Doing "whatever it takes" to meet goals

Are you prepared to do "whatever it takes" to meet goals?

This sounds like the sort of thing that the ambitious, loyal, executive or manger or employee would be EXPECTED to say in today's fast moving, highly competitive world.

Sounds good: "I do whatever it takes to achieve my goals".

The sort of go-getting approach that will put you on the fast road to career or business success.

Or jail.

In a 2007 Oversight Systems Report on Corporate Fraud, 81% of respondents identified pressure to "do whatever it takes" to meet goals as the primary reason for corporate fraud.

In my interactions with clients I have found time and again that they are their own worst enemies when it comes to fraud prevention.

The pressure to perform imposed by shareholders, owners and other stakeholders is huge.

Fact is that a lot of these pressures are self imposed by way of unrealistic budget and forecasts by executives that then have to be met.

The pressure to meet these unrealistic goals is passed down the line to some poor mug who will be willing "do whatever it takes" to meet the performance expectations.

This is normally accompanied by the old executive "blind eye".

"Please don't tell me what you are doing to make the quarterlies look good"

Price fixing, manipulation of figures, false invoicing, whatever it is, in the process of "doing whatever it takes" to achieve our goals.

No one can be surprised when old Joe, under huge pressure from his BOSS, morally confused to start with, does the wrong thing.

We are causing our own problems.

The demon in this picture is the corporate culture that promotes or allows the "do whatever it takes" approach to business.

When a corporate culture of this type combines with our inherent moral confusion can we wonder that fraud and other corporate malfeasance results?

And isn't it just another manifestation of our broader "go gettum", hard charging, culture?

Win at any cost.

Well the cost of "doing whatever it takes" is to high.

Loss of self respect, integrity,reputation and maybe even your freedom.

Don't "do whatever it takes" NO goal is worth it. 

Do the RIGHT thing.

Keep your integrity, self respect and reputation intact.

The Power of Self Delusion

I am often asked at seminars or workshop how people can continue to operate a fraud scheme for a long period of time when they know that people MUST inevitably be hurt.

Self delusion.

Firstly you tell yourself that you can make it work, you will make up the money in some way and no one will lose.

In the cold hard light of day this is an obvious nonsense, you have stolen the money, you have no viable business only a moron would believe that you can magically make something out of nothing.

But you rationalise and delude yourself that the impossible is a certainty, of course you can make it up.

Then you say to yourself that it is only business, not fraud at all, just a creative way of doing business. You convince yourself that "everybody" does business this way.

No they don't, you are a crook.

I spoke to another fraudster in jail on this very subject. We got talking and it came out that he was also in for fraud.

This chap was horrified when he had explained why he was in jail and I said "Oh, you mean you are in for fraud".

"NO, I am NOT a fraudster, I am a businessman who operates in the gray area of business"

Here was a man who had been sentenced for fraud, had appealed all the way to the Supreme Court of Appeals, lost ALL his appeals but still was able to delude himself that he had done nothing wrong.

Such is the power of self delusion.

This man was able to continue with his scheme because he was totally, absolutely 100% convinced that he was doing nothing wrong.

And, of course, he is likely to do it again when he is released because he has convinced himself that he did nothing wrong.

Please don't think this is an isolated extreme example, I have come across it many, many times and it is one of the primary reasons that fraud still flourishes.

If you can continue to convince yourself that you are doing nothing wrong, you will continue with what you are doing.

Do you delude yourself about anything at all? Is this power in you?

Beware you could find yourself on the road to nowhere.

And watch out for self delusion in partners or employees, it is a huge red flag that you must take note of.

Corporate Crime Watch: How to avoid fraud

Corporate Crime Watch: How to avoid fraud

How to avoid fraud

Here are some tips on how to avoid fraud.

These tips were published on Moneyweb in October 2008.

Read the article Convicted fraudster on how to avoid fraud

I hope you find the information useful.

Contact me if you require any assistance with fraud prevention.

Moral confusion facilitates fraud

80% of us suffer from "moral confusion".

80% of us will engage (indulge?) in some form of illegal or unacceptable activity if the motive (need), opportunity and an acceptable rationalisation is present.

We all have our own unique moral code. What we are be prepared to do or not to do has nothing whatsoever to do with whether or not it is illegal.

What we will do depends on our own moral code, we will break a law but will never violate our own moral standards.

It's what YOU think is acceptable that dictates your behaviour, not what the law says is acceptable.

Your moral code is a living thing, it is continually being formed by your world view, the circumstances in your life, what you see, think, feel and experience.

The key question is "What are you prepared to do?"

Would you cheat on your taxes? Take home company assets for personal use? Cheat on your expenses? Inflate your travel claim? "Adjust" company revenue to get better results? Bill clients for hours not worked or work not done?

The list can be endless.

The point is when moral confusion (I set my own standards), motive or need (I need money, my car has broken, my cat is sick), opportunity (I do my own time sheets so I will just bill a few extra hours, who will ever know that I did not actually work the hours) and rationalisation (they pay badly, they don't appreciate me, the boss hates me, everybody does it, I will make it up next month, it's not really illegal) meet fraud results.

Think this through.

What are your moral standards? Do you have motive and opportunity? Can you rationalise?

What will your moral code allow you to do?

A bit about David Alexander

Want to know a bit more about me?

Why can I claim to be an expert on fraud?

Read about my history on Moneyweb you will see that I am indeed very well qualified to advise you on all matters relating to fraud.

Do you need a Fraud Risk Assessment?

Are you aware of your company’s fraud risk profile?

Do you know where, when and how you could become a victim of fraud?

Is your company’s Fraud Management Program able to meet the challenges posed by the risk of fraud in your organisation?

If you are not sure of the answer to any of these questions you very definitely need a comprehensive Fraud Risk Assessment.

NOW

I am a recognised fraud expert, with intimate, personal experience of fraud from an insider perspective.

I undertake comprehensive Fraud Risk Assessments that answer all of your fraud concerns.

This includes the review of your current Fraud Management Program, identification of fraud risks including points of maximum vulnerability and the suitability of existing systems and policies.

I then make recommendations for enhanced protection including comprehensive recommendations for implementation in a revised Fraud Management Program.

My expertise and experience will enable you to pinpoint the areas of your business (or your personal investments) where you are most at risk of fraud.

My services are an essential addition to those provided by your normal professional advisors. Your advisors are essential for the well being of your business BUT they cannot protect you from fraud.

You need to be able to think like a fraudster, to be able to anticipate their actions to adequately address fraud protection policies.

Enhance revenue, control costs, reduce risk, increase organisational knowledge AND stay out of the media!

Protect yourself against fraud.

Sex, Greed and Emotion

My wife has a saying "God gave a man a penis and a brain but only enough blood to use one at a time"

She trots this out at regular intervals whenever a man does something dumb that involves a beautiful young girl and she must be right because this seems to happen with monotonous regularity!

But there are other things that drain your brain of blood making it impossible to think clearly.

Greed and emotion.

These are, in my view, the main reasons why people get defrauded in investment schemes.

Greed and emotion are also the primary reason why people do stupid things in the corporate environment or for that matter anywhere else.

Greed not only involves money. It could be greed for recognition, for promotion, for personal validation, for something to boost a poor self image.

And emotion is a real killer of reasoned decision. Who amongst us can honestly say that we have made a quality decision while under the influence of ANY strong emotion.

Note that these are the three main tools of the fraudster. He will appeal to, or manipulate your emotions, your out of control lust, your greed, to lure you into an untenable situation.

By the time you recover your senses, by the time that your brain once again has enough blood to function, it may be to late.

So take a moment, walk away, take the decision tomorrow when you have thought it through, when you have considered all the consequences and future implications, never decide ANYTHING when you are under the influence of powerful emotions.

Don't ever allow anyone to manipulate your emotions so that you make a dumb decision.

The consequences can be fatal.

Join me at Economic Crime Experts

Fraud protection: Where to from here?

Tradionally we have relied upon Accountants, Auditors, Risk Managers and Regulators to protect us from fraud.

That's worked really well hasn't it?

The problem with all the protection is that we trust them to protect us and they can't.

And the more "protection" we have in place the less we think for ourselves, the less we are worried by exposure because we have the very best "professional' protection in place.

Problem is these people cannot protect you because they do not think like a fraudster, they are reactive, not proactive, they can find and solve problems, never prevent them.

The answer is self reliance.

Educate yourself, ask questions, understand the risk, apply common sense and sound judgement.

And you need professional assistance; you need to employ a fraud prevention professional who understands fraud from the inside, who has personal experience of fraud and who understands how fraudsters think, act and operate.

You need me.

SAfm Market Update 24/10/08 - David Alexander Convicted Fraudster

The pot calling the kettle black

I am gob-smacked, rendered prostrate by the audacity of the family and estate of Mr Charles Ponzi, the first man to operate a large pyramid or rob Peter to pay Paul scheme.

They are suing Bernie Madoff, the Federal Regulators, the media in general and anyone else they can think of to stop them referring to the fraud operated by Bernie Madoff as a Ponzi Scheme.

Impinges on his legacy, his reputation and so on the family says. They don't want the family name associated with a crook.

Unbelievable.

So what, exactly was Mr Charles Ponzi then?

Enlighten me PLEASE!

Read the full story from The Huffington Post and please join me at The Fraud News Network for all the latest news on fraud and economic crime.

My misguided Indian friend.......

I was engaged in a discussion on one of the clubs I belong to on Ecademy today about, you guessed it, Bernie Madoff.

One of the other members taking part was from India. He had some very interesting points to make:

Regulation was to blame, the US was not as well regulated as India, it would never happen in India and so on.

While I agree that it appears that regulation or lack thereof did play a large part I don't think that any other country has better regulation than the US.

And, as you can always say for the USA, they are taking very quick, public action to correct the situation

and they are replacing the head of the SEC.

Never happen in India, I wonder.

It is a  little disturbing that a very well qualified man, a CPA etc, can display hubris of this magnitude. 

That is what got us in the dung in the first place.

Wake up man, it happens everywhere, even India.

If Bernie the Bold had decent Auditors it would never have happened.

What are they smoking in India?

What about the failure of the auditors of the feeder fund and investors? Do they not have a responsibility to look after their clients interests?

ALL the auditors screwed up, every single one of them and anyway you can NEVER rely on an auditor to prevent fraud, at best they find out what has already happened so you can stop it happening again and you can fix the problem.

Auditors are not proactive they are reactive, it goes with the job description.

The auditors of all the investors are in the dwang in any event, they are going to be taken to the cleaners. Sued to death.

And anyway you only have to look at ONE other current story, that of Mr Stein Bagger, CEO of the IT Factory in Denmark to see the absolute nonsense in the contention that decent auditors would have prevented the fraud.

Our friend Stein was audited by Deloitte and KPMG, he had a loan from the largest Danish Bank (a State bank), was a very close partner of IBM AND he was made the Ernst and Young's "Entrepreneur of the Year' on the day he fled the country.

Now there is a story to bring tears to your eyes if you are the emotional type.

One of the quotes of the year comes from Ernst and Young who said:

"We feel deceived," said Søren Strøm, head of Ernst & Young's "Entrepreneur of the Year" program, in a statement. The accounting firm, he added, is "unable to understand the last few days' developments."

Unable to understand?

That an easy one Soren, he took the money and bolted!

I would add embarrased and ashamed to the list if I was them. Do they know about due diligence in Denmark?

What is it that Ernst and Young does again?

We must always remember that it OUR money that money managers and funds invest. We have the responsibility to ensure that our professional advisors do what they are supposed to do.

It's our money after all.

Then my friend from India closed with a racist remark about "the Jews who manage The Swiss Banks"

Very regrettable but unfortunately common, particularly with this story, have a look at "Antisemites feast on Madoff misery"

No, the Jews are NOT responsible albeit Mr Madoff is a Jew, the Jews were in fact the major individual losers.

This attitude sickens me, I find it personally repugnant, and you should be ashamed of yourself.

As long as we indulge in hubris, naivety, blame laying, greed, justification, ego and anti-Semitic diatribes we will continue to be taken in by fraud schemes.

We need to take responsibility for our own investments, do the homework and rely on "them" to look after us.

Bernie Madoff': Keeping it in the Family

Old Bernie gives the phrase "Keep it in the family" a whole new meaning!

The New York Times, reported today on the emerging ties between members of Madoff's family and SEC compliance inspectors who had done (or not done?) several investigations into Madoff's fund several years ago.

Turns out old Bernie's niece, Shana, is married to the ex Deputy Director of the SEC who was in charge of compliance and lead several investigations into Bernie's funds.

and Shana is?

Compliance Attorney for Uncle Bernie.

And Daddy Roger is?

General Council for brother Bernie.

And the sons were both senior officers for Daddy Bernie.

Neat hey?

Amazing the coincidences that happen.

Of course the ex SEC lawyer, Mr Eric Swanson, says that his relationship with Shana started long after the probe into Daddy's funds.

So what, still sounds like sleeping with the enemy to me.

Now my credibility is taking severe strain.

I wrote in a previous post, Bernie Madoff: Could he have acted alone? that I didn't think that the family was involved.

Maybe I was wrong.

But then again maybe I was right.

I have learned to my cost, both in my personal and professional life, NEVER to judge until the facts are known and the truth emerges, as it will in this case.

As Sherlock Holmes said "When you exclude the impossible, whatever is left, no matter how improbable, must be the truth.

We should wait for all the facts to emerge before we judge anybody, including Bernie Madoff.

But until then we are free to speculate.........

Bernie Madoff: What was he thinking?

What was Bernie Madoff thinking?

I mean he must have known that at some stage the whole house of cards would collapse. Where did he think that would leave his two sons, daughter and brother all of whom were employed in the business.

Accept for sake of argument that none of the family was aware of what Bernie was up to.

Was Bernie hoping to die before the truth came out and leave others to clean up the mess?

Did Bernie plan to make a deathbed confession " Oh by the way people, that multibillion dollar empire you think you are going to inherit is a fraud and all you will inherit will be S@#T"

What was your exit strategy Bernie?

Did you have one?

Or were you living in the fraudsters "cloud cuckoo land" where everything, against all odds, turn out right in the end?

Believe me, I can tell you from personal experience, that all fraudsters dream of being able to "make everything right" and it can never happen.

This presumes that Bernie was acting alone and that none of the family was involved.

If this is the case at least they only face the ruin of their reputation and financial destruction and not life in jail.

But this scenario makes Bernie a monster who had no compunction in not only ruining thousands of people financially, ruining the reputations of many in the banking and investing field and ruining his own family.

Want to know the number one rule among professional criminals?

Always protect your family, no matter what it takes.

But hold on!

Maybe Bernie IS applying rule number 1.

Bernie Madoff: Could he have acted alone?

I have been following the massive 50 billion dollar fraud on Wall Street with a great deal of interest, sorrow and wonder.

A pillar of the investment community Mr Bernie Madoff, allegedly defrauded investors of 50 billion (that's right BILLION) dollars in the biggest Ponzi Scheme in history.

You can follow all the stories on The Fraud News Network, while you are there, join the network and comment on the stories.

And he reportedly did it alone.

I am sure that the truth will out during the course of the investigations.

But is it conceivable that he acted alone?

Yes.

Alone in the sense that he controlled the scheme alone, he must have had "soldiers" doing some of the paper work.

But I don't believe his family knew what he was doing, they were fooled, made dupes.

Bernie Madoff is without doubt a master of manipulation, a very powerful personality and he was an institution on Wall Street.

These factors give you the basis for any successful illusion; smoke and mirrors.

He used the "mirror" of his reputation on Wall Street and his record of many years of constant, stable investment growth to hide behind and to blind investors and the regulatory authorities to the truth.

His reputation was a powerful shield.

Prior to events of the recent past who would have accused Bernie Madoff, a paragon of Wall Street, an ex Chairman of Nasdaq, a man of unimpeachable integrity with the highest reputation of probity in his financial dealings of fraud?

I would say that it would be a very brave SEC civil servant who would have dared make that claim. The man had powerful friends and allies who trusted him and who would have defended him.

A lot has also been said about the fact that his family occupied all the senior positions in his company and that they must have known what he was up to.

No.

I would say that Bernie Madoff was held in absolute awe by his family, awe verging on veneration. He probably ran a patriarchal family structure that was not open to sharing and caring and exchanging confidences over the dinner table.

I suggest that no one ever thought to question his decisions, he ran the unit where the fraud occurred, his sons worked in the broker division.

Would you think that your father, with his reputation, a man you venerate was busy with a massive fraud scheme?

I know I wouldn't.

Love and family fealty can blind you to the obvious. Until one day the scales drop off your eyes and it is to late to even try and save your own reputation.

Maybe he did act alone?

Remember also that his son's reported him although it could be argued that they had no choice.

What would you have done if it was your father?

Another Day, Another Way

Ever had the feeling that you are not on the right track?

Happens to me from time to time but has been a recurring thought ever since I started from scratch following my parole.

I recognise that my experiences are fairly unique and put me in the position to offer services that are not freely available.

I started off by trying to make my services available as a consultant on fraud and economic crime combined with an education offering.

Then I changed it to only education.

Then I changed it back again.

Then today I changed, again!

All the while that this happens it is impossible to build any sort of personal brand the reason being you are never certain in your own mind WHAT you are branding.

So what are you today, Daddy?

I always knew that trust would be a factor (would you trust me to advise you on fraud?) I mean it IS a leap of faith for any business to open up the books and secrets to me.

The professional firms are reluctant to refer their clients to me. I understand, they have liability issues and they don't want me to show the client how little his advisor actually knows.

I accept this, but I don't think that my clients understand my services. I am NOT asking to see your books, know your secrets or have access. (or your clients)

I am asking for you to listen to me, ask me questions, follow my advice then get your own people to design and implement.

So that is why I am a Consultant at an advisory practice, we add value by advice, by education, by telling you things you cannot even imagine exist or have only seen in the movies.

I have vast real life business experience, I have been around the block a few times. I am an excellent problem solver, crisis resolver, strategic thinker.

I can add huge value to any business, not just in the area of business risk.

My experiences and expertise can add enormous value if YOU use them.

I will not underrate, undervalue or undersell myself, I can truly help you and add value to your business.

Direction

What about a change of strategic direction?

It is sometimes very difficult to find out what direction you should be going and even more difficult to change course, particularly if you have managed to convince yourself that you were right in the first place.

Is this change required in your life? are you on the road to nowhere? I think I am and a change is definitely required.

I have today decided to follow my passion and let the revenue and business model sort itself out. This may be foolish but when one direction is not working what do you have to lose by trying another?

Not much.

So watch this space, anything could happen.

Patience

I struggle with the entire concept of patience.

Timing I understand, waiting for the right moment either to strike or withdraw, waiting for a tactic or strategy to mature.

This I understand.

I suppose this is patience.

My lack of patience, I could not wait for things to mature as they should, was one of the reasons for my downfall.

I should have remembered the old Vietnamese proverb "Patience is the sole possession of the wise man"

Patience could also lead to soul possession for the wise man.

What would you do?

The company is under pressure, forecasts given to the market and shareholders must be met but times are very tough.

Your immediate superior, a Board Member, comes to you with a way out.

He says:

“I have a truly brilliant, no risk plan, we will overstate sales and understate expenditure.”

“This will win us time and things will get better, then we can correct the “errors”.”

Of course he is the BOSS, what he says goes and there is no risk or damage, we ARE going to correct the “errors”.

And he is responsible at the end of the day.

And it is almost time for that performance bonus and annual appraisal.

Guess who is responsible for the granting or not of bonuses.

Guess who does the performance appraisal.

And it’s not really fraud, is it?

And everyone “adjusts” the books occasionally, don’t they?

And who would ever know?

What would you do?

A recent Oversight Systems survey found that 82% of survey respondents, all corporate fraudsters, were prepared to “do whatever it takes” to achieve their goals.

Don’t be a moron.

Of course its fraud, you are making an unlawful misrepresentation that prejudices the rights of others.

Of course “they” will find out, they always do.

Very smart people are watching you are your company; believe me they will find out.

And you are prostituting your integrity and shattering the trust your company and its shareholders have in you.

And you are justifying your actions to yourself, even though you know that what you are doing is criminal and just basically wrong.

You are prepared to sacrifice the well being of many for your own personal gain.

Nice guy, you. You are a moral man, full of integrity, the flower of humanity, the perfect employee, and the go-to man in a crisis.

Well you are going to, going to jail!

With your boss if he hasn’t managed to make you the scapegoat, which he probably will.

The upside is that you will have several years with lots of time on your hands to consider what you should have done.

What you should do is report the crooked bastard to the CEO NOW and if he is the CEO, to an Independent Director.

If they don’t listen go straight to the authorities.

And remember it is only Jason Bourne who can save the world on his own, the rest of us need a little help.

Professional Crime, Protection and Stupidity

Like death and taxes, the professional criminal has always and will always be with us.

The professional criminal will run schemes such as a ‘pump it and dump it” share price inflation scam where the share price of illiquid shares is artificially inflated so that the criminal can profit from the share price rise.

http://www.sec.gov/rss/your_money/pump_and_dump.htm

http://www.usatoday.com/money/general/2001-03-09-pump-anddump.htm

Another favourite is the “boiler room” con where shares in nonexistent companies are sold.

http://www.birminghammail.net/news/birminghamnews/2008/10/16/boiler-room-con-arrests-97319-22048723/

He may indulge in identity fraud on a large scale.

He may be running a in sophisticated cyber crime ring such as the recent case of built in “skimmers” sending millions of credit card numbers and PIN numbers direct from supermarkets in the UK to criminals in Pakistan.

http://www.dailytimes.com.pk/default.asp?page=2008%5C10%5C13%5Cstory_13-10-2008_pg7_57

http://www.thenews.com.pk/daily_detail.asp?id=140678

Skimmers can also be fitted to ATM machines and all your personal details and PIN number can be harvested.

http://blogs.creditcards.com/2008/09/cha0-atm-skimmer-hackerturkey.php

http://computerworld.co.nz/news.nsf/scrt/19798B0C0963BA0ECC2574D6007A3B24

Cybercrime is the new big thing with profits estimated to be in excess of those from drug trafficking.

http://www.securitypark.co.uk/security_article262156.html

There was even an on-line market (Dark Market) where cybercriminals could buy, sell and trade stolen credit card and other confidential information to other fraudsters.

The FBI has subsequently shut this site down and made several arrests.

http://www.bankingtimes.co.uk/17102008-darkmarket-in-credit-cardfraud-closed/

http://www.securityoracle.com/news/detail.html?id=14552

Your entire identity could be sold on line for as little as USD 10!

You can get lessons on how to commit credit card fraud on the internet, a sort of DIY guide for beginners!

http://www.interesting-information.com/identity-theft/identity-thefthow.htm

http://www.criminaladvice.net/creditcardhacker.htm

He may engineer deliberate manipulation of contracts, tenders and investments; be responsible for major corporate and financial fraud such as is currently investigated at Lehman Bros in the United States.

http://www.mortgagenewsdaily.com/10212008_FBI_Financial_Crimes.asp

It may even be the perennial favourite, the old 419 scheme. An oldie but goodie, still working after many years.

The only difference now is that the 419 operators have moved with the times they have gone electronic!

http://tsyn.com/archives/2008/10/14/email-fraud-beware-of-419-fraud/

And then we have identity fraud.

You may buy a house you don’t know about, make purchases on your credit card you never made, get a new line of credit or an entirely new credit card.

You may spend a fortune on on-line purchases that you don’t know about.

Your identity has been stolen.

You could be ruined by identity theft.

http://uk.reuters.com/article/topNews/idUKTRE4971X820081008

http://www.marketwatch.com/news/story/farmers-insurance-warnsduring-economic/story.aspx?guid=%7BFECE5BF1-D022-4051-AC09-793DC1FB3F14%7D&dist=hppr

Identity theft is the fastest growing crime in the world today.

Your credit card could be “skimmed”; a clone made and is used by criminals to buy on your account.

http://www.bbc.co.uk/insideout/east/series3/credit_card_cloning.shtml

http://www.bi-me.com/main.php?id=24586&t=1&c=62&cg=4&mset=

Your home computer could be hacked and all your confidential information be stolen by cyber criminals.

http://www.smh.com.au/news/technology/cyber-thieves-stealingbillions/2008/10/08/1223145446451.html

The professional criminal could be running a scheme based on “round tripping” your investment through a whole series of related companies, all of which are false fronts.

http://crimeincorporated.blogspot.com/2008/09/tom-petters-thrust-intospotlight.html

http://www.mngossip.com/2008/10/tom-petters-betrayed-by-friend.html

You should realise that there is not much you can do about the operations of a sophisticated, professional criminal.

If you are a target, chances are very good that his scheme will succeed and that you will become a victim.

And the chances are he will get away with it.

This is not just a fact in South Africa.

In the US the FBI has admitted that it does not have the resources to deal with all the economic crime that is taking place.

They select their cases based on the chances of a successful prosecution and the prospect of recovering money.

http://sacramentohomeloans4u.com/?p=157

http://www.mymortgageinsider.com/fbi-resources-overwhelmed-by-crisis-related-crime

The good news is that you can take some basic steps that will help prevent you from becoming a victim of a professional.

• Use your common sense. Don’t get involved in things you do not understand 100% and remember if it sounds too good to be true it is.

• Be informed and aware. Knowledge is power and if you are informed you will be empowered to resist the schemes that abound.

• Protect your personal information. Don’t ever allow anyone access to old bank statements, credit card statements etc. Don’t throw them away, destroy them.

• Never give out private information over the telephone. Your bank or other financial information will never ask you for information in this fashion.

• Always make sure that you are using the genuine bank site and not a “phishing” clone. Always enter the URL yourself; never follow a link from an e mail to the bank’s site. Banks do not send you emails with a link to their site.

• Never enter private information on any web site you are not 100% sure of and remember that with current technology clones look 100% real.

• Never let your credit or debit card out of your sight for a single second. Skimming machines fit into the hand and it is literally the work of a second to skim your card.

• Never use an ATM machine that acts or feels “strange”. Report the machine and find another machine to use. Rather feel slightly foolish that have your card skimmed.

• Make sure that your PC or laptop is equipped with the latest security and antivirus software and make sure it is up to date.

• Don’t visit dodgy sites, that’s were criminals hang out (YES I am talking about “adult content”!)

• Control your greed and your emotions. Only two things really make us stupid and those are greed and sex. Never let them affect your judgement. No one has ever got rich overnight on a “special” investment and you are not going to be the first; you will probably become another victim.

• Check your card and bank statements regularly and carefully, make sure you remember every charge on your card or account. Report it immediately if you have any doubt.

• Make use of a service like PayPal for online purchases or at the very least make sure that the site you are buying from complies with the very latest security requirements.

If your judgement, intuition, common sense or whatever gives you the slightest twinge at all, walk away.

Trust your own judgement.

After we have been caught we often say “I thought there was something funny.....” but you went ahead and did it anyway, didn’t you?

How clever was that?

I say again, if you don’t understand how it works, if it makes no sense to you PLEASE do not get involved.

You will regret it.

People are endlessly gullible.
That is why the 419 survives to this day and people still fall for it.

Supposedly intelligent and wealthy people often fall for these schemes.

Don’t be doff, there is no tooth fairy.

Times are undoubtedly tough, markets are in turmoil, and finances are strained.

It is at exactly these times that the professional is most active.

People and companies are desperate, sometimes so desperate that they will suspend any sense of reality, all common sense and restraint in the hope of the miracle deal or investment that will solve their problems.

Sometimes people consider fraud to be a way out of their problems.

Not going to happen.

Take desperate measure and you will become another victim.

The answer is common sense, caution and a healthy little dose of paranoia.

PROTECT YOURSELF AND IF YOU FEEL TEMPTED EITHER TO “DO CRIME” OR FALL FOR SOME INCREDIBLY GOOD “DEAL” CALL ME.

I will put your head right.

Or at least tell you how much fun it is to be bankrupt or in jail where Bubba is waiting for you.

Remember if you are not Chuck Norris you will probably be Bubba’s baby.

Think on that before you do something stupid.

Do we know what fraud is?

I am a fraud and economic crime educator and training consultant.

By the very nature of my profession I deal with fraud and white collar crime and the people who are involved in this crime (albeit vicariously!) on a daily basis.

Not only that I am an ex fraudster myself having perpetrated one of the largest white collar crimes in the history of South Africa.

In addition I spent many, many hours in jail talking with other fraudsters to try and understand the nature of their crimes, their mindset, what drove them to crime and how and why the targeted specific companies or industries.

I also spend many hours engaged in research to stay on top of trends in fraud and white collar crime on a local and international basis.

I am an expert in my field and I understand fraud and economic crime and why people commit fraud.

The question is why do we have an absolute deluge of fraud and economic crime?

We are all aware of the dangers that fraud and economic crime represent to our businesses, ourselves and the economy of the country.

Why does this scourge continue to proliferate?

This is an easy answer.

We all lie, cheat and steal.

That is how our previous Auditor General, Mr Shauket Fakie, defines fraud.

“Lying, cheating and stealing”

The official South African definition of fraud is:

“Fraud is the unlawful and intentional making of a misrepresentation which causes actual and or potential prejudice to another”.

The first problem is that we don’t understand what fraud is and what the consequences could be.

Here is a recent example to illustrate the point.

I read a story on Moneyweb's Realestateweb about the undervaluing of houses by estate agents to get quicker sales.

Is this only business?

Nope it is definitely fraud.

Look at the definition, fits the bill doesn’t it?

When that estate agent deliberately misrepresented the value of the house to the seller he caused him potential prejudice and it is therefore fraud.

If the potential prejudice is more than R500 000.00 that qualifies the estate agent for a 15 year minimum sentence jail term.

Did that agent think about that when he made that misrepresentation?

Did he even know that he was committing fraud?

Can he deal with spending the next 12 years in jail?

People don’t realise that fraud is about potential not actual loss, the victim does not have to suffer any actual loss for you to be found guilty of fraud.

The other problem is that we are all motivated by self interest; the only important thing is what is good for us.

We lie to our spouses, children, bosses, business partners, the Minister and God Himself without thinking of consequence.

We steal the all the time even if it is only a pencil from work, our employer’s time, our expense accounts or someone else’s chocolate bar from the cupboard.

We cheat at games, on our spouses, our employers.

And we find no problem with this, I mean, EVERYONE does it.

We are all (or at least 80% of us according to research) morally confused. We will do anything if the motive and opportunity are right.

If this is the case, and it is, why would fraud be a stretch?

We are all already corrupt, we have strong criminal tendencies, and we only have to convert these tendencies into action.

Yes I know YOU have never done anything like that, you are one of the morally impeccable 10%!

The other 10% are outright crooks and NONE of us fall into that category!

The point is that there is a definite line between moral and immoral behaviour and most of us crossed that line a long time ago.

Most of us just idle along as petty criminals until the right opportunity and motive come along, and then we become real crooks.

Once you have crossed the line you have crossed the line, very difficult to get back.

Do you really think that the high profile crooks that we read about started life with the ambition of becoming a crook?

Of course not, things just got out of control; the downward spiral swept them away.

This happens very easily and quickly and you rationalise and justify it all the time telling yourself that it is only business and that you are doing nothing wrong.

Deep down you may know the truth but you only admit it when you are caught, and you WILL be caught.

So the answer is that we are ignorant, we don’t know that what we are doing is fraud and we are morally confused.

The solution is very easy; don’t EVER lie, cheat or steal and be morally impeccable.

Develop, build, maintain and promote a cast iron impeccable personal moral code.

And stick to it no matter what happens.

In a word be trustworthy.

Trust, Fraud and Business in South Africa

I was recently doing some research and came across some startling facts from KPMG contained in The 2007 KPMG Fraud Report for Europe, Middle East and Africa.

I thought that only crooks committed fraud.

I was in the “business”, I committed major fraud myself and I met a large number of fraudsters who operated in a number of different ways while in prison.

But I always thought that we (the fraudsters) were the exception, the scrapings at the bottom of the barrel of society if you will, those whose moral confusion and adaptable personal integrity allowed them to commit fraud.

But I was wrong.

Facts from the report establish that in 86% of the cases investigated the fraud was perpetrated by management. Of this figure 11% were board members, 49% were senior management and 26% were management.

If you relate this to the general figures that estimate that 85% of South African companies will fall victim to fraud, losing up to 6% of turnover a horrific picture of corporate integrity starts to emerge.

Relate this further to the fact that fully one third of bankruptcies are as a direct result of fraud and theft.

And it is estimated that only 48% of fraud is discovered (or reported) and of that 48% only 40% of the perpetrators are sentenced.

The report also highlighted the fact that trust was always the major risk factor in fraud.

Those in a position of trust were committing fraud almost at will, having the ability to cover it up.

What do these figures say about business in South Africa?

Remember these figures are from 2007 when times were good, who knows what they are now that times are tough.

We are good at explaining these things away, of making excuses.

The report highlights rationalisation as the major factor in fraud.

This is borne out by one of my experiences in jail with a fellow sentenced for fraud. He was horrified with the label of fraudster and maintained that he was only a businessman who operated in “the gray area of business”.

You try and figure that rationalisation out, I never could.

His attitude is, I would imagine, quite common in business in South Africa.

Anyone in business who studies this report can no longer say that “they” are committing fraud.

It is us; it seems that we are rotten to the core.

On a personal note at least I feel better after reading the report.

I have no reason to feel isolated. I was one of the majority, one of the “boys”, those prepared to abuse the norms of business, society and own integrity.

I am not alone.

The people committing fraud in South Africa are just like you and me; in fact they are you and me.

We should never forget that our major businesses and organisations are made up of people just like you and me no matter what their elevated positions may be.

The executives, shareholders and other stakeholders of businesses are subject to the same temptations, opportunities, threats and pressures as the rest of us.

And a business reflects the approach and attitudes of its people.

So the attitude of business must change to reflect a more moral and ethical approach. Our businesses should be above reproach.

Why is corporate fraud such a problem?

I believe that it is not only the general moral confusion that most of us suffer from (80% of people will commit fraud if the motive and opportunity is right) it is also the demands placed upon people in business by the markets, shareholder expectations or the demands of superiors to meet targets.

This is further exacerbated by our natural greed, maybe not for money per se but for recognition, promotion or bonuses.

Remember that 86% of the corporate fraud in South Africa is committed by management and board members.

What could explain this? Are they just bad people, crooks?

No I don’t believe so.

I quote from Managing the Businesses Risk of Fraud: A Practical Guide, sponsored by the Institute of Internal Auditors, The American Institute of Certified Public Accountants and the Association of Certified Fraud Examiners.

“A 2007 Oversight Systems study5 discovered that the primary reasons why fraud occurs are “pressures to do ‘whatever it takes’ to meet goals” (81 percent of respondents) and “to seek personal gain” (72 percent). Additionally, many respondents indicated that “they do not consider their actions fraudulent” (40 percent) as a reason for wrongful behavior.”

Are the pressures exerted on boards and executives by market conditions, shareholder expectations or performance pressures from superiors forcing people into fraud and unethical behaviour?

Or are they just greedy crooks?

They cannot be, not 86% of them.

Our corporate society in South Africa needs to take a careful, brutally honest look at corporate governance issues, the expectations they create in the markets and the performance pressures that flow from those expectations and the pressures they place on their people.

They need to manage expectations so that people don’t feel obliged to “do whatever it takes”.

Above all they must have an acceptable moral and ethical code in the organisation and a professional Fraud Management Program in place that applies from the top of the company right to the bottom.

They must have regular training and education for all management and staff on fraud awareness, prevention and management.

And they must communicate their Fraud Management Program to the investing public, other stakeholders and staff.

The commitment to effective and rigorous Fraud Management starts from the top of the organisation and filters down.

A more stringent code of conduct reflecting the fact that those at the top will be held to a higher standard and stricter code of conduct than normal staff must be composed and must be communicated to all.

Set the example from the top.

The board and senior management must be morally impeccable if they expect to eradicate fraud in the company.

The situation is not beyond our grasp but we must act now, structure a Fraud Management Program, invest in staff education and communicate your commitment to the eradication of fraud in your organisation.

Apart from all the other benefits just think what you could do with 6% of TURNOVER on your bottom line.

That may relieve some of the pressure and silence your critics.

Act today, tomorrow may be too late.

Purpose

My purpose.....

The purpose of this site is very simple.

It is to inform and empower you in the fight against fraud, corruption, unethical conduct in your organisation.

It is to provide you with news, information and content that will inform and entertain.

By referring to this site regularly you will stay up to date with all the latest trends in all types of economic crime.

Expert analysis of these trends will be available from this site.

The site is also the portal to obtain my expert services and advice in your fight against economic crime.

But above all this site MUST add value to your life and business.

Please feel free to contact me at any time if I can be of any service to you

When is it a scam?

How do you tell the difference between a genuine business opportunity and a dodgy or completely bogus scheme?

A huge challenge today is that with modern digital technology the ability to produce truly top class forged documents is in everybody’s hands.

This applies to both paper based and electronic documents. You can no longer rely on what you see either in person or electronically.

Anything is too easy to copy or forge from scratch and the results are nearly perfect, every time.

And of course you will be provided with names, numbers, web site and e mail addresses to be used to verify the veracity of the documents and information.

Perhaps a business card or two will be put in your hand by the representative you meet.

And electronic sleight of hand can make you believe you are seeing what you are not and talking to who you aren’t.

The illusion is crafted to perfection. It is very simple with today’s technology to craft a nearly perfect illusion.

Human senses are dominated by the visual to a huge extent so we tend to believe what we see.

If everything looks good – it is significant that we always say that something “looks” good – we will tend to be taken in by the scam.

We will phone the numbers we are given check the figures, visit the right web site and so on while we “verify” that everything is above board.

We are excited; this is it, the big one (greed and lack of judgement kicking in!) and we go for it boots and all!

We trust what we see and this is our downfall.

This aided and abetted by the common misconception that we will all someday come across that magic, secret deal that will make our fortune.

The deal that has only been made available to us because we are special, selected investors who will understand the proposition.

Don’t tell anyone, it’s secret.

That’s the giveaway.

It’s a scam.

That’s also their protection; don’t tell anyone its secret.

By all means check out what we have told you, where we steer you to; but don’t tell anyone its secret.

Above all don’t tell your professional advisors.

If it looks too good to be true, it is.

Please don’t be misled into believing that this only happens in grubby, back street deals, it happens everywhere.

So what do you do?

When presented with any opportunity you must go back to basics.

Good old fashioned leg work, face to face interviews with vetted people and research and verification.

Check all facts by making direct, independent contact with the company concerned.

Don’t call the number on the business card you were given, don’t take the number from the documents or the web site, do it the old fashioned way, look the number up yourself in the telephone directory.

Make an appointment to see the man at his office and go through the documents.

Be sceptical, demand detailed verifiable answers and independently verifiable paperwork.

And take you auditor or financial advisor with you; tell him to be obstructive, sceptical, judgemental, argumentative and confrontational.

Whatever the deal entails take an appropriate subject specialist with you to the meeting.
And tell him to be skeptical.

Generate a bit of heat; get a debate going; make the person PROVE all factual contentions.

If everything checks out, the documents, facts and contentions made prove to be true, by all means invest your life savings.

Maybe there is a tooth fairy and Santa lives at the North Pole.

But make sure you verify everything personally AND independently with knowledgeable experts.

I am prepared to bet that only 1 in 100,000 of these opportunities will actually check out.

In most cases you will never see or hear from the promoters of these schemes again.

Anatomy of a fraud scheme

The following characteristics will be present:

• The returns are above normal, guaranteed with no risk

• The deal is secret, confidential, special

• It relies on special “insider” knowledge or contacts

• Key facts cannot be independently verified due to the secret nature of the deal

• It is border line unethical, a bit murky but not illegal but it must be kept strictly confidential

• It will have at least one key, larger than life personality involved who will cement the whole deal by sheer force of personality

• It will give you up front incentives at the slightest display of interest

• It will seem too good to be true

• You must act NOW the market is up, the market is down, the commodity price is –whatever- the point is to stampede you into a quick decision

Of course all of these things play into our human nature desire to want to be involved in secret, slightly dodgy, very lucrative business.

Business that for a short while makes us feel like one of the chosen few, special people with insider knowledge.

My advice to you is that if even ONE of these factors is present, run a mile, immediately.

To paraphrase Mark Twain “better to miss the opportunity and be thought to be a fool than to invest and remove all doubt”

Healthy scepticism, common sense and attention to detail will save you a lot of heartache.

Control your emotions, your ego and your greed and you will be able to avoid the worst pitfalls of clever schemes.

And remember the saying that a penny’s prevention is worth more than a pound of cure.