Old Technology Used in New Ways

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By Cora Bullock, Assistant Editor, Fraud Magazine

We know technology is a double-edged sword. It helps us catch fraudsters, but then they use it to perpetrate ever-more-complex frauds. Christopher Rosetti, CFE, CPA, told attendees how to tip the scales in their favor in his Tuesday breakout session, “Cutting Edge Tips in Today’s World of Fraud.” Rosetti is Partner-Fraud Investigations with BST.

When IRS tax return e-filing went nationwide, it decreased filing errors and postage costs, and increased audit efficiency and the opportunity for fraud.

And old technology can be used in new ways. Fraudsters use passwords, but in creative ways. Rosetti was involved in a case that’s lingered in litigation for three years because the fraudster not only used the system administrator’s password but also those of terminated employees and employees at lunch or on breaks.

Fraudsters are perpetrating the newest schemes through:

  • Metadata – the digital DNA of who created a document and who made changes and when
  • Made-to-order fake websites
  • Use of alibi websites – these produce documents to “corroborate” a fraudsters story
  • Data storage and transmission techniques – such as flash drives

Rosetti told how pharmaceutical juggernaut Merck edited out negative test results from a 2007 Vioxx drug study. How was the deception discovered? Metadata.

He also told of a case he worked in which an employee had submitted fraudulent travel expense documents. His team thought the employee was using a template to generate the documents, but they couldn’t find it. However, they reviewed the documents’ metadata and found that a travel agency employee had created the documents, but the fraudster had repeatedly edited the documents. “The point is, if you’re going to perpetrate this fraud, don’t have your accomplice email the documents.” said Rosetti.

There are several ways to scrub metadata, including software such as EnCase, and simply printing the document, scanning it and saving it as a PDF. Fraudsters can do this, but so can CFEs who are trying to protect sensitive data during litigation.

If one wants to gather data, on the other hand, Rosetti recommended Palantir – “Basically IT software on steroids,” he said. It accumulates massive amounts of data and was used in the Bernard Madoff case.

Rosetti went into great detail about alibi websites, which offer an astonishing array of services to provide false alibis. “You may be surprised at what these websites can help fraudsters get away with,” he said. These websites include Falseexpenses.com, Alibinetwork.com and Alibisnpaybacks.com.

Services include:

  • Receipts on authentic thermal paper
  • Rescue calls to get you out of meetings
  • Virtual doctors offices
  • Fake travel documents and confirmations
  • Virtual employment, including business cards, letterhead and confirmation of “employment”
  • Escape-a-date

“It almost makes you want to use one just to see how it works!” laughed Rosetti.