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This article was originally published on The Province
Fraud has been around for thousands of years, witness its mention in the Bible and the Babylonian law Code of Hammurabi.
"Fraud has been around from Day 1," said Pat McParland, a forensic accountant with MNP in Vancouver. "The original pyramid scheme was the pyramids. 'Hey, can I sell you an interest in those really nice condos over there on the Nile?' " Like much else, however, fraud has changed with the times, lately thanks to computers and the Internet, which makes fraud easier, anonymous and speedier to carry out.
Take last week's announcement by the Vancouver Police Department of a new credit-card and identity scam involving not money but reward points, which were exchanged for gift cards.
"It makes it more challenging for the police and the public," said Sgt. Linda Grange, a financial crime detective with the VPD. "You're not dealing with a person, per se, you can't see who is behind the computer screen."
Probably the best-known modern-day scam is the African princess who emails you seeking your help in regaining her inheritance. You stand to make hundreds of thousands, if not millions, of dollars for your assistance. You just need to send details of your back account to get the ball rolling.
"The tools have changed and therefore the investigative techniques have changed," said Jackie Davies of MNP. "Where there were handwritten ledgers, we now have computer programs to record transactions. "Where there were face-to-face meetings and telephone calls with people you could identify, we now have the Internet and email.
"This often makes it difficult to identify who is on the other end of the conversation and where they are located in the world."
Ethics also seem to be changing, creating a mushy moral swamp where once stood firm ground between right and wrong, according to police and forensic accountants.
And that's not even taking into account a generation coming of age that grew up expecting most things on the Internet to be free.
"Sometimes now it seems as if the only sin, the only bad thing, is to be caught," McParland said.
Instances of fraud don't follow economic indicators, rising and falling with good times and bad; fraud is consistent and persistent, arising out of psychological pressures, said Jim Blatchford, also with MNP's investigative and forensic services. He quotes the late Donald Cressey, a famous American penal, social and criminal expert who stated that for fraud to occur, three elements must be present: Motivation, opportunity and rationalization.
"Today's most honest individuals could turn to fraudulent activities where their motivation and rationalizations change with negative changes to their personal circumstances," Blatchford said.
With the anonymity the Internet offers, experts say there are both more fraudsters at work and more potential victims than ever.
Investigators are also stymied by fraud's international nature - by foreign languages and foreign laws.
And fraud comes in all shapes and sizes, from an employee stealing from an employer to huge Ponzi schemes with layer after layer and victim after victim, the VPD's Grange said.
Some things never change, of course.
"It comes down to someone wanting to separate you from your money," she said.
The variety of fraud in B.C. ranges from the petty to the extremely pricey. Here are three examples from the Province/MNP poll:
"Mine involved a relatively small amount of money that a Victoria person owes me to fulfil a contract for some firewood I paid him for. I paid him $650 cash for three cords of wood and he delivered only two cords, so I'm out at least $200.
"I've phoned him to get him to correct the error or to obtain a refund, but to no avail.
"I would take him to small claims court, but I only have phone numbers and a vehicle licence plate number, neither of which enables me to serve him with documents."
— Ray Silver, Shawnigan Lake
"I'm not sure how it happened, but my credit card was compromised. They used it to spend $30,000 on online gambling. I have a high limit because I use it for business and the credit card people always phone me when there's a change in my spending pattern. But not this time. I didn't find out about it until I got my statement and said, 'What the heck is this?'
"I didn't pay anything, it didn't hurt me or harm me, except that I was without a credit card for a few days. I never did find out how it happened."
— Scott Riznek, Surrey
"I invested six figures of my RSP money with a company that sells commercial real estate limited partnerships.
"They just filed for CCAA (similar to bankruptcy protection, the letters stand for Companies' Creditors Arrangement Act) protection in October 2013."
(There are roughly 4,200 investors from across Canada with more than $370 million invested in the company who are wondering what happened to their money.) "Right now, most of the money is gone.
"The principals always presented themselves and the company as experienced, honest, transparent and reputable.
"Their actions are anything but honest."
— name withheld by request
Categories:Valuation, Forensics and Litigation Support; Technology Solutions
Related Topics:Fraud; Technology
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