...customers, the arrest confirmed the occurrence of the second public fraud in less than two months that victimized the institution. However, the latest one involved a highly rank white-collar who was able to breach the information system of the company. The following paper will present a summary of the case, including the characteristic of the perpetrator, the detective methods that were used, and the effects on the stakeholders. We will also try to classify the fraud based upon the data processing model, assess the types of controls that were in place at the time of the violations, suggest the type of corrective controls that should be adopted, and evaluate the punishment that must serve as deterrent to similar acts. At 35 years old, Gary foster of Englewood Cliffs, New Jersey has been working for Citigroup since 1999. When he left voluntarily in January of 2011, Foster was the vice president of the treasury finance department in charge of funding loans and other business-to-business transactions inside Citigroup. Bank records show that between May 2009 through December 2010, Foster caused approximately over nineteen million of dollars to be wired from Citigroup’s account to his personal bank account at Chase. With a degree in finance from Rutger University and a yearly salary of about one-hundred-thousand dollars, Foster is the ideal example of the white-collar criminal that Romney defines in those terms: “Fraud perpetrators look just like you and me.”...
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...During the last hundred years mankind has witnessed and been part of a dynamic evolution. Changes, modifications, and inventions that have occurred have been part of what has enabled humans to communicate in a more immediate manner, this has been particularly ideal in our work environment . Information technology has been an essential part of this process. As there are huge benefits obtained from technology there have also been issues that have derived from it, such as ethical ones. Several acts have been established in order to have the ability to control those pitfalls identified. Mankind has acknowledged that technology is an ideal part of our work lives as well as our personal lives and has been able to identify and establish boundaries within these to ensure the overall protection of one. CHANGE There was a time in which in order to send another person a memo or a letter it was sent by transporting it with a carriage and horse, patiently one would await a response from the other party which could at times take weeks or months depending on how far the other party was. That changed when motorized vehicles were invented, it was now faster to send and receive those responses, and one would still patiently await the other’s response. We then had airplanes a much faster method of transporting our said information. Nowadays, there is no such thing as waiting patiently for a response! We have electronic mail! With which as soon as we hit the “send” button we expect...
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...How Computer Fraud and Abuse Evolved Before 1984 there was little that could be done about computer fraud. In 1984 the Counterfeit Access Device and Computer Fraud and Abuse Act was the first legislation on computer fraud. The act made it a misdemeanor to illegally retrieve financial and credit information by computer. Also, the act made it illegal to cause harm to other computer systems. Around this time, what constitutes computer crime was still an ongoing discussion. As a Federal Act, only half of the states passed similar statues. (History of Computer Crime) The Computer Fraud and Abuse Act can be violated in two ways, either by an outsider trespasses into a computer or by someone on the inside who exceed their given authorization and go beyond their standard expectation. The first person who was charged for violating the Computer Fraud and Abuse Act was Robert T. Morris Jr. He caused harm to many universities and government computers by releasing a worm and was the creator of the first computer virus. He argued that he had only just exceeded his authorized access and not accessed the computers without authorization. To exceed authorization defined by the Computer Fraud and Abuse Act as “to access a computer with authorization and to use such access to obtain or alter information in the computer that the accesser is not entitled so to obtain or alter." The court found Morris guilty of acting without authorization. (Computer Fraud and Abuse Act (CFAA)) As the internet...
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...Systems | Computer Fraud | | By | [Type the author name] | 9/14/2013 | DeVry University’s Keller Graduate School of Management | A University of Oklahoma student was charged with computer fraud on May 16, 2013 by the Cleveland County District Court. The University of Oklahoma student, Roja Osman Hamad, is accused of improperly changing his grades. Roja Hamad now faces five counts of computer fraud. Mr. Hamad was a former student employee of the university’s information technology department. This is where Mr. Hamad was able to access the university’s computer system to change six faculty member’s passwords without the faculty member’s permission. University official’s state, Roja Hamad broke into the university’s computer system and changed his grades. Roja Hamad fits the majority of the profile of the average fraud perpetrator. According to the ACFE, the average fraud perpetrator has no prior fraud charges or convictions and is more likely to be male rather than female. The ACFE states that the offender is commonly between the ages of 31-45. Even though Mr. Hamad is only 24 years old, he possessed the knowledge to commit the fraud. Since Roja Hamad was a student employee of the university, he was probably a trusted employee. As a trusted employee of the University, this gave Hamad an opportunity to perpetuate the fraud. Lack of proper internal controls, failure to enforce controls, and incompetent management personnel enabled Hamad to commit the fraud. The...
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...Chapter 22 COMPUTER CRIME: PORNOGRAPHY, FRAUD, HACKING AND GAMBLING CHAPTER SUMMARY The Internet, a relatively recent phenomenon, has caused a change in how laws may or may not apply to formerly traditional situations. Furthermore, the Internet has allowed criminals to perpetrate crimes that could not exist but for cyberspace. Chapter 22 examines computer crime and the statutes enacted to combat this growing problem as well as the erosion of our personal privacy. Freedom of speech, online gambling and cybermedicine issues are also examined in light of contemporary applications and influences resulting from the Internet. CHAPTER OUTLINE I. COMPUTER CRIME AND CYBERCRIME A. Definitions 1. Computer crime consists of crimes involving: • Computers • Computer systems • Computer applications. 2. Cybercrime consists of computer crime that takes place in cyberspace 3. The Internet facilitates a number of opportunities for crimes to occur. 4. Typical cybercrime abuses include: • Hacking • Spreading of viruses • Fraud • IP theft • Appropriation of trade secrets • Defamation B. The USA Patriot Act, 2001 1. The USA Patriot Act provided significant new powers to federal law enforcement agencies. ...
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...Information Systems Audit and Control Association. All rights reserved. www.isaca.org. How to Use a New Computer Audit Fraud Prevention and Detection Tool By Richard B. Lanza, CPA, PMP W hile occupational fraud takes various forms, the result is always the same: the numbers generated by fraud cannot hold up to the unfailing logic of the accounting equation. If executives add false sales and accounts receivable to increase the organization’s revenue, profits and cash will be out of kilter. The advancement of technology has allowed for this “accounting equation” to be systematized into computer logic and applied to company data.1 Results of this logic could take the form of a simple matching of the human resource file to the accounts payable vendor master file. On the other side of the coin, it could be an advanced neural network application focused on detecting money laundering schemes. Whether it is simple or advanced, data analysis provides many benefits in the prevention and detection of fraud. On one hand, the fraud examiner gains insight on 100 percent of an organization’s transaction data vs. more limited manual methods of selection. Further, this approach can generally be completed in less time than manual procedures, given the automation of the work. Examiners also gain improved business intelligence as the generated reports often lead to conclusions beyond whether just fraud occurred. Such new insights can lead to suggested process improvements to the client. The Institute...
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...Accounting Fraud at Satyam Computers March 04, 2011 BACKGROUND Satyam Computers Services Limited was a consulting and an Information Technology (IT) services company founded by Ramalingam Raju in 1988. It was India’s fourth largest company in India’s IT industry, offering a variety of IT services to many types of businesses. Its network spanned over 46 countries, across 6 continents and employed over 20,000 IT professionals. On 7th January 2009, Satyam scandal was publicly announced and Ramalingam Raju confessed and notified SEBI (Securities and Exchange Board of India), which is the Indian equivalent of SEC, of having falsified the account. Raju confessed that Satyam’s balance sheet of 30 September 2008 contained inflated figures for cash and bank balances of Rs 5,040 crores (US$ 1.04 billion) [as against Rs 5,361 crores (US$ 1.1 billion) reflected in the books], an accrued interest of Rs. 376 crores (US$ 77.46 million) which was non-existent, an understated liability of Rs. 1,230 crores (US$ 253.38 million) on account of funds which were arranged by himself and an overstated debtors’ position of Rs. 490 crores (US$ 100.94 million) [as against Rs. 2,651 crores (US$ 546.11 million) in the books]. REASON FOR FRAUD Deriving high stock values allows the promoters to enjoy benefits allowing them to buy real wealth outside the company and thereby giving them opportunity to derive money to acquire large stakes in other firms on another hand. This could be the reason Raju’s...
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...htm Anatomy of computer accounting frauds A. Seetharaman, M. Senthilvelmurugan and Rajan Periyanayagam Faculty of Management, Multimedia University, Malaysia Keywords Fraud, Corruption, Financial reporting, Whistleblowing, Internal control, Corporate governance Abstract This paper introduces fraud as asset misappropriations (85 per cent of cases), corruption and fraudulent statements. Symptoms include accounting anomalies, lack of internal control environment, lifestyle and behaviour. The most effective tools for fraud detection are internal audit review, specific investigation by management, and whistle-blowing. The paper details the fraud investigation process and the role of auditors as fraud examiners. The correlation of fraud perpetrators’ personality with the size of losses is examined. Personality is analysed into age, gender, position, educational background and collusion. A strong system of internal control is most effective in fraud prevention. Fraud prevention procedures, targeted goals and improvements to system weaknesses feature in the paper. Fraud impacts on accounting transactions in accounts receivable, receipts and disbursements, accounts payable, inventories and fixed assets, and financial reporting. The monetary impact resulting from fraud is analysed by the type of victim and the amount of loss. Internal control and good employment practices prevent fraud and mitigate loss. Computer accounting frauds 1055 Introduction Accounting fraud involves an intentional...
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...Acts | Accidents caused by human carelessness, failure to follow established procedures, and poorly trained or supervised personnel, innocent errors or omissions, lost, erroneous, destroyed, or misplaced data, logic errors, systems that do not meet company needs or are incapable of handling tasks. MOST LOSSES OCCUR HERE! | Sabotage, which is destroying a system, computer fraud, misappropriation of assets, financial statement fraud, corruption. Deliberate destruction to harm a system. (Cookie: data website store on your computer that identify the site & you do not have to log on each time you visit the site) | * The Association of Certified Fraud Examiners (ACFE) 2014 Survey Results Show: * 5% of revenues are lost to fraud (≈ >$3.7 trillion lost globally) * Median loss: $145,000 (22% of cases involved with losses > $1,000,000) * Most frauds are fairly small in scope * Median fraud scheme lasts about 18 months * What is Fraud? * Gaining an unfair advantage over another person. All five of the following elements must be present for it to be legally considered fraud: 1. A false statement, representation, or disclosure. 2. A material fact that induces a person to act (influences the decision process). 3. An intent to deceive (not accidental). 4. A justifiable reliance; that is, the person relies on the misrepresentation to take an...
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...Bank Frauds “Lapses in system make easy the job of offenders to dupe banks” Fraud is any dishonest act and behaviour by which one person gains or intends to gain advantage over another person. Fraud causes loss to the victim directly or indirectly. Fraud has not been described or discussed clearly in The Indian Penal Code but sections dealing with cheating. concealment, forgery counterfeiting and breach of trust has been discusses which leads to the act of fraud. In Contractual term as described in the Indian Contract Act, Sec 17 suggests that a fraud means and includes any of the acts by a party to a contract or with his connivance or by his agents with the intention to deceive another party or his agent or to induce him to enter in to a contract. Banking Frauds constitute a considerable percentage of white-collar offences being probed by the police. Unlike ordinary thefts and robberies, the amount misappropriated in these crimes runs into lakhs and crores of rupees. Bank fraud is a federal crime in many countries, defined as planning to obtain property or money from any federally insured financial institution. It is sometimes considered a white collar crime. The number of bank frauds in India is substantial. It in increasing with the passage of time. All the major operational areas in banking represent a good opportunity for fraudsters with growing incidence being reported under deposit, loan and inter-branch accounting transactions, including remittances...
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...CYBER SCAM AND ITS EFFECTS November 27, 2011 SUBMITTED BY: FETALVER, FRANCIS VIOLETA, ROGENE CRIS SUBMITTED TO: MRS. MARY GRACE P. ALFANTA I Introduction Background of the Study Experts and law-enforcement officials who track Internet crime say scams have intensified in the past six months, as fraudsters take advantage of economic confusion and anxiety to target both consumers and businesses. Thieves are sending out phony emails and putting up fake Web sites pretending to be banks, mortgage-service providers or even government agencies like the Federal Bureau of Investigation or the Federal Deposit Insurance Corp. Cell phones and Internet-based phone services have also been used to seek out victims. The object: to drain customer accounts of money or to gain information for identity theft. Most scams are done by e-mail (Spam). They entice users to give them critical information like usernames, passwords, credit card information, or other types of account information. Most of these e-mails can easily be identified as fraudulent, by identifying a couple of general characteristics. If someone pretending to represent a company or organization contact you by e-mail to supply them with usernames, passwords or other critical information by e-mail, then you can be certain it’s fraudulent. Today we have something we call SSL (Secure Socket Layer). E-mail is one of the most un-secure methods to send user information and passwords. Most organizations...
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...• ACFE= Association of Certified Fraud Examiners; conducts comprehensive fraud studies; Report to the Nation on Occupational Fraud & Abuse • Fraud - deception that includes: a representation, about a material point, which is false, and intentionally or recklessly so, which is believed, and acted upon by the victim to the victim’s damage. Fraud is an act of dishonesty with the intention to deceive or cover the truth to gain an advantage. Most critical element: confidence. Fraud can be classified as (in terms of organization): against or on behalf of • Occupational fraud - use of one’s occupation for personnel enrichment through deliberate misuse or misapplication of the employing org’s resources or assets. Categories: Asset misappropriation (steal asset), f.s fraud (manipulate f.s), Corruption scheme (misuse connections). • Employee embezzlement-can be: direct (e.g: asset misappropriation, making dummy company and making employer pay for goods not actually delivered) (from perpetrator to employer); or indirect (corruption, taking bribes from outside) (3rd party involved) • Management fraud- aka financial statement fraud; involves top management’s deceptive manipulation of f.s.; more inclusive • Investment scam-consumer fraud: Ponzi scheme, telemarketing, identity theft, money scam, advance fee scam, letter of credit fraud, etc. • Vendor fraud-overcharge, send inferior goods, charge for goods not shipped; • Customer fraud-not pay, shoplift; • Miscellaneous¬-other ...
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...Shoplifting • Fraud • Embezzlement • Forger and Counterfeiting • Vandalism • Arson • Espionage • Computer Crime Fraud • Fraud involves inducing another to act to his or her detriment. • Examples of fraud • A merchant collects payment in advance for good that will not be delivered or will be greatly inferior to what was promised • A customer accepts delivery od goods with the interntion of not paying them • And inventor sells all rights to an invention that has been developed and patented by another • A unauthorized person acquired and uses the account number or pin of someone credit or debit card to change items to that person’s account Forgery and Counterfeiting • Both forgery and counterfeiting involve fraudulently creating or using false or unauthorized versions of currency, documents, artwork or other property that only specified entities or persons have the right to make or use or unauthorized versions of documents such as stock certificates, birth records, lottery tickets, licenses , passports or other papers that only government agencies or other entities can issue. • Two broad types of crimes losses from forgery/counterfeiting o Inducing an organization to accept falsified documents, etc, to exchange something od valye for something that is valueless o Impersonating an organization using and unauthorized or stolen document to the detriment od the organization Computer Crime • Computer sabotage • Fraud and embezzlement • Computer network...
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...ASSIGNMENT 1: REVIEW OF BUSINESS FRAUD ABSTRACT Business fraud is a white-collar crime that is increasing at a rapid pace. One case of business fraud dealt with an information breach within Bank of America’s information system. This breach affected over 300 Bank of America customers. Management failed to provide proper security for their information system and the sensitive information of their customers. The following assignment will give detailed specifics about the case, clarify the classification of this particular fraud, and suggest recommendations that can help prevent this fraud from reoccurring. ASSIGNMENT 1: Review of Business Fraud On May 24, 2011, an investigation was in process within the Bank of America organization for potential business fraud. A Bank of America employee had manage to copy the personal information of over 300 of the bank’s customers. The security breach allowed the Bank of America employee to communicate the sensitive information of the customers to a ring of scammers. Customer information compromised included the customers’ names, physical addresses, Social Security numbers, contact numbers, checking account numbers, savings account numbers, routing numbers, driver's license numbers, date of births, email addresses, mother's maiden names, PINs and the balances on their accounts. Scammers used this information to start up credit cards and to spend the money available on the customers’ bank accounts. The leaking of the confidential...
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...Fraud is a serious problem for most businesses today and often technology compounds the problem. In addition, the role of the independent auditor in the detection of fraud is often questioned. (http://www.swlearning.com/accounting/hall/ais_4e/study_notes/ch03.pdf) Fraud is dishonest activity causing actual or potential financial loss to any person or entity including theft of money or other property by employees or persons and where deception is used at the time, immediately before or immediately following the activity. (http://about.curtin.edu.au/definitions-impact.cfm) * Types of Fraud (http://www.auditsol.com.au/media/Fraudw.pdf) 1. Employee fraud Is internal or employee frauds are when fraud is committed against the company or organization a person is working for. Internal frauds can include: * payment fraud Payment fraud is any fraud that involves falsely creating or diverting payments. Payment fraud can include: * creating bogus customer records and bank accounts so that false payments can be generated * intercepting and altering payee details and amounts on cheques and Payable Orders, then attempting to cash them * creating false payment and financial information to support fraudulent claims for benefits * processing false claims by accomplices for benefits, grants or repayments self authorizing payments to oneself. * procurement fraud Procurement fraud is any fraud relating to a company purchasing goods,...
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