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Archive for Monday, December 13, 2010

KU School of Business class teaches graduate students how to commit fraud, identity theft

KU graduate student Chris Flanders sniffs a washed check for the scent of acetone Thursday. Students participated in a check-washing demonstration in the KU business school's fraud examination and forensic accounting class.

KU graduate student Chris Flanders sniffs a washed check for the scent of acetone Thursday. Students participated in a check-washing demonstration in the KU business school's fraud examination and forensic accounting class.

December 13, 2010

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On Thursday, Dec. 9, KU graduate students in the School of Business learned how to wash checks in the fraud examination and forensic accounting class at KU. Household items like Acetone and brake fluid were used to wash away ink on written checks.

On Thursday, Dec. 9, KU graduate students in the School of Business learned how to wash checks in the fraud examination and forensic accounting class at KU. Household items like Acetone and brake fluid were used to wash away ink on written checks.

Allegra Beshore demonstrates how checks can be washed with Acetone in the fraud examination and forensic accounting class at KU.

Allegra Beshore demonstrates how checks can be washed with Acetone in the fraud examination and forensic accounting class at KU.

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Tips you can use to guard against fraud

Here are a few tips on how to guard against would-be fraudsters, courtesy of Kansas University forensic accounting students who spent some time learning how to prevent them from occurring.

• Get a SmartSwipe credit card reader.

This device plugs into your computer and allows consumers to swipe credit cards instead of typing in the numbers for online transactions.

The device encrypts the data, and avoids using the keyboard when entering credit card information. Would-be identity thieves can use devices like a keystroke reader to pick up keystrokes remotely. It’s available at several retailers for between about $50 and $80.

• Never sign blank health insurance forms at the doctor’s office.

It’s a little like signing a blank check, and always follow up with medical bills to ensure that the services listed were actually given.

Guard insurance information as one would a social security number. Criminals can use both in much the same way.

• Sign checks with an anti-fraud pen.

Some pens, like the Uni-ball 207, contain pigments that are absorbed into check fibers, and will not dissolve when someone tries to wash the check.

• Beware of fake websites.

Nearly 20 percent of the websites on the Internet are fake, one group said. These websites can be built to mirror banks’ websites or other common sites, too, and will ask the user to input personal information. Some key things to watch for include long and unwieldy URL addresses with lots of unnecessary characters.

Also, be aware that most banks will ask for personal information on the phone and will rarely prompt you to input secure information online.

• Check out nonprofit groups before donating.

Both the Better Business Bureau and a website called Charity Navigator, charitynavigator.org, provide financial ratings for charitable organizations. Look out, also, for high-pressure pitches from nonprofits looking to ensure you donate.

It got to the point where the students followed their teacher to Panera Bread and secretly videotaped him on the way to class.

It was all part of an assignment in Paul Mason’s forensic accounting and fraud detection course for graduate business students in accounting. In order to become proficient at stopping different methods of fraud, for a class project the students essentially learned how to commit them.

He said the style wasn’t for everyone, and he probably wouldn’t do such a project for undergraduates, but it’s important for the next generation of forensic accountants to realize what they’re up against, he said.

“When the rubber meets the road, our people are going to be called upon, for their clients, to prevent fraud,” said Mason, a lecturer in the business school.

The surveillance while he purchased coffee was a little unexpected, he added, but it served to illustrate the broader point of the presentations: this stuff is pretty easy to do.

“I do have some expectation of privacy, though,” he told the class.

The students showed off their work to the class, with presentations on everything from identity theft to mail fraud to check washing.

One common theme quickly emerged: Fraud is a big business in this country. Group after group gave statistics detailing how $14 billion in fraudulent bank loans were made in 2009, how consumers lost $815 million because of washed checks and how health care fraud accounted for even more: between $60 billion and $90 billion in the U.S. each year.

The check washers found that it was an easy four-minute process to remove the ink from an already-filled out check, and all one really needs is some acetone and a little help from the Internet.

“There are so many videos about it on YouTube,” said Lisa Zirkel, a student from Wichita.

The Internet, in fact, was a frequent source of help for the would-be fraudsters.

In addition to one group tailing the instructor, another purchased a “spy pen” online with a video camera hidden inside of it, and — to show how easy it was to pull off — surreptitiously videotaped other students taking an exam.

It’s a very James Bond-like device — to start recording, it just takes a click of the top of the pen. And, when detached, the top part of the pen plugs into a USB port.

The cost? A mere $25. And, yes, it writes, too.

The health care fraud group reminded the class of Robert Courtney, the Kansas City-area pharmacist who diluted cancer drugs, and of the Florida-based American Therapeutic Corporation. Company leaders were arrested in October, accused of perpetrating a $200 million fraud by falsifying records and billing Medicare for services not performed.

Mary Lacy, a student from Houston who wants to someday work for the FBI, said the accounting class was probably the most interesting one she’s taken at KU.

“The best way to learn something is to actually see how it works,” she said. “I’m just amazed at how much is out there.”

Comments

SamShaw 3 years, 4 months ago

fraud and theft? the library board and some of the city commission should be guest lecturers.

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kuprof54 3 years, 4 months ago

Did they bring in the Business School administration to teach students how to dismantle oversight, eliminate financial reporting, and dance around the truth? They have such great real world experience within their own building that they might as well take advantage of it.

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jetgirl 3 years, 4 months ago

ah ha Ha HA HA... no. After graduation, I got a financial analyst-type position in loss prevention for a local company. While I don't have fraud prevention as a job duty, my department is responsible for minimizing those opportunities.

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beeshlii 3 years, 4 months ago

@jetgirl are you commenting from a jail library?

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pizzapete 3 years, 4 months ago

These kids will be ready to get into politics upon graduation.

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toe 3 years, 4 months ago

This course content is taught daily on many blogs.

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Confrontation 3 years, 4 months ago

"Also, be aware that most banks will ask for personal information on the phone and will rarely prompt you to input secure information online."

Shouldn't this be "most banks won't ask for personal information on the phone"? Unless you're calling their line directly, then you shouldn't expect to give out personal info.

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jetgirl 3 years, 4 months ago

I've taken that class and it was fascinating how many different ways fraud is committed by people no one would suspect. My favorite part of the course was on the topic of micro-expressions (highlighted in the TV show "Lie To Me"). One group in my class filmed themselves telling lies and were able to go through the film frame-by-frame to catch those brief moments when their faces made involuntary expressions. This class ranks as my favorite of all I took at KU. Teacher Paul Mason is pretty cool too.

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