Case DescriptionThe fraud began when Jessica Samuelson approached Salvatore Smith about a plan to steal and sell people's personal information. Salvatore Smith had begun to work at Infodynamics, Inc.

1. Background Information on the Fraud Committed

The fraud in this case began in early 2000. Jessica Samuelson approached Salvatore Smith with a plan to steal and sell confidential information. Smith was a customer service representative with Infodynamics and therefore had access to the confidential access codes which are used by Infodynamics’ clients to retrieve credit reports. These reports were then sold by Smith and Samuelson to a group of known criminals who used the information to gain access to victims’ bank accounts and other financial information. The group then used the victim information to drain bank accounts through wire transfers and change addresses on accounts so that the victims would not receive statements showing the activity on the accounts, order new checks and ATM cards to the fraudulent addresses which were then used to drain bank accounts, and obtain credit cards and lines of credit in the names of the victims.

We believe that the perpetrators were able to steal large sums of money, at least $2.7 million from late 2009 through late 2012 alone. This is particularly concerning since Smith’s employment at Infodynamics was terminated in early 2010, meaning he was able to continue stealing confidential information for nearly two years after his employment at Infodynamics ended. Smith has explained that he was able to continue to engage in these thefts because the access codes he had obtained were not changed during this period. Smith’s fraud was discovered in 2012 after large increases in the number of credit report requests using a Ford Motor Company access code was raised suspicion at Equifax. Upon further investigation Equifax was able to determine that nearly all of the credit reports requested originated at one phone number in large batches of around 100 reports each. With the help of law enforcement we have been able to locate a physical address associated with the phone number used and as a result of a search warrant we have obtained a computer and other equipment we believe was used in committing this fraud.

1. Type of Fraud the Case Represents

1. a) Types of Fraud - summarize the major types of fraud and explain which type this case represents.

2. there are many ways to classify the various types of fraud, the most common way is to simply divide frauds into those that are committed against organizations and those that are committed on behalf of organizations. In employee fraud, for example—fraud committed against an organization—the victim of the fraud is the employee’s employer.1 p. 9

3. Another way to classify frauds is to use the ACFE’s definition of “occupational fraud.” The ACFE defines this type of fraud as, “The use of one’s occupation for personnel enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets.”p. 10

4. Identity theft. Identity theft occurs when someone assumes the identity of another person to purchase goods, engage in criminal activity, or perpetrate fraud. Perpetrators steal a person’s identity by accessing personal financial information such as information that is found on creditor statements, credit cards, bank statements, social security, and other personal documents such as driver’s license. Perpetrators sometimes also gain this infor- mation by going through a victim’s mailbox or trash can.p. 12

1. Fraud Triangle

b) Nature of Fraud – provide an overview of the fraud triangle and use information from the case to illustrate your discussion of each of the three components.

three key elements common to all of them. His fraud included: (1) a perceived pressure, (2) a perceived opportunity, and (3) some way to rationalize the fraud as acceptable. p. 34

A perceived opportunity to commit fraud, conceal it, or avoid being punished is the second element of the fraud triangle. In this section, we will discuss fraud opportunities. At least six major factors increase perceived or real opportunities for individuals to commit fraud within an organization. The following list of these factors is not exhaustive, but it does provide a sufficient number of settings to illustrate the role of opportunities in the fraud triangle. 1. Lack of internal controls that prevent and/or detect fraudulent behavior 2. Inability to judge quality of performance 3. Failure to discipline fraud perpetrators 4. Lack of access to information or asymmetrical information 5. Ignorance, apathy, or incapacity 6. Lack of an audit trail p. 39

A. Case Specific Information Related to the Fraud Triangle

1. Opportunity.

As a customer service representative, Smith could obtain many confidential access codes.  The clients of Infodynamics used these access codes to gain approval on credit requests.  With permission to retrieve these confidential access codes, Smith had the opportunity to commit fraud. Smith claimed that most of the access codes he had stolen remained unchanged for full two years after he left the company.

2. Pressure.

Finally, in early 2012, Smith’s increasing greediness led to the detection of his fraud. Since the fraud began, Smith had purchased a large home for himself and purchased several time-share, also known as fractional ownership condominiums around the world. He quickly adapted to the "jet set" life of a playboy. However, Smith was finding it difficult to keep up with his newfound friends who were independently wealthy.

3. Rationalization.

No specific info given in case but there was so much opportunity that there was little need to rationalize. Little controls-likely thought wouldn’t be caught. Maybe thought that he was not directly hurting the people since he only sold the info.

B. Fraud Behaviors Exhibited by the Thugs in This Case.

1. c) Fraud Behaviors - describe the basic behaviors that fraudsters tend to exhibit and provide examples of those behaviors exhibited in this case.

III. Evidence

A. Evidence Gathering Plan

1. Evidence gathering methods used to investigate the theft of information.

2)        Evidence Gathering

1. a) Evidence Gathering Overview - Summarize the basic methods used to investigate a fraud that involves theft of information.

2. Summary of implementation of appropriate physical evidence gathering procedures in this case.

1. b) Evidence Gathering Plan - Develop a plan to uncover physical evidence in this case.  Include the following points:

2. i) A summary of physical evidence gathering procedures and how you would implement these procedures in this case as appropriate.

3. ii) A detailed description of how you would proceed to gather data from the computer and Smith’s cell phone, which you seized as a result of the search warrant.

3. Summary of the basic ways to conceal evidence and an analysis of how the fraud ring may have concealed evidence in this case.

iii)        A summary of the basic ways to conceal evidence and an analysis of how the fraud ring may have concealed evidence in this case.

4. Detailed description of how to gather data from the computer and Smith’s cell phone seized as a result of the search warrant.

1. ii) A detailed description of how you would proceed to gather data from the computer and Smith’s cell phone, which you seized as a result of the search warrant.

5. Summary of the basic methods used to obtain documentary evidence and how these methods might apply to this case.

1. iv) A summary of the basic methods used to obtain documentary evidence and how these methods might apply to this case.

IV. Interview

A. Interviewer Characteristics

1. a) Interviewer characteristics - Summarize the basic characteristics of a good fraud interviewer.

B. Interview Plan

1. b) Interview Plan - Develop a plan to interview Smith regarding this case.  List the questions you plan to ask in the interview.

V. Prosecution

A. Prosecution Recommendations

o   Prosecution Recommendations (assume you are able to gather sufficient evidence that you believe would lead to either a criminal conviction or civil recovery for credit card companies that covered the losses of their customers).

o   Justification for Prosecution - Present the general arguments for or against prosecuting fraud cases from the standpoint of the credit card companies that sustained losses due to the fraud and make a recommendation about whether the credit card companies should proceed.

B. Justification for Prosecution

o   Justification for Prosecution - Present the general arguments for or against prosecuting fraud cases from the standpoint of the credit card companies that sustained losses due to the fraud and make a recommendation about whether the credit card companies should proceed.

C. Method of Prosecution

o   Method of Prosecution - Present a general comparison between civil and criminal prosecution procedures.  Make a recommendation to present to the credit card companies that were harmed concerning which approach they should take and why.  Also, include the possibility of taking both approaches.  Note, law enforcement agencies will not press charges until one or more of the credit card companies presses charges.