Articles of Interest – Page 7

Changing Technology: Monitoring Employee Computer Usage

David Ray – Grant Thornton, LLP

The employee of a Calgary oilfield service company wanted to spend the day with friends so he called in sick. During the course of the day photos were taken of their “excursion” and posted on Facebook. A co-worker, who had to pick up the extra work because his colleague was off sick, saw the photos on Facebook and reported it to the boss. The “sick” employee was disciplined and had to make up for his day off. Continue reading Changing Technology: Monitoring Employee Computer Usage

Leading the Charge Against Credit Card Crime

David Ray – Grant Thornton, LLP

Betty and Jim were a husband and wife who ran a small retail business. Last year they began receiving requests from Visa and MasterCard for backup information on credit card payments that had been transacted at their business. The first few were requests were smaller amounts of $50 to $100 but over the next several days and weeks the requests for information were more sizeable and grew to $500 amounts and then to $1000. One of the most distressing things about the requests was that, each time they went to their records to pull the back up documentation, it was missing. The matter suddenly came to a head when the father of one of their young employees called to tell them that he had discovered that his son had been using his credit card without his authorization. When Betty and Jim looked closer at the demands from the credit card companies they realized that all of the transactions had taken place when the son was on shift. They confronted him and he refused to respond to their questions and quit on the spot. They were eventually held responsible for over $60,000 in charges against several credit cards and the loss resulted in their decision to close the business because all of their annual profits had been lost. Continue reading Leading the Charge Against Credit Card Crime

Working with Lawyers on a Fraud Investigation

David Debenham, Partner – McMillan LLP

“Fraud” is a legal conclusion. A “fraud investigation” should not presuppose that conclusion is true, only that it might be true. A fraud investigation is really a misnomer because the complainant seeks legal remedies for a perceived wrong, whether that wrong is ultimately called “fraud” or not. Therefore the investigation is really about whether a wrongdoing has occurred, and if so, what remedies are available to the complainant as a result of that wrong. Lawyer and investigator alike have to be able to identify the wrongdoing on any particular set of facts, the evidentiary threshold for proving that wrongdoing, and whether the legal remedy afforded the victim of the wrongdoing effectively remedies the wrong. Therefore the fraud investigation is really an iterative process between investigator and legal counsel in which legal tests are matched with the state of the evidence in what should be a continuous dialogue from discovery of the wrongdoing until the verdict at the trial. A few examples should suffice to make the point. Continue reading Working with Lawyers on a Fraud Investigation

One of the many lessons learned

Originally printed in the Internal Auditor Magazine

PAUL PIGEON WAS A MANAGER of training who had been with Canadian-based Example Corp. for more than 12 years. His primary duty was to identify the training requirements of the company and then, when needs dictated, arrange for outside consultants to aid in course development and implementation.

The Example Corp. had approximately 3,000 employees who reported through more than 45 different departments to five division heads. Each year, Pigeon would sit down with various managers throughout the organization and assess their training needs for the coming year. After reviewing the available company resources, Pigeon would determine the aggregate cost for all divisions of the company and develop, or update, one-, three-, and five-year plans for each area that were then approved by his supervisor, the director of human resources. Pigeon’s bottom line would be consolidated into the human resources budget and then folded into the company’s overall financial plan. Continue reading One of the many lessons learned

Should Forensic Investigators Support The Canadian Tort

David Debenham, Partner – McMillan LLP

Canada has recognized a right to sue public and private investigators for conducting a negligent investigation, unlike any other jurisdiction in the Commonwealth. Is that a bad thing? One instinctively says “of course it is”. Doing a forensic investigation that passes muster in a court of law is an extremely difficult task, made harder if we have to worry about not only being sued by our client or employer, but also by “the other side”. Canadian courts have made a difficult job, impossible. Or so it would seem. Continue reading Should Forensic Investigators Support The Canadian Tort

Kroll Global Fraud Report 2011-2012

Economist Intelligence Unit Survey Results

“The Annual Global Fraud Survey, commissioned by Kroll and carried out by the Economist Intelligence Unit, polled 1,265 senior executives worldwide from a broad range of industries and functions in June and July 2011. Where Economist Intelligence Unit analysis has been quoted in this report, it has been headlined as such. Kroll also undertook its own analysis of the results. As in previous years, these represented a wide range of industries, including notable participation from Financial Services and Professional Services; as well as Retail and Wholesale; Technology, Media, and Telecommunications; Healthcare and Pharmaceuticals; Travel, Leisure, and Transportation; Consumer Goods; Construction, Engineering, and Infrastructure; Natural Resources and Manufacturing. Respondents were senior, with 47% at C-suite level. One-half of participants represent companies with annual revenues of over $500m. Respondents this year included 23% from North America, 24% from Europe, 28% from the Asia-Pacific region, 15% from the Middle East/Africa and 11% from Latin America.

Global Economy and it’s Impact on Current Fraud Trends

Jeffrey R. Filliter, Managing Director – Froese Forensic Partners Ltd.

Frauds in general continue to be on the rise at an alarming rate in direct correlation with both the domestic and global downturn in the economy. Those who might otherwise be predisposed to committing crime find themselves reaching states of desperation as a result of their inability to provide, in some cases, even the necessities of life. In addition, organized crime groups capitalize on desperation by preying on those who are most vulnerable financially to join their forces in defrauding the wealthy. The recent “Occupations” that occurred throughout the world’s economic powers were a clear sign of many people’s frustration with the perceived divide between the wealthy and the impoverished. There is evidence to support that organized crime factions infiltrated those groups with a view to heightening the demonstrations and to recruiting potential fraudsters to assist in their attack against “the 1%”, which to many represents the growing wealth gap between America’s wealthy elite compared to the overall citizenry. Continue reading Global Economy and it’s Impact on Current Fraud Trends

Digital Evidence – Diminishing or Shifting?

Kevin Lo – Froese Forensic Partners Ltd

Analysis of email communications and Internet (browsing) history plays a dominant part in many forensic investigations involving digital evidence. However, there is also a trend where less evidence could be located from these traditional sources (i.e. email or internet activities). There is no indication that people are committing fewer crimes or wrong-doing on computers – so what could be the explanation of the declining volume of evidence from these traditional sources? Continue reading Digital Evidence – Diminishing or Shifting?

The ADGA Doctrine and Fraud by Corporate Directors and Officers

David Debenham*, CFI, Partner – McMillan LLP

The “ADGA doctrine” originates from a case called ADGA Systems International Ltd. v. Valcom Ltd. The following principles have been subsequently recognized as part of the ADGA doctrine: (a) that directors of a corporation may be personally responsible for the statutory obligations of their corporations, regardless of the directors’ involvement, and (b) that if the director does some wrongful act, the director is personally liable for this wrongful act in tort, whether it was done within the scope of the director’s employment or whether it was done bona fide in what was perceived as the best interests of the employer corporation. In WS Leasing Ltd. v. Platinum Equipment Ltd.,et al, two directors of the defendant company purported to sell 40 steel shipping containers through their company Platinum Equipment Ltd. The two directors took the position that the Plaintiff clearly contracted with their company, and that therefore their claim is restricted to one for breach of contract against their company. They were nevertheless found liable for fraud. Continue reading The ADGA Doctrine and Fraud by Corporate Directors and Officers

Kroll Global Fraud Report 2012-2013

Sixth annual edition

Welcome to the sixth annual edition of Kroll’s Global Fraud Report, prepared in collaboration with the Economist Intelligence Unit.

More than 800 senior executives were polled worldwide, from a broad range of industries. The results highlight a changing fraud environment, and provide both heartening and sobering news for businesses around the world.