Experts Warn of Fraud's Scope and Sophistication

Former FBI Agent Depicted in Popular Movie Offers Pointers to Internal Auditors

April 15, 2009

You have just won an all-expense paid vacation to Tahiti, but you must act “now.” You have won a lottery that you don’t even remember entering, but you must act now and wire an “advance fee” to collect your winnings.

Today, there are countless scams designed to separate people from their money that calls for a higher degree of diligence and skepticism than ever before, said former top-flight FBI agent, Eric O’Neill.

The UT Dallas Fraud Summit is held annually by School of Management’s Center for Internal Auditing.

Mark Salamasick, director of the center; and former FBI Agent Eric O'Neill, the conference keynote speaker.

O’Neill, who helped capture the most notorious spy in U.S. history and the real-life hero behind the movie Breach, addressed nearly 400 professionals in the internal auditing field recently at the 2009 UT Dallas Fraud Summit.

As a partner with the Georgetown Group, a fraud investigative and consulting firm, O’Neill now draws on the same investigative acumen he used as an FBI counterintelligence operative to assist clients in the private sector.

“What happened to an honest wage for an honest day’s work?” O’Neill said. “If there’s a way to cheat you out of your money, someone’s going to do it, and that’s why as a society, we’ve become people with our guards way up.”

O’Neill told the group that when the economy weakens, fraudulent activity strengthens, and fraudsters exploit people who are more vulnerable and desperate for help and cash.

“Think of the old axiom: Desperate times call for desperate measures. We’re certainly in desperate times, fraud is on the rise, and I don’t see it stopping any time soon,” O’Neill said.

O’Neill said technological advances have made fraud “easier, more pervasive and more persuasive.” The power of the Internet and information technology has helped cybercriminals recycle and perfect older ploys, such as bogus work-at-home schemes, while designing thousands of new ones.

“It’s just as easy now for someone in Dallas, Texas, to defraud you as it is for someone sitting in Belarus or anywhere around the world, because all they need is a computer and Internet access,” he said.

On the corporate side, economic espionage poses the greatest threat as fraudsters attempt to steal companies’ greatest asset – their intellectual property. Fraudsters comb web sites and marketing material, review filings with regulatory agencies and scan trade floor conferences looking for any information that grants them access to a company’s intellectual property.

“Occasionally a vendor will put out information that they might not have wanted to release. You’d be amazed how many clients will put things on the web site because they want to look really special and unique, and they forget that they’ve just given their (intellectual property) to the world,” O’Neill said.

“We’ve all sort of become like business and financial 4-year-olds,” O’Neill said. "Don’t speak to strangers. … Don’t take candy from Bernie Madoff. Don’t accept a car ride from Robert Hanssen. Turn and run away from telemarketers,” O’Neill told the audience.

“We are in the age of diligence … You must know who you’re dealing with and discover a way to trust them. This isn’t really about fraud. It’s about trust, so be a little bit paranoid. A little bit of paranoia can be a great asset,” O’Neill said.

The Fraud Summit is held annually and is sponsored by UT Dallas School of Management’s Center for Internal Auditing.


Media Contacts: Jill Glass, UT Dallas, ( 972) 883-5989, jill.glass@utdallas.edu
or the Office of Media Relations, UT Dallas, (972) 883-2155, newscenter@utdallas.edu

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Alumnus Teaches Clients
How to Detect Business Fraud


James D. Ratley, president of the Association of Certified Fraud Examiners, might say he got his introduction into fraud detection when, as a little boy, he stole 50 cents from his daddy’s dresser.

As he told the story to the almost 400 internal auditors and fraud investigators who attended the 2009 Annual Fraud Summit at the UT Dallas School of Management, it didn’t take long for his mother to find out the truth. Or for him to suffer the consequences — on his rear end.

The point, as he related to those gathered for the all-day conference, is that no one was raised to be a liar — including those covering up fraud. And ultimately, investigators can use that fact to their advantage.

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The former Dallas cop and University of Texas at Dallas alumnus, who now travels the world teaching others how to run fraud investigations, offered many words of wisdom to his listeners. Find someone who knows about the industry being investigated, he said as he related the story of his probe into construction fraud at D/FW International Airport. “My dad was in construction all his life,” Ratley related. Not school-educated, but with a clear understanding of what a change order should look like, Ratley said, his father immediately identified the fraud at the site — by noticing the way concrete pipe had been ordered. “Hire competent, trained people who recognize the red flags,” he said, “and know how to interview people.”

Equally important, know “who’s mad at who” in the organization, how the organization works and who’s acting a little strange. Ratley followed a mid-level employee out of the office one day to find him heading to a private spot where a fancy sports car was parked. “People all lie the same way,” he said, suggesting auditors look for wristwatches, shoes and cars. “Find out what they do with their time,” he advised.

Ratley, who confessed, “I can talk the horns off a billy goat, but I can’t write,” told the audience to take special pains to make sure their reports were without opinions or conclusions, make sure their own biases don’t impact their work and “assume every case you work on will go to court.”

“The proper steps always take longer, but you’ll be happy you did them,” he said.


Media Contacts: Jeanne Spreier, UT Dallas, (972) 883-4759, jeanne.spreier@utdallas.edu
or the Office of Media Relations, UT Dallas, (972) 883-2155, newscenter@utdallas.edu

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