But this economy has also brought with it an increased risk of fraud.

Far too many companies wait until they are a victim of fraudulent activities before implementing or evaluating their internal controls. We encourage you to take the time to assess your organization’s tools and controls on at least an annual basis. Where appropriate, you should consider engaging with a CPA firm that specializes in fraud detection and protection as that cost will be significantly lower than the cost to your business of the average fraud incident.

Coastal Vacation Scams Equal Bad Vacations For You

Coastal vacation scam artists take people’s money with promises of phony vacations. Many of these offers use words like “cheap Hawaiian vacation” to lure travelers.

Most people dream of taking a coastal vacation. They may hope for a cheap Hawaiian vacation package or dream of a coastal vacation resort weekend.

But many coastal vacation scams disguise themselves as legitimate offers. Police report an increase in coastal vacation scams in recent years.

The Internet spawned a new breed of coastal vacation scam artist wanting to cheat honest consumers out of their money. Anyone who types in cheap Hawaiian vacation package into a “Google” search engine will find over one million his.

The Federal Trade Commission reported 3,600 consumers scammed in 2002, amounting to $3.5 million. How can consumers tell the difference between a coastal vacation scam and an honest cheap vacation package?

1. Many people operating coastal vacation scams will ask for a credit card or other financial information early in the conversation. Many of these so-called vacation companies want consumers to give their financial information online for a “cheap Hawaiian vacation.”

The desire by the company to receive financial information before the consumer feel comfortable doing so should indicate a red flag and a possible coastal vacation scam.

Many cases of identity fraud started with coastal vacation scams. Consumers receive their bank or credit card statements and find that in addition to their “cheap Hawaiian vacation,” charges of cash advances and purchases of high-dollar merchandise.

Consumers who fall prey to identity fraud should contact their local law enforcement immediately about the coastal vacation scam.

2. The company operating coastal vacation scams will offer the consumer very little details about the planned trip. The person on the other line, on the phone or on the Internet, will offer constant assurances the hotel in the cheap Hawaiian vacation package features Oceanside views, luxuries rooms and private balconies—very broad descriptions.

The “seller” of the coastal vacation scam may claim they stayed there many times but cannot give specifics.

The company asks the consumer not to contact the hotel or resort directly about the vacation package, another sign of a coastal vacation scam.

If the consumer cannot confirm the reservations with the hotel directly, the consumer should look elsewhere for a cheap Hawaiian vacation. Consumers should get the details and take charge of their coastal vacation and not fall prey to coastal vacation scams.

3. Coastal vacation scam artists use word like “free” or “vacation offer.” Often these so-called “offers” include a daylong presentation before families can use their free tickets–a common coastal vacation scam technique.

If consumers cannot see the islands on their cheap Hawaiian vacation and must sit through lengthy presentations, the vacation may not seem so “cheap.”

4. The Better Business Bureau and other government agencies maintain lists of coastal vacation scams. Smart consumers check these lists and report any contact by these coastal vacation scam artists.

One of the more popular ruses offers a cheap Hawaiian vacation or a cheap family vacation package.

Fear of a coastal vacation scam should not keep consumers from seeking out great vacation deals, like a cheap Hawaiian vacation.

Many companies offer legitimate family vacation packages and an honest travel incentive program that saves families even more money on their vacation costs. Coastal vacation scams should not discourage travelers.

Ben Jordan an x-Fortune 500 executive turned coastal vacations scam buster. His love is helping people use the coastal vacations call center business model. For a FREE 3day/2night hotel voucher visit

How to Report "Buy America Act" Fraud

Many federal government agencies include “Buy America” clauses in contracts. If there is a Buy America Act clause in a government contract, it’s fraud to supply overseas goods under the government contract. In other words, unless the Buy America clause is waived by the agency for a particular contract and reason, these clauses are enforceable and the government pays whistleblower rewards to those who report when goods are made overseas.

Buy America Act fraud is not limited to the countries that won’t sign the Trade Agreement Act, but applies to all things made overseas in any country. It applies to all types of goods, such as electronics, office supplies, furniture, computers, and anything else bought by the government. (Trade Agreement Act fraud is described in another article by this author.)

Examples of “Buy America Act” Fraud

Recently a competitor turned in a company that was undercutting its bid on government contracts. If found out the reason; they were obtaining their electronics overseas. That’s not fair competition and hurts U.S. manufacturers. He filed for a reward for reporting Buy America fraud. The government agreed. It required the company to pay the U.S. $500,000 and gave the whistleblower a reward of $160,000 reward for turning in company for supplying government with goods made in China. It wasn’t that hard for the competitor to figure it out, because the electronics were stamped made in China. He was able to easily prove the fraud and not only stop the competitor from cheating, but got a nice reward.

At least two large chain companies that sell office supplies have also been forced to repaid $5 million to the government for committing Buy America fraud. The whistleblowers received rewards of $1 million each for reporting Buy America Act fraud.

How to Report Buy American Fraud

It’s downright un-American to cheat by committing Buy America Act fraud. That’s why the U.S. Department of Justice is offering huge monetary rewards for reporting Buy America Act fraud.

The government will pay up to 25% of what it recovers based upon your report of Buy America Act fraud. That often amounts to a million dollar reward.

However, knowing how to report Buy America Act fraud is just as important as knowing about Buy America Act fraud. One requirement is that you must use an attorney to file for a monetary reward under the federal False Claims Act. You must also follow the government’s strict procedures for applying for a government reward. You cannot simply call a hotline, but must file specific filings in federal court. That’s why you need to use an attorney experienced with the False Claims Act to file for you. (Don’t worry, they’ll use a contingency fee and accept a portion of the reward as payment.) It certainly can be worth the effort because you can help protect American businesses while at the same time getting a significant monetary reward.

If you work for a company that has a Buy America Act clause in a federal government contract, but you know that it secretly supplies goods from overseas, you may be eligible for a significant monetary reward if you report the Buy America Act fraud. Similarly, if you are a competitor and have specific proof that they are cheating by supplying overseas goods for contracts you know contain a Buy America Act clause, you too could get a reward and level the playing field.

It’s time for you to learn how to report Buy America Act fraud and how to step forward.

Joel Hesch spent 15 years as an attorney in the Fraud Division of the Department of Justice (1990-2006) administering the national whistleblower reward program. He is the author of a recent book, Whistleblowing: A Guide to Government Reward Programs (How to Collect Millions of Dollars for Reporting Fraud). He is currently a law school professor at and represents whistleblowers filing for monetary rewards for reporting fraud. Please visit his informative website to learn more about government reward programs:

Understanding Types of Arizona Fraud

Fraud is a serious offense that can include a multitude of possible crimes and schemes. In the state of Arizona, fraud schemes can encompass intricate bank fraud to internet crimes. If you or a loved one have been charged with criminal fraud, money laundering, robbery, forgery, false reporting, or a number of other applicable fraud offenses, your first step is to get in touch with an experienced fraud attorney in Arizona.

Here, we’ll take a look at a few of the different types of fraud, broken up by white collar and internet crimes.

White Collar Crimes

Bank fraud occurs when a person fraudulently attempts to control and/or obtain assets, money, or property owned by an institution like a bank. In many cases, this is a criminal offense that employs a scheme or artifice.

Bribery is defined as a form of corruption. It is an act of implying money or gift that will be given in order to alter the behavior of the recipient. It becomes a crime when it offers, gives, receives, or solicits and item of value to influence the actions of any person in charge of a public or legal duty.

Counterfeiting is an act of imitation that is made with the intent of passing it off as genuine. Counterfeit products are oftentimes made to take advantage of the superior value of the imitated product, including currency, documents, clothing, software, pharmaceuticals, watches, electronics, company logos, and brands.

Extortion is a criminal offense in which a person unlawfully obtains money, property, or services from a person, entity, or institution through coercion. It is commonly practiced by organized crime groups and the threat of violence that usually accompanies extortion is enough to fuel a conviction.

Money laundering is the practice of participating in financial interactions to conceal the identity, source, and/or destination of the illegally gained money. The assets are then are made to appear like they have a legitimate origin.

Internet Crimes

Auction fraud occurs when the value of a product is false or there is a failure to deliver the product. There may also be an individual who claims to be the authorized dealer.

Credit card fraud is defined as an unauthorized use of a credit or debit card. It can also happen when the card was obtained in part of an identity theft scheme.

Debt elimination schemes promise to offer a “legal” solution to resolving one’s credit card debt or unpaid mortgage. Typically, the victim pays a flat fee for the service and is then issued false documents which state that the debts have been absolved.

Identity theft is the most well-known internet crime and occurs when an individual takes one’s identity without his or her permission/knowledge.

What to Do

If you or a loved one have been charged with any sort of fraud, it is imperative that you come in contact with a reputable and experienced fraud attorney in Arizona. Only a fraud attorney in Arizona with enough practice in the field will be able to give your case a fighting chance at being reduced or dismissed.

An Arizona criminal defense attorney with the experience of 20 years in law, Guy will provide you with an outstanding, passionate defense in the face of criminal law charges. For more information about Guy and his mission, contact him here or at 602.396.7114.

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