Training frontline staff is vital in fraud prevention

MoneyManagement.com.au reports from the Investment and Financial Services Association (IFSA) national conference about how taking fraud prevention back to basics can make all the difference in financial services businesses. Read the full article at http://www.moneymanagement.com.au

Disgruntled Employee Deletes 7 Years Worth of Architectural Drawings

Homeland Security Daily Wire (01/28/08)

An employee at a Florida architectural firm deleted seven years worth of files because she believed she was about to be fired. Marie Cooley discovered a job advertisement a local paper that matched her job description at Steven E. Hutchins Architects. A police official said that she "decided to go and mess up everything for everybody" because she was sure that the advertisement meant she was going to lose her job. Cooley went into the office on the night of Jan. 27 and logged onto the company server using her own account. Within seconds, she deleted an estimated $2.5 million worth of drawings and blueprints. Cooley later confessed to the crime, and faces a maximum sentence of five years in prison if convicted of a second degree felony. The owner of the firm said that they had managed to recover every file that had been deleted. He also said that there were no plans to fire Cooley and the classified ad was for a position at his wife's business.

Rough Notes (01/08); McCormick, Roy C.

Merchants now experience more thefts at the hands of employees than at the hands of customers, and employers must invest in high-limit fidelity insurance and implement stronger security measures in order to cover their assets. Employee dishonesty coverage should be set at a high limit for reasons of liability, since workers have access to company resources and can cause more financial damage to a company than shoplifting customers. Employers must not hesitate to carry out a background check on any new or prospective employees, especially those who work as cashiers, bookkeepers, purchasers and warehouse workers. Embezzlement and credit card theft also can be stymied by the use of surveillance technologies, as well as the checking of corporate credit card and bank receipts.

Insurance investigators were tipped off to the owners of Florida-based Gulf Coast Title Closings & Escrow Services by a whistleblower in early 2006. The tip resulted in the immediate deployment of an army of accountants to the firm's offices by Commonwealth Land Title Insurance, the underwriter for the company's title policies. Investigations uncovered that the owners had bilked the company of some $8 million between early 2004 and 2006 through a Ponzi scheme. Though the identity of the whistleblower has not been divulged, there are no lack of disgruntled ex-employees, according to reports. One former employee says the owners had placed cameras and microphones throughout the company's offices to keep a tab on employees. The owners have been charged with multiple counts of theft and money laundering and if convicted could receive life sentences.

Financial Week (10/08/07) Vol. 2, No. 38, P. 6 ; O'Brien, Sarah

National Underwriter (Property & Casualty - Risk & Benefits Management Edition) (09/03/07) Vol. 111, No. 32, P. 35; Thomson, Robert

A high-quality employee screening program is essential to increase workplace security and reduce the risk of a negligent-hiring suit. When looking for a good screening program, many employers go for the fastest and cheapest product. Experts caution against this practice, noting there are several quality measures which should take priority over speed and cost-effectiveness. First of all, all information provided by a background screening should be accurate. A screening program is useless if it attributes a crime to the wrong person or misses prior offenses. Second, the company providing the program should have an excellent customer service record, including staff members who are knowledgeable about the product and available to answer questions. Next, all action taken by the screening company should be within the limits of local and federal law. Obtaining accurate background information does not decrease liability risks if the screening process exposes clients to legal repercussions. Finally, the screening company should enact all available security measures to protect the privacy of companies and potential hires alike. Without these quality controls, a company is at risk for a legal "perfect storm"--the combination of an untrustworthy employee, fast and loose background checks, and an on-the-job incident.

According to a survey of 1,151 men and 795 women, 73 percent of Americans have witnessed unethical behavior while on the job. The study, conducted by corporate ethics consultant LRN, also discovered that 36 percent of respondents reported unethical behavior negatively affected their job performance. When asked how they would handle the situation, 43 percent stated they would deal with the situation themselves, while 48 percent would report the problem to management. Some reasons given for those who chose not to report ethics issues included being unsure how management would handle the misconduct, and the absence of official company reporting procedures. Source HR Magazine (07/07) Vol. 52, No. 7, P. 16.

The Minister for Police, David Campbell, announced on August 2nd a raft of changes to the Security Industry, to further tighten the laws governing security operators in NSW (Australia).

"NSW already has the toughest security industry regulation in Australia and those high standards exist to protect the community and to prevent the infiltration of the industry by criminal gangs" Mr. Campbell said.

"NSW has led the way with stringent probity checks for licences, with exclusions for people convicted of offences relating to violence, drugs, weapons and participating in criminal gangs."

The new regulations will commence on September 1, 2007.

A copy of the new regulations is contained in the Government Gazette which can be obtained from the Department of Commerce website www.advertising.nswp.commerce.nsw.gov.au.

As Portugal takes centre stage as holder of the EU presidency for six months, the Prime Minister, Jose Socrates, is embroiled in a row over the authenticity of his university degree.

The saga throws doubt on Mr Socrates' personal integrity, and consolidates the dismal reputation of politicians among ordinary Portuguese. The indifference with which the allegations were received by most opposition MPs (they say it is a personal matter) fuel suspicions that Mr Socrates is not the only one to profess academic qualifications yet to be received.