Identity Theft and Emails From Nicaragua: Protect Yourself From Web-Based Fraud

Barry Frankel cropped

By Barry Frankel, partner-in-charge of Forensic Accounting & Litigation Support

I recently received a personalized fax inviting me “…to participate as a member of the Advisory Board for a telephone company, which is fully licensed and operating in the USA.” My responsibilities would include “two to three hours of telephone conferences per month” and commentary on “new product acceptance, market need and product/price comparison.” For my service I was offered “potential income in excess of $100,000.00 (One Hundred Thousand Dollars).”

Was I ever psyched! The world of high finance had finally found out what my mother had told her friends all along: her son is a brilliant accountant and financial advisor. Why else would they make me this incredible offer? Was I becoming as globally respected as Warren Buffett and Ted Turner? Was an invitation to join Augusta National next?

Well, the harsh light of reality always has a way of waking me in the middle of the best day dreams. It seems that a whole lot of folks could be joining me on that same advisory board. All they (and I) had to do was make a small investment of $10,000. As for the advisory board compensation, well, have you picked your lottery numbers today? I imagine your odds for winning $100,000 from Powerball would be better than my odds for seeing a dime from that telephone company.

It seems that I was the target of a scam, a hoax, a financial come-on designed to let someone other than me get rich. So, rather than joining the advisory board, I filed the fax next to one sent to one of my fraud investigation colleagues.

My colleague had just received an e-mail from “FedEx Home Delivery.” While maybe not from the FedEx Corp. based in Memphis, the e-mail did have a “trademarked” picture of a building with a FedEx sign in front of it and a drawing of the cute little FedEx Home Delivery dog. It seems they wanted to delivery to my colleague his “lottery funds.” First he had to provide his contact information and then a check for $105 for handling fees. Oddly enough, this FedEx was apparently using a student at a university in Nicaragua to handle the notification process. At least, the sender’s e-mail address indicated that to be the source.

I guess my colleague passed up the opportunity. He’s still coming to the office every day!

Financial fraud is becoming more and more widespread by the minute. It is not limited to the targets of SEC investigations for insider trading and overstated reported earnings; it’s stolen credit card and checking account numbers, and (perhaps most damaging) stolen social security numbers. The latter results in “identity theft,” where someone else says they are you (over the phone, over the Internet, or in person) and uses your name and social security number to obtain credit that shows up on your credit report.

Here’s a real life story from an HA&W Partner who was a recent victim of identity theft: One day his wife received a bill from Sears for a thousand dollars. Knowing that she hadn’t made any purchases at Sears, and that her husband certainly hadn’t surprised her with any presents of late, she set her husband (my partner) to the task of investigating the billing.

Somehow, someone had learned his social security number, address and telephone number. The culprit then had a fake ID made (a Georgia driver’s license) and used the false document to open accounts (in person) at a number of retail locations. The result: over ten thousand dollars of purchases for which my partner was asked to foot the bills without getting the goods or services.

The good news is that he and his wife were able to contact the three major credit bureaus to have an alert put on his data so that more retailers and lenders would be not caught up in the fraud. Likewise, the victimized retailers waived his liability.

The bad news is that the clean-up process required three months. The computers of the retailers are still trying to charge him interest, and he can’t open new accounts himself until the alerts are removed. If he wanted to buy or refinance a home, he would be jumping through more hoops than a dog in the circus.

The bottom line: take care to protect yourself from identity fraud. Check the sender’s address on e-mail offers; “.edu” is a not one you will get from a financial institution. In fact, you should check the e-mail address of the sender of messages from “friends” that start-off with “hi…you should look at this (web link)”. The message is probably a web based scam or data grab. Don’t give out your social security number unless you are applying for credit in a secure environment. Don’t put any extra data on your checks. Watch your mail to make sure you are getting all your bills and bank statements, and secure important documents in a safe place or in a secured electronic form.

And always remember what my mother told me: “if the deal sounds too good to be true…it probably is just that.”

Have you been the victim of a web-based fraud scheme? Tell me about it at barry.frankel@hawcpa.com.

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