Tag Archive for: Fraud

CPA's & Business Advisors

IRS Warns of FAKE Emails…

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Beware! The IRS and Security Summit Partners now warn of fake tax bill emails!

The tax bill may claim to be related to the Affordable Care Act. The IRS has received several reports of scammers now sending out fraudulent versions of CP2000 notices for the 2015 tax year via email. Generally, the scam involves an email that includes the fake notices as an attachment.

You can read more by clicking the image below. As always, please reach out to us with any questions!

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Holiday Scam Alert: Gift Card Stripping

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If you give a gift card this season, you could be susceptible to a fraud scheme.

If you give a gift card this season, you could be susceptible to a fraud scheme.

Gift cards are one of the most popular presents of the holiday season, but could they lead to disappointment from the recipient? Maybe. Beyond suffering through the usual, “gift cards show that you put no thought towards what I might like” speech, they may also make you susceptible to fraud.

Gifts cards are easier to compromise than you may think. They have no shelf value, no owner’s information and no way to be traced. All a fraudster has to do is buy a scanner, scan the gift cards on the shelf to retrieve the card information, and then wait for them to be purchased.

How do they know if the cards have been purchased?  Easy. The status and value can simply be checked online. Once you’ve purchased it, the fraudster is able to buy products online with the stolen information on the scanner.  Most gift cards are purchased well in advance of the holiday, so the fraudster has plenty of time to shop and spend the available resources on the card before it is even opened.

There are steps you can take to prevent yourself from falling victim. Most retailers have cards that are either under registers or not on the shelf yet. Ask a sales associate for one of those cards. This will minimize the possibility of it being compromised.  If the card looks compromised or has been handled a lot, then do not purchase it.

Kit Powell
Certified Fraud Examiner
616.735.3104
kitp@hscompanies.com



Fraud Happens Everywhere

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Rough financial times could trigger an employee to embezzle to stay afloat.

Rough financial times could trigger an employee to embezzle to stay afloat.

National news programs report financial crimes from all around the world, every day. As we listen to these stories in our homes across Western and Central Michigan, it’s hard to imagine embezzlement or fraud happening in our small business. But, it does happen more frequently, and goes on for perhaps longer than we think.

In August, Mlive reported that Eileen Louis Dove, a 6-year employee of Viking Tool & Engineering Inc., was charged with embezzling $31,000 (some speculate that figure is actually closer to $280,000).  The alleged forged check-cashing scheme occurred from late 2011 through May of 2012. Checks were allegedly forged and cashed at banks right here in West Michigan (in Muskegon and Newaygo counties).

In March, the 9&10 News reported that Jason Artnz, of Union Township, allegedly embezzled over $500,000 in electronics, appliances and tools from his employer, Auto Owners Insurance.  Artnz is accused of padding customers’ insurance claims and then keeping the excess for himself.

So why do people embezzle from their employers? In many cases, you may be dealing with an otherwise loyal and very good employee. It’s not uncommon for me to hear people say, “I never thought {embezzler} would steal from us!” It’s important to note that good people can do bad things. Many things could be going on in your employees’ personal lives that could trigger them to take desperate measures, such as, extraordinary medical expenses or gambling problems.

It’s crucial to be on the look out for behavioral red flags. You also need to be especially careful to monitor the following:

  • Journal entries affecting cash
  • Receipts and revenues being less than your expectations
  • Bank reconciliations noting outstanding deposits or checks
  • Notices of payroll taxes due from governmental authorities
  • Questions from customers regarding their accounts receivable balances

There are many steps you can take to prevent fraud from happening. It’s imperative to have the proper controls in place. A fraud assessment conducted by H&S Fraud Division can identify weaknesses in your system and put controls in place to help prevent fraud.

To learn more about preventing fraud in your business, contact Kit Powell.

Kit Powell
Certified Fraud Examiner
616.735.3104
kitp@hscompanies.com



Phishing for Information | Beware of Fake IRS Site

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Phising, Fraud, Scam

"If I cast enough lines, I'll catch a big fish..."

On October 25th, the IRS issued a warning regarding a new tax scam. Taxpayers have been receiving solicitations to use web-based products on a fake IRS site. This site is designed to steal your personal information. The real IRS e-Services page is for tax preparers and payers only and is found at www.irs.gov.

If you receive a solicitation sending you to a site ending in .com, .net, .org, etc., it’s not the authentic IRS site. Also, keep in mind that the IRS will never initiate contact with you via email or web channels (like social media). If you do receiving a phishing message, please be sure to report it to the IRS.

If you have questions regarding correspondence from the IRS, please contact your H&S team member today.

photo credit: wit via photopin cc



Phishing for Information | Beware of Fake IRS Site

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Phising, Fraud, Scam

"If I cast enough lines, I'll catch a big fish..."


On October 25th, the IRS issued a warning regarding a new tax scam. Taxpayers have been receiving solicitations to use web-based products on a fake IRS site. This site is designed to steal your personal information. The real IRS e-Services page is for tax preparers and payers only and is found at www.irs.gov.
If you receive a solicitation sending you to a site ending in .com, .net, .org, etc., it’s not the authentic IRS site. Also, keep in mind that the IRS will never initiate contact with you via email or web channels (like social media). If you do receiving a phishing message, please be sure to report it to the IRS.

If you have questions regarding correspondence from the IRS, please contact your H&S team member today.

photo credit: wit via photopin cc


Protect Your Non-Profit From Fraudsters

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Donation

Little do they know, he’s going to pocket that money.

A common problem for churches and not-for-profit organizations is embezzlement, which occurs because decision makers are often times too trusting, internal controls are lacking, and even the simplest checks and balances are not in place. Because these organizations want to welcome and trust everyone, fraudsters can easily take advantage of their goodwill. Most fraudsters place themselves in multiple groups in a church and gain the “trust” of fellow members.

Once the trust is there, fraudulent activity is easier to pull off. I have worked with several churches and not-for-profits that have had the same answer as to why they were defrauded:  “I never thought he/she would steal from us”, “we trusted him/her”, “She is a good person”, “outstanding Christian”.

Be sure to not give church group members too much access to money and other valuables without church staff present.

Employees working for not-for-profits and church organizations have also been known to commit fraud. According to the Association of Certified Fraud Examiners, in 2012 the median loss for not-for-profits from fraudulent activity was $100,000. There are many factors that drive people to commit fraud. Red flags include:

  • Extraordinary medical expenses of the employee or a family member
  • Loss of spouse’s employment
  • Financial struggles of children
  • Divorce Gambling problems

It’s important to know what may be going on in the lives of personnel that have the potential to appropriate assets of your business for their personal use. Remember the importance of internal controls! Things like segregating job duties, rotating job duties, and instituting a system of checks and balances can all help deter fraud. Overall donations and contributions have been down the past couple years, the last thing a not-for-profit organization needs is embezzlement to occur.

If you are concerned about fraud in your not-for-profit, contact Kit Powell

Kit Powell
Certified Fraud Examiner
231.924.8035
kitp@hscompanies.com



Avoid Bad Hires With Background Checks

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eliminate problem employees with background checks

Background checks can help eliminate potentially hazardous candidates.

Criminal background checks are a first line of defense that businesses can use to weed out potential fraudsters and problem employees, but many choose not to take this simple first step. You don’t need to be a detective to run a background check; it can be as easy as creating a profile on the state website and running reports as needed.

The first thing to consider is whether you want to run a state or national background check. If you run one for just the State of Michigan, any crimes committed elsewhere will not appear in the search results. Also, keep in mind, the database is only as accurate as the information fed to it. If someone was convicted of a crime yesterday, but it hasn’t been entered in the system yet, you won’t see it in the results.

You will want to make sure to consider hiring best practices and industry-specific requirements when implementing background checks so you don’t set yourself up for lawsuits. Define ahead of time what types of crimes would cause you to retract an employment offer, and be consistent in enforcing your policy. Although there is no defined law regarding when you may run a background, it’s best to do so after you’ve made a job offer. Be sure to define in the offer that employment is contingent upon passing the background check. The HR specialists at H&S can help you develop a policy or even facilitate running the checks.

Download our free background implementation list 

To learn more about implementing a background check policy contact Ashley Clonan at 616.884.7949.

Ashley Clonan
Marketing Coordinator
616.884.7949
ashleyc@hscompanies.com



After An Employee Embezzles…

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Ways Fraud is Discovered

Tips for preventing fraud, as well as, the top ways fraud is typically detected.

Embezzlement has been the number one financial crime for the past 30 years.  If an employee embezzles, then the employer has already lost. Of those losses the employer suffers a financial loss, a loss of trust, and additional revenue loss from litigation matters that follow the embezzlement. To avoid embezzlement embarrassment, employers have to move quickly, as the financial impact will likely have a greater effect than was first suspected. The employer has to stop the damage quickly and conduct a fraud examination.  If stockholders are involved then the employer has the responsibility to investigate and recover the losses. If you have an embezzlement issue come up, follow these three steps in order:

Contact Legal Counsel and Your Insurer

Contacting legal counsel is an important first step because sometimes the employee’s rights can be violated even though they were the one who committed the crime. Contact your insurer also because failure to do so could void potential losses from being covered.

Secure Data

A fraud auditor will know what information and data to secure and back up. A good start for an employer is to do the following:

  • Create a mirrored hard drive of the employee computer
  • Secure electronic backups in the network and local drives of original data
  • Secure CDs, disks, thumb drives, etc.
  • Search the offending employee’s desk and office for any sensitive information (review handbook policies with attorney first)

Deal with the Employee

Management should follow their legal counsel’s advice in dealing with the employee as swiftly as possible.

Remember, fraudulent activities are easier to prevent than to detect. Make sure you have a plan in place, and know what to do should fraud occur in your business.

To learn more about preventing fraud in your business, contact Kit Powell

Kit Powell
Certified Fraud Examiner
231.924.8035
kitp@hscompanies.com



Occupational Fraud Doesn’t Just Strike Small Business

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Corruption schemes are the most popular form of fraud in governmental units.

Occupational Fraud doesn’t just strike small businesses; governmental units are susceptible as well. In the Association of Certified Fraud Examiners’ Report to the Nations, they found that corruption schemes, such as kickbacks, were the most popular form of fraud among government and public administration positions. Billing schemes, such as using fake companies to send bills to governmental units, stealing inventory, skimming money, and expense reimbursement schemes were the next most popular.

Those in government positions need to remember to put fraud controls in place. Rotating financial duties among employees, creating a system of checks and balances, and assessing and protecting areas susceptible to fraud are all important parts of preventing it from happening. To learn more, contact Kit Powell today.

Kit Powell
Certified Fraud Examiner
231.924.8035
kitp@hscompanies.com



In The News: Former Assistant Principal Pleads Guilty to Embezzlement

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Segregate Duties

Simply segregating duties between various team members can help reduce the chance of fraud occurring.

According to an article in theDetroit Free Press, Samuel Craig, a former assistant principal, was convicted of embezzling more than $36,000 from his union.

Craig was able to embezzle the money in his role as treasurer of his school’s union. He used blank, pre-signed checks, which officials believed would be used to pay bills, for his own use. Additionally, Craig opened a debit card linked to union funds and authorized electronic fund transfers to his personal bank account.

This story highlights the importance of implementing procedures to prevent fraud. Officials should review financial statements regularly, rotate financial duties if possible, and segregate duties to prevent one person from having too much power.

To learn more about fraud in business, read:
Small Businesses & Fraud – What you need to know
Fraud Happens. Learn the Facts.

Source: Former Highland Park assistant principal pleads guilty to embezzling from union by Melanie Scott Dorsey



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