Accounting Fraud: NJCSPA

Business Scams: FTC

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Published in U.S. 1 Newspaper on June 28, 2000. All rights reserved.

Internet Fraud

While the FBI took most of the credit for nabbing the

New Jersey programmer who launched the destructive Melissa virus last

spring, behind-the-scenes detectives like Peter Wolf in the

New Jersey State Police High-Tech Crimes Unit were doing a lot of

the forensic work. In the end, AOL tipped them off. "We followed

the Internet protocol address trail and identified the guy ourselves

and called the FBI," says Wolf.

Today’s law enforcement officials are becoming just as tech-savvy

as their 14-year-old hacker rivals, says Wolf, because the computer

is becoming a major weapon in violent and white collar crimes alike.

"The computer has been involved in every type of crime out there,"

says Wolf, who trained at the National White Collar Crimes Center

in West Virginia, the International Association of Computer Investigative

Specialists, and the High Tech Crimes Investigator’s Association.

"We’ve actually reopened a death investigation that turned out

to be a homicide based on things that we found in the computer."

Wolf speaks on "Protecting Yourself from Fraud on the Internet,"

on Thursday, July 6, at 8 a.m. at the Edison Clarion for the Middlesex

Chamber. Call 732-821-1700. Cost: $30.

Wolf, 41, spent a year in college before joining the New Jersey State

Police as an investigator in undercover narcotics, white collar, and

organized crime in 1977. Today, Wolf, a resident of Ocean County with

four children ranging in age from 9 to 18, has the kind of computer

skills that would make most network administrators and programmers

envious. Most of his technical secrets are applied to solving white

collar crimes, such as credit identity theft and sabotage, and breaking

up child exploitation rings, which he calls the "new wave"

in crime.

Sabotage and fraud over the Internet are a real threat for businesses,

says Wolf, because so many companies aren’t operating on a secure

network. Hackers can spot these sitting ducks right away. "I could

run a scan on certain IP addresses, find one that’s running Windows

95, and use a program to which Windows 95 is vulnerable and break

in," says Wolf. "You have a lot of people who are stealing

Internet accounts with passwords and then using somebody else’s E-mail

account to make terroristic or harassing threats. Credit identity

theft is also a problem. There are programs that a 14-year-old kid

can download on the Internet that will generate a valid credit card

number."

To avoid becoming the next high-tech victim, Wolf suggests the following

measures:

Have a good antivirus program. Make sure that you update

the virus definitions when prompted.

Pick a good password, one that uses alpha and numeric

figures, and is at least eight characters long. There are programs

that will run through a dictionary to decode, says Wolf. "If you

put in a numeric value, the dictionary-type crackers won’t work,"

says Wolf. Don’t use your name, social security number, dog’s name,

or any other password that could be guessed by "social engineering."

Hire a knowledgeable network administrator to set up a

fire wall. Constantly update software to correct vulnerabilities.

High-tech crimes may be on the rise, but Wolf is optimistic

about law enforcement’s ability to stay on top of hackers and hold

them accountable. "I think people have a false sense of anonymity

on the Internet," he says. "A lot of people don’t think that

they can be traced, but they can."

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Accounting Fraud: NJCSPA

Each year, businesses lose about six percent of their

revenues to fraud and abuse, according to several certified fraud

examiners (CFEs) with the New Jersey Society of Certified Professional

Accountants. Fraud can take many forms, ranging from lifting funds

from petty cash and goods, inventory or telephone and cellular phone

abuse, to complex bookkeeping and accounting cover-ups to hide stolen

monies, as was the case a few weeks ago when a secretary in a Montgomery

Knoll dentist’s office was sentenced to jail for embezzling nearly

$100,000 from her employer. Joseph T. Wells, a CFE, member of

the NJSCPA, and author of "Occupational Fraud and Abuse" (1997,

$99) estimates that the total cost of fraud and abuse to businesses

in the country exceeds $400 billion annually.

Small businesses can find such losses hard to recoup, so they should

take a number of measures to protect themselves against fraud. Perhaps

the easiest measure is establishing a system of checks and balances

for each of a business’ financial functions, says Laurence G. Thoma,

a CFE at Withum, Smith & Brown in Red Bank. "Don’t have the same

person performing all financial functions," he says. "A different

person should handle the billing, collection, and deposits because

alterations can be made to the records at any time. Don’t give employees

an opportunity to commit fraud."

Send a clear message to employees that they will be held accountable

for their work and any abuses, says Henry Fuentes, a CPA in

Ramsey. "The single best way a small business can protect itself

against fraud is good internal control," he says.

Trust your gut instinct about a person, says Thoma, and ask job candidates

to give their permission for background checks. Employers can obtain

police background checks for a nominal fee. "If there is a negative

feeling, follow it," says Fuentes. "Seventy-five percent of

the people who commit fraud will do it again."

Businesses looking for a forensic accountant can refer to the NJSCPA’s

"Forensic and Litigation Services Directory," available online

at www.njscpa.org/forensic, or by calling 973-226-4494.

Top Of Page
Business Scams: FTC

If job advertisements that trumpet such claims as "be

your own boss," "set your own hours," and "earn money

quickly" sound to good to be true, they probably are. The Federal

Trade Commission has repeatedly found that business opportunities

like these are often scams, taking consumers’ money up front but failing

to deliver on their promises in the end.

Still, if you can’t resist such enticing offers, the Federal Trade

Commission suggests you at least do the following:

Get all earnings claims in writing. If the promoter hesitates

or refuses to give the information in writing, find another business

opportunity.

Interview references provided by the company promoting

the business opportunity. Talk to each, preferably where their business

operates.

Study the business’ franchise disclosure document. It

includes information about the company, including whether it has faced

any lawsuits from prior purchasers or lawsuits alleging fraud.

Query the Attorney General’s office, state or county consumer

protection agency, and Better Business Bureau in the area in which

the business opportunity promoter is based.

Call the legal department of the company whose merchandise

is being promoted, if the business opportunity involves selling products

from well-known companies.

Consult an attorney.

For more information about business opportunities or to make

a complaint about a business, call the FTC toll-free at 1-877-382-4357

or visit www.ftc.gov.


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