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.

Case Description

The 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., a third-party credit-reporting agency that facilitates the retrieval of credit history data.  Infodynamics had outstanding contracts with over 25,000 companies, allowing these companies to check the creditworthiness of potential customers, thus creating a direct line past the three main credit bureaus.  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.

In early 2000, Smith and Samuelson began to steal credit reports.  The two fraudsters sold this information to a group of thugs with known involvement in the black market.  The thugs would pay up to $60 for one person's personal information.  After some time, the thugs began to provide the two fraudsters with names and social security numbers to help facilitate the fraud process even further.

To convert the information into money, the thugs would use information purchased from Smith and Samuelson to gain access to the victim's bank accounts and other financial information.  The group of thugs would then take the following steps:

                Deplete the bank accounts of the victims through wire transfers.                Change the addresses of the accounts so victims would no longer receive current information about their accounts.                Order new checks using the victim's bank account numbers.                Order new ATM cards to enable cash withdrawals.                Order new credit cards using the victim's name.                Establish new lines of credit in the victims' names.Using these techniques, the fraud ring stole over $2.7 million from consumers over a period of about three years from late 2009 to late 2012.  The most intriguing aspect of the fraud was that Smith quit working at Infodynamics in early 2010, but continued stealing the information for an additional two years. Smith claimed that most of the access codes he had stolen remained unchanged for full two years after he left the company.

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.  In his attempt to continue living a life of affluence, Smith stole around 15,000 credit reports from Infodynamics by using Ford Motor Company access codes.  In addition, from February to May 2012, Smith again stole a large number of names.  This time, Smith used Washington Mutual Bank access codes to steal 6,000 credit reports.  Finally, in September 2012, Smith made what would be his last big theft of credit reports.  Using Central Texas Energy Supply access codes, Smith stole 4,500 credit reports.

Subsequent to Smith’s use of Ford’s access codes, Equifax, one of the three largest credit bureaus in the United States, began to notice credit report request spikes in Ford's account.  After Smith’s next two large batches of credit report requests, Equifax decided to investigate further.  Equifax discovered that almost all of the credit report requests came from one phone number, and that the fraudsters ordered requests in large batches of about 100 credit reports.   

Your role in this learning demonstration is to assume you are the accountant assigned  to investigate irregularities in Ford’s account.  So far, you have located the physical address associated with the telephone number.  With the help of a law enforcement agency, you obtained a search warrant, secured a computer, and other equipment the fraudsters used to commit fraud. 

DELIVERABLE:

Write a report to your supervisor that contains the following sections. Use the template I provide to you for this information.

1)        Basic Background on Fraud

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

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.

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

2)        Evidence Gathering

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

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

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

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.

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.

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

3)        Interview Plan

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

b) Interview Plan - Develop a plan to interview Smith regarding this case.  List the questions you plan to ask in the interview. (This is an exception to the rule to avoid using bullet point lists.)4)        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).

a) 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) 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.

PLEASE SEE ATTACHMENT AND REQUIREMENTS