25/10/2016

DatatheftandITfraud|ForensicControl

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Fraud investigations
Home Expertise Fraud investigations
Electronicevidenceplaysacrucialroleincorporatecrime
investigation.Theproperhandlingofsuchevidencecanbethe
keyfactorinstoppingafraudandrecoveringlosses.

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EXPERTISE
>Forgeries
>Fraudinvestigations
>HR&employment
disputes
>IPtheft

Computerevidenceisvolatile,soitsessentialthatitshandled
correctlyfromtheoutset.ThetemptationforlocalIT/HRstaffto
havealookislikelytooverwritedatashowingwholast
accessedthedocumentandsubstantiallyweakenthe
evidence.Experiencedcomputerforensicexpertscanensure
theintegrityofthedataandtheirspecialistanalysistoolscan
recoverinformationthatappearedlostordeleted.

Case study
ForensicControl
workedonbehalfofa
LondonNHSTrust.The
Trustwasconcerned
thatadoctorwas
runningaprivate
practiceusingNHS
resources.Thiswasa
sensitiveissueandwe
hadtoworkcovertlyto
takeaforensicimageof
hislaptopsoasnotto
raisesuspicionoralarmotherstaff.Weextracteddozensof
emailsshowingthatthesubjecthadmadeprivate
appointmentsoverthepreviousyearattimesthatheshould
havebeenworkingfortheNHSTrust.Thisevidenceformeda
keypartofatribunalhearingthatawardedtheTrustdamages.

>Industrialespionage
>Insolvencyinvestigations

ThehelpForensic
Controlprovidedin
connectionwiththe
investigationofa
complexcaseof
suspectedIPtheftwas
invaluable
MarcusRowland,Partner,
HeadofEmploymentGroup,
WigginLLP,(MediaLawfirm)

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What is fraud?

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What is fraud?
Fraudisatypeofcriminalactivity,definedas:abuseof
position,orfalserepresentation,orprejudicingsomeones
rightsforpersonalgain.Putsimply,fraudisanactof
deceptionintendedforpersonalgainortocausealossto
anotherparty.

Company*

Jobtitle*

Telephone*

Email*

Thegeneralcriminaloffenceoffraudcaninclude:
Country*

deceptionwherebysomeoneknowinglymakesfalse
representation

Comments

ortheyfailtodiscloseinformation
ortheyabuseaposition.

Is it fraud? Ways to recognise fraud

Sometimesthewaypeoplebehavemightsuggestthattheyare
committingafraud.Althoughtheseredflagsbythemselves
theymaynotbeanycauseforconcern,afewofthese
togethermightbeenoughtoalertyouthatsomethingisntquite
right.

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Keyindicatorsoffraudinclude:
Significantchangesinbehaviourthatyouvenoticed
Theyhavelargepersonaldebtsorfinanciallosses,and
adesireforpersonalgain
Auditfindingsdeemedtobeerrorsorirregularities
Transactionstakingplacethatwereatanoddtime,odd
frequency,unusualamountortooddrecipients
Internalcontrolsthatarenotenforced,oroften
compromisedbyhigherauthorities
Discrepanciesinaccountingrecordsandunexplained
itemsonreconciliations
Missingdocuments,oronlyphotocopieddocuments
available
Inconsistent,vagueorimplausibleresponsesarising
frominquiries
Unusualdiscrepanciesbetweentheclientsrecordsand
confirmationreplies
Missinginventoryorphysicalassets
Excessivevoidsorcredits
Commonnamesoraddressesofpayeesorcustomers
Alterationsondocuments(backdating,forexample)
Duplications(duplicatepayments,forexample)
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Collusionamongemployees,wherethereislittleorno
supervision
Oneemployeehascontrolofaprocessfromstartto
finishwithnosegregationofduties

Types of Fraud
Corporate Fraud
CorporateFraudinvolvesdeliberatedishonestytodeceivethe
public,investorsorlendingcompanies,usuallyresultingin
financialgaintothecriminalsororganisation.Corporatefraud
mayincludeassetstripping,fraudulenttrading,shareramping,
andthepublishingoffalseinformation.

Asset stripping
Assetstrippingistakingcompanyfundsorassetsofvalue
whileleavingbehindthedebts.Companydirectorstransfer
onlytheassetsofonecompanytoanotherandnotthe
liabilities.Theresultisadormantcompanywithlargeliabilities
thatcannotbemetandithastobeputintoliquidation
Strippingofcompanyassetsisnormallydonefortwomain
reasons:
Thefraudstersdeliberatelytargetacompanyor
companiestotakeownership,movetheassetsandthen
putthestrippedentityintoliquidation
Phoenixingdirectorsmoveassetsfromonelimited
companytoanothertosecurethebenefitsoftheir
businessandavoidtheliabilities.Mostorallthedirectors
willusuallybethesameinbothcompanies.Thisusually
arisesasawayofrescuingtheassetsofafailing
businessratherthantargetingacompany

Fradulent trading
Fraudulenttradingiswhereacompanycarriesonabusiness
withtheintentionofdefraudingcreditorsorforanyfraudulent
purposes.Thisapplieswhetherthecompanyistrading,has
ceasedtradingorisintheprocessofbeingwoundup.Ifyou
suspectfraudulenttrading,youshould:
Alerttheliquidatorifapplicable
Thepolice
TheSpecialComplianceOfficeofHMRC.

Share ramping
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Shareramping(alsoknownaspumpanddumpandbook
ramping)iswherecriminalsinfluencethesharepriceofa
companyandthentakeadvantageofit.
Itiscommonlydonebybringingacompanytothemarket
withfalseexpectationsofitsprofitability.
Alternativelyitcanbedonebybuyingsharesina
companywhentheyareatalowpriceandthenstarting
arumourthatthecompanyisbeingtakenover.When
thesharepricerises,thesharesaresoldataprofit.

Publishing false information

Publishingfalseinformationisatypeoffraudcommittedwhen
acriminalcreates,destroys,conceals,orfalsifiesanaccount,
recordorreportwhichisdeliberatelymisleadingonthe
companysfinancialposition.Thisisusuallydonetomislead
investorsandcreditorsandtokeepafailingcompanytrading.

Public Sector Fraud

PublicSectorfraudiswherecriminalsseektoexploit
Governmentgrantandcompensationschemesfortheir
personalgain.Thistypeoffraudaffectsalltaxpayersby
stealingpublicmoney.Thecriminalswillproducefake
documentsandapplicationstodeliberatelydeceiveandexploit
certainschemeswhichareinplacetoprovidehelptogenuine
applicants.ExamplesofPublicSectorfraudinclude:
abuseoftherighttobuysystemforformercouncil
homes
Legalaidfraud
GrantforBusinessInvestment(GBI)fraud

Investment fraud
Investmentfraudstargetindividualswithconvincingarguments
tomakethempartwiththeirsavings.Thesetypesoffraudsters
usuallywantyoutoinvestyourmoneyinacompanyor
opportunitywhichseemstobeofferingveryhighratesof
return.

Share scams (boiler room fraud)

Aboilerroomisanoperationsellingsharestoinvestorsin
companieswhichareusuallyafakeorarenotsuccessfully
trading.

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Scammerstypicallycoldcallpeopleandusehardsell
tacticstosellsharesinUKoroverseasbased
companiesthatprovetobeworthless.
Boilerroomsareusuallyoperatedfromoverseas
locations.
Thescammersprofitbyeitherjusttakinginvestors
moneywithoutprovidingsharesorsellingthesharesto
themathighlyinflatedprices.

Recovery Room Fraud

Oftenthosethatrunboilerroomswillsharetheircontactlists
withothers.Thereforeifyouhavegivenyourinformationto
onecompanyyoumaywellreceivecallsfromothercompanies
suggestingtheycanassisttosellyoursharesoroffering
furtherpurchases.Whatarethewarningsigns?
Haveyoubeencontactedaboutinvestinginshares?
Haveyouneverheardofthecompanybefore?
Wereyoupromisedhighratesofreturn?

Other investment fraud

InvestmentFraudscouldincludeyouofferedthechanceto
investinanewcompanyoranexcitinginvestmentopportunity.
Thefraudsterswilloftenshowaseriesofprofessionallooking
documentstobackuptheirclaimsandenticeinvestors.Oneof
themostcommoninvestmentfraudsarePonziorpyramid
schemewilltypicallyinvolveaninvestmentofferwhichpromises
toprovideahigherrateofreturnthanusuallyoffered.For
example,a30%returnoninvestmentisclaimedwhenamore
realisticreturnis510%.

Bribery and corruption

Corruptioniswheretheintegrityofaperson,Government,or
companyismanipulatedandcompromisedfortheirown
personalgain.Therearetwomaintypesofcorruption:
Politicalcorruptiondysfunctionofapoliticalsystemor
institutioninwhichgovernmentofficials,politicalofficials
oremployeesseekillegitimatepersonalgainthrough
actionssuchasbribery,extortion,cronyism,patronage
andembezzlement
Corporatecorruptione.g.wherebribesareofferedto
agencies/institutions/individualsinordertowinacontract

Other frauds include:

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Taxandexcisefraud
Identityfraud
Benefitfraud
Civilmatters(negligence,forexample)
Contractualdispute
Advancefeefrauds

SomeoftheinformationfromthispageisfromtheSerious
FraudOfficewebsiteandisusedunderthetermsoftheOpen
GovernmentLicense.

Clients we have worked with include

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