Saturday, September 24, 2005

All Criminals are the Same

Bernie Ebbers has some company behind bars, although it is doubtful he will see them for a long time. Dennis Kozlowski and Mark Swartz, formerly of Tyco International have been sentenced to 8 to 25 years in prison. These two "gems" of society ripped off millions of dollars from the company they ran. Since they were convicted by the people of New York, they will not being going to "Club Fed" (Federal Prison), which means they will serve hard time.

In another case, David Radler, the former publisher of the Chicago Sun-Times, has also entered a guilty plea for scamming $32 million from the newspaper's parent company.

Enron's Kenneth Lay and Jeffrey Skilling will be going on trial soon, also. Maybe Aunt Millie will see some justice? Here is a previous post, I did on Enron: The Road to Justice is Slow for Aunt Millie. Even if they are convicted, it is doubtful that their true victims (the people of California) will ever be made whole.

In all these cases (these greedy people of means) destroyed thousands of jobs and cost hard working investors millions of dollars. In addition to this, the costs of their misdeeds (in some instances) were passed on to ordinary people, who needed the services they provided.

In the end, they deserve no sympathy and are no better (or different) than their new neighbors at the crossbar hotel! In fact, since they all had considerable "means" when they committed their crimes, they are probably worse.

For a post on Bernie Ebbers, click on the title above.

Thursday, September 22, 2005

Counterfeit (MoneyGram) Travelers Express Money Orders

I'm surprised I haven't seen many reports in the media on counterfeit Travelers Express Money Orders. They seem to be frequently appearing in advance fee scams, particularly on auctions, such as E-Bay. Please note that these scams don't only happen on auction sites, they can occur on dating sites, within chatrooms and arrive via spam e-mails etc. etc.

I was even recently contacted by a reader where the (advance fee scam) attempt was made with a Qchex, (checks you can have e-mailed to you) as payment for a rental. Of course, the reader was then solicited to wire the excess $4,500.00 to someone, who was supposed to arrange furnishings. Upon verification, the check turned out to be counterfeit and our reader avoided becoming a victim of this scam.

Here is my most recent post on Qchex: Addressing QChex Fraud.

The counterfeit items reported to me are being made in the $1,000.00 to $1,500.00 range. They are being passed either for high value merchandise, or given as overpayments on the asking price of the merchandise. The seller is then being duped into wiring the money, normally overseas.

Some of the items reported to me also had Walmart and Ace Check Cashing logos on them.

Recently, there have been a lot of counterfeited U.S. and Canadian Postal Money Orders used in internet scams. Here is a post, I did on them: More on Postal Money Order Scam.

According to the U.S. Postal Service, they were being produced in Nigeria and Eastern Europe.

The items being passed seem to mutate. For some time, they were counterfeit cashier (official) checks, then came the official government money orders and now it seems, money orders in general. The thing to be aware of is the behavior, which is a come-on (normally over the internet) to cash the items for a percentage, or to negotiate them over the amount of something you are trying to sell and wire the excess money. Once in awhile they are to free some beautiful model from Eastern Europe, or Nigeria, who is facing oppression in her homeland.

For information on how to determine if a Travelers Express Money Order is good, click on the title of this post.

Tuesday, September 20, 2005

Identity Theft/Check Fraud in Katrina

In a story released by Reuters, the Louisiana Attorney General's Office is reporting that identity theft is complicating getting benefits to victims. When they apply, they discover that someone has already applied (using their information) and received benefits in their name.

Besides identity theft, I would imagine that we will being seeing a lot of check fraud in the near term. The reason for this is that the government and relief agencies will be issuing checks for benefits. The U.S. Postal Service is recommending that displaced victims submit a "change of address" to a temporary address, where they can pick up their mail in order to avoid having it stolen.

Mail theft, especially to steal government checks, is nothing new. The criminals involved in this target times when they know a lot of checks are in the mail. Every year, there is a huge surge of this activity during tax season due of the amount of refund checks being mailed.

In the case of stolen checks, the criminals will have to assume the identity of the person entitled to the check. Many Katrina victims were stranded without their identification and agencies, such as the Social Security Administration have set up remote offices to address this problem. With the combination of temporary offices set up to issue identification and masses of displaced people, it creates an environment that identity thieves/check fraudsters will probably try to take advantage of.

In the ensuing confusion, there have already been reports of people "double and triple" dipping for Katrina benefits. One common method of doing this is to cash in the original benefit payment (normally a check) and then claim it was never received.

This activity is starting to occur all over the country with people showing up, claiming to be displaced victims and applying for benefits. There are reports of people being arrested for this, as well as filing false claims, nationwide.

I wrote about some of this in an earlier post, Katrina Fraud Far and Wide .

There are many other methods the crooks use to pass bad checks. Here is a document from the Treasury Department that is pretty extensive on Check Fraud:

For the story by Reuters, click on the title of this post.

Monday, September 19, 2005

ATM Machines That Clone Your Card

I received an e-mail showing how ATM skimming (stealing card information complete with PIN) has become more advanced with the advent of portable devices and wireless technology. Being leery of e-mail, I researched recent articles to validate this activity.

One of the articles, I researched was from by Bruce Mandelblit, which can be seen, here.

Here is the text of the e-mail, I received:

"A team of organized criminals are installing equipment on legitimate bank ATM's in at least 2 regions to steal both the ATM card number and the PIN. The team sits nearby in a car receiving the information transmitted wirelessly over weekends and evenings from equipment they install on the front of the ATM (see photos).

If you see an attachment like this, do not use the ATM and report it immediately to the bank using the 800 number or phone on the front of the ATM."

The equipment used to capture your ATM card number and PIN are cleverly disguised to look like normal ATM equipment. A "skimmer" is mounted to the front of the normal ATM card slot that reads the ATM card number and transmits it to the criminals sitting in a nearby car. At the same time, a wireless camera is disguised to look like a leaflet holder and is mounted in a position to view ATM PIN entries.

The thieves copy the cards and use the PIN numbers to withdraw thousands from many accounts in a very short time directly from the bank ATM."

I also found the pictures of this on Snopes is a site that reports on urban legends and whether, or not they are true. They list this one as true and based on my independent research, I believe they are right. Note that this method is being reported in Europe, South America, North America and Asia.

When going to this site, I also realized that the author of the e-mail had obtained their information from Snopes. Please note, Snopes claims to have gotten their information from the internet, also.

Snopes post, here.

This activity has been around for a few years. In the past, it was primarily done in small retailers, where the skimming device was behind the counter and the camera was over the keypad. It was also done by setting up ATM machines that were completely fake. It's always a GOOD IDEA to conceal your actions when entering your PIN. When you do this, the camera doesn't record your PIN number and they can't clone your card.

I've written a little about this phenomonen (skimming), which I update every so often. All the posts can be viewed, here.

Here is a picture of a ATM Machine after being compromised.

They attach a device over the card slot on the legitimate ATM, which reads the magnetic information. Using the latest wireless technology, it is normally transmitted to fraudsters in a nearby vehicle.

Your ATM is protected by a PIN, but these criminals have a solution for this too. They install a hidden camera, again using the latest technology (wireless) and the PIN is digitally recorded.

Here is a picture of the compromised ATM with the camera installed.

Sunday, September 18, 2005

Fraud Related to FEMA

Apparently, the bungling and ineptness by the Federal Emergency Management system (FEMA) is nothing new. The South Florida Sun-Sentinel did an investigation, which revealed at least 330 million in payments to people, who weren't affected by the disaster they filed claims on. Here are some glaring examples:

  • $5.2 million to Los Angeles-area residents for the 2003 wildfires that burned more than 25 miles away.
  • $168.5 million to Detroit residents for a 2000 rainstorm that the then mayor doesn't even remember.
  • $21.6 million in clothing losses alone to Cleveland residents for a 2003 storm that brought less than an inch and a half of rain.

The investigation was started after FEMA distributed 31 million in Hurricane Frances claims to residents in South Florida that hadn't been exposed to the hurricane. Since then there has been evidence uncovered that defrauding FEMA is considered easy and done from coast to coast.

The Sun Sentinel examined 20 of the 313 disasters declared by FEMA in the years 1999 through 2004. Of the 1.2 billion paid, 27 percent of the money went to areas that had suffered no, or little damage in the disaster.

According to the article, in some of the so-called disaster areas, residents were openly discussing how to defraud FEMA and even passing damaged goods from house to house.

Ultimately, this indicates to me that FEMA is desperately in need of an overhaul, which should include some serious auditing and oversight to ensure that the services they provide are effective. Besides demonstrating a total lack of financial management, this ultimately hurts the entitlements made to the people, who are really victims.

After reading this, it isn't very surprising what happened in the Katrina disaster.

Daily, we hear of fiscal emergencies within our governments. The money for these programs comes from the people, who pay taxes. It is becoming apparent that those who choose to defraud and the government agencies that exercise poor management need to held accountable.

In fact, it's possible that if we fix these problems now, it might even help save lives in the next disaster. If we are spending this many resources (human and financial) paying out fraudulent claims, it has to be a drain on their ability to service the people, who really need the help.

You can read the full story courtesy of the Gainesville Sun (without my commentary) by clicking on the title of this post.

Beware of Flood Damaged Cars

There are undoubtedly a lot of flood damaged vehicles as a result of the Katrina Disaster. I read a story from the AP that is warning consumers to be careful of buying flood damaged cars, which are cleaned up to conceal that fact that they were damaged. Furthermore, with the volume of cars being sold on auction sites, such as E-Bay and Craig's List (along with the known fraud occurring on these sites), the old saying "BUYER BEWARE" certainly applies.

A useful tool in determining the history of any vehicle is CarFax. Please note that they charge a nominal fee for their services and you can go to their site by clicking on the title of this post.

For the complete story from the AP, please go to:

"The National Automobile Dealers Association says although there's no foolproof method to test a vehicle for flood damage, a prospective buyer should, at a minimum, perform the following inspections before committing to a purchase:

1. Check the vehicle's title history, which may say whether it has sustained flood damage.

2. Examine the interior and engine compartment for evidence of water and grit from suspected submersion.

3. Check for recently shampooed carpet.

4. Check under the floorboard carpet for water residue or stain marks from evaporated water not related to air-conditioning pan leaks.

5. Look for rust inside the car and beneath carpeting and visually inspect upholstery and door panels for evidence of fading.

6. Check under the dashboard for dried mud and residue, and note any evidence of mold or musty odors in the upholstery, carpet or trunk.

7. Check for rust on any screws in the console or other areas where water normally would not reach unless the vehicle had been submerged.

8. Check for mud or grit in alternator crevices, behind wiring harnesses and around the small recesses of starter motors, power steering pumps and relays.

9. Complete a detailed inspection of the electrical wiring system, looking for rusted components, water residue or suspicious corrosion.

10. Inspect the undercarriage of other components for evidence of rust and flaking metal that would not normally be associated with late-model vehicles."