Media Centre
Fraud Updates
PCB News
Fraud Updates 2007
23 August
It has been reported that identity fraudsters are increasingly targeting social networking websites such as Facebook and MySpace for individual's personal information such as birth dates, addresses and phone numbers. In addition businesses are increasingly at risk from hackers who use details posted by employees online to breach security.
This week hackers gained access to the databases of Monster.com (a leading US jobs website) and accessed information, similar to that found on social networking sites, of hundreds of thousands of registered users.
MessageLabs, an internet security company, has also reported a huge growth in phishing e-mails. In early 2007 it was intercepting about 10 of these e-mails every day but by June the number had risen to more than 500 all addressed to top executives demonstrating the careful preparation that had been carried out by the instigators. It is likely that one of the sources for the information is social networking sites.
Recent developments demonstrate the need for individuals to be made aware of the dangers of posting personal information on social networking sites. In addition, businesses should consider informing employees of the importance of not posting details of their jobs online.
22 August
Yesterday the bankruptcy trustee for Refco issued proceedings in the United States against several of the company's former professional advisers including Grant Thornton, Ernst & Young and PWC seeking damages of $2 billion.
The law suit alleges that the firms knowingly assisted insiders at Refco in a seven year conspiracy to defraud investors by concealing the true financial position of the company.
Refco was declared bankrupt in 2005 shortly after it was announced that its former chief executive, Phillip Bennett, had hidden a debt of $430 million that he owed to the company. Mr Bennett is currently awaiting trial on charges of criminal fraud.
Yesterdays events demonstrate the dangers to professional advisers who may have played no direct part in a fraud, but may still find themselves being held accountable for the actions of others as investors look for ways to recoup their investments.
20 August
It has been reported that four mortgage lenders including Alliance & Leicester, one of the country's top ten lenders, are set to lose an estimated £40 million after lending funds to bogus borrowers to purchase newly built properties.
The fraud appears to centre on a new development in London built by Persimmons Homes, the UKs leading house builder. The allegation is that apartments were sold to a property developer, Atrex, at a substantial discount. Atrex is then believed to have created false identities to borrow from lenders at inflated prices and pocketed the difference.
In addition, Atrex is believed to have used ordinary people as "mortgage mules" in the scheme in which they were misled into borrowing far more than the properties were worth.
The Metropolitan Police has confirmed that it has discovered that a company used mortgage brokers and chartered accountants to fraudulently provide inaccurate mortgage applications for genuine buyers where in most cases the buyers would not have otherwise qualified for a mortgage.
Lenders suffered losses when the properties were sold or repossessed.
In such a situation as this, companies may have a number of ways of recovering their losses. These include using civil proceedings both as a method of recovering stolen assets from the fraudsters and by claiming damages from third parties who may have assisted in creating the fraudulent scheme. By way of example, court orders can be obtained requiring third parties such as banks to provide information about the fraudsters and their assets. Once identified, those assets can be frozen on a worldwide basis without first alerting the fraudster.
3 August
Fraud figures released in KPMG's Fraud Barometer at the end of July show a disturbing trend which does not show signs of improvement. The Fraud Barometer tracks fraud cases coming to court which are worth in excess of £100,000. Incidents of such cases have continued to rise and for the fourth six-month period in a row, more than 100 such cases came to court with a total value of almost £600m.
Carousel frauds have proved to be the biggest cases in the last six months, with four of them being worth a total of £440m. Professional criminals however have not limited themselves to carousel fraud. The total value of frauds coming to court which were carried out by professional gangs, much of which includes carousel frauds, was £538m, this represented 91% of the total value.
In terms of frequency however, insider frauds took pole position. From wages clerks to finance managers, employee fraudsters persist in being a major problem for companies with an average value of £630,000 per case.
| October 2007 | July 2007 |