Insider Signal - 2022.1
Embezzling bookkeeper, track coach soliciting nudes, Canadian Navy loses top secret information and insider information benefits Bangladesh Minister's family
Law Firm Bookkeeper Embezzled $1.7 Million
Irene M. Scott received an 87-month sentence for embezzling $1.7 million from Shelton & Valadez, the San Antonio law firm for which she worked as an administrator. Scott, 42, used a wide array of methods over several years of criminal activity at the firm, including unauthorized purchases on the firm's credit card, checks written out in her name, and drawing on the firm's line of credit.
Analysis Highlights
Scott was responsible for preparing financial reports, paying invoices, and distributing credit cards.
As in many such insider embezzlement cases, Scott had unchecked ability to conduct financial transactions as a trusted employee.
Segregation of duties or regular audits would likely have prevented or caught this activity.
The scale of the fraud is astounding, given that the law firm has only 7 attorneys (and 22 staff overall) and has an estimated annual revenue of $4.2 million.
The magnitude of fraudulent purchases or payments stands out as exceptional.
Deeper Analysis
Scott continued her fraudulent activity after leaving the firm: she moved on to a job with Central Lighting and Energy while simultaneously receiving unemployment benefits from the Texas Workforce Commission for 18 months.
Central Lighting's background check failed to pull up negative information on Scott because she hadn't been charged at the time of hire.
This case shows the limitations of background checks, which are confined to a point in time, as opposed to continuous monitoring of the employee's activity.
Central Lighting received a letter asking about Scott's unemployment; Scott said she was a victim of fraud.
Suspicious, Central Lighting had its IT staff track Scott's online activity, which showed visits to the Texas Workforce Commission and revealed the duplicity.
The case also shows the extent to insider fraud victimizes a company beyond the direct loss:
Shelton & Valadez paid $100,000 to pursue a civil case against Scott but stand to recover less than $2,000
Staff assumed extra duties after Scott's termination, causing some employees to quit
The firm found itself liable for payments that Scott never made to bona fide contractors and service providers
Many vendors require the firm to prepay services, while others won't provide services until debts are paid off
The notoriety of the case has degraded the firm's reputation and damaged relationships with clients
Sources & Additional Information
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Track Coach Tricked Athletes Into Sending Him Nude Pics
Federal authorities have charged a college track and field coach, Steve Waithe, for a variety of offenses arising from duping female athletes into sending him nude or partially nude pictures of themselves. Waithe, 28, who had coached at Northeastern, Penn State, the University of Tennessee, and other institutions, would anonymously reach out to potential victims and ask for revealing photos, under the guise of conducting a study on the body development of female athletes.
Analysis Highlights
Waithe shielded his identity using anonymous social media accounts
He would title messages "Privacy Protector" to simulate a service that protects online privacy and reputation
Waithe would adopt female names in his approach to victims, including "Katie Janovich" and "Kathryn Svoboda."
Waithe would send victims a pitch about conducting a study on the body development of female athletes, requesting information such as height, weight, body fat percentage, and dietary habits.
He also asked the women to send pictures of themselves showing "as much skin as possible" so he could help them track their fitness progress.
About 50 victims submitted a total of more than 350 photos.
Waithe also allegedly borrowed athletes' cell phones at practices on the pretext of recording their form, instead of scrolling through their photos and sending them to himself.
Sources & Additional Information
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Canadian Navy Loses Top Secret Information
CBC News has reported that two Canadian Navy frigates lost USBs, DVDs, and a backup hard drive containing sensitive data--some of it top secret. According to the news organization, an inventory of the HMCS Fredericton "discovered numerous classified and unclassified items" missing. Two DVDs contained information on "threat emitters"--electronic devices that locate and fend off incoming missiles. A few months earlier, a classified hard drive and two USB sticks were reported missing from the HMCS Montreal.
Analysis Highlights
This case treads the line between negligence (loss of devices) and intentional theft for the purposes of espionage
The findings are alarming because the Canadian military suffered a spying scandal that broke in 2011, which uncovered that Sub-Lieutenant Jeffrey Paul Delisle passed military secrets to Russian spies
In 2013, a Navy's board of inquiry recommended more stringent security measures
The HMCS Montreal loss has been blamed on sloppy accounting techniques
The Canadian Navy has conceded that the loss of the devices has the potential to threaten national security
Sources & Additional Information
https://www.cbc.ca/news/politics/navy-classified-electronics-lost-1.6277938
https://www.nytimes.com/2021/05/22/world/russia-us-arctic-military.html
Cronies, Family Benefited from Education Minister's Alleged Tip
Government authorities in Chandpur, Bangladesh, have alleged that the country's education minister, Dipu Moni, tipped off family members and political allies to the site of a yet-to-be-announced university, allowing them to buy the land before prices rose. These beneficiaries allegedly sold the land to the government at highly inflated prices.
Analysis Highlights
In a report issued in late 2021, Chandpur authorities said that Moni's relatives, associates, and colleagues bought 62.5 acres of land in an area later designated as the site of Chandpur Science and Technology University, a public institution
Purchasers included the minister's brother, cousin, and personal assistant, among others
A local union chair, Md Selim Khan, a close associate of Moni, is alleged to be a major figure in the scheme; Khan's son and daughter also made purchases
After allegations of misdealing arose, the local administration investigated and concluded in a report that the purchases occurred just days before the government approved the university's land acquisition
Authorities said the prices increased "abnormally and intentionally"--twentyfold--once the university announced its plans
Local authorities say that the purchasers collectively earned the equivalent of about US$42 million
Moni vociferously denies the charges
Sources & Additional Information
More Insider Threat Stories - January 2022
Deliveryman Swipes, Resells Game Consoles
Tokyo police arrested a man who, instead of delivering electronic game consoles and games to customers, sold two hundred consoles and games to used-games retailers in the Akihabara district of Tokyo. The suspect had been asked by an acquaintance at a delivery company to distribute the items to customers who had already paid for them. The unnamed suspect, aged 50, purportedly sold Nintendo Switches and PlayStation 5s, netting up 5.8 million yen (about US$50,000).
Source: https://toysmatrix.com/tokyo-man-stole-200-ps5-and-nintendo-switch-consoles-then-gambled-the-money
Crafts Store Employee Gets Crafty With Receipts
Amanda Johnson, an employee at Joann Fabrics and Crafts in Sonora, California, has been arrested and charged with making fraudulent returns and pocketing the cash. Johnson is charged with stealing more than $2,000 by duplicating multiple receipts and using them to make fraudulent returns.
Source: https://www.mymotherlode.com/news/local/2287513/spd-arrests-woman-for-embezzlement.html
Pharmacist Ran Prescription Fraud Scheme
Pharmacist David “Jason” Rutland, 42, of Bolton, Mississippi, received a five-year prison sentence for defrauding insurance companies by getting distributors to refer unnecessary prescriptions and giving them kickbacks. The scheme cost insurance companies and federal health care programs more than $150 million. Rutland recruited distributors to aid in the scheme, manipulated prescriptions to generate the greatest amount of reimbursement, and waived customer copayments while recovering funds from copayer assistance programs.
Source: https://mageenews.com/pharmacist-sentenced-for-180-million-health-care-fraud-scheme
South African Bank Engineer Swindled His Employer
Xolela Masebeni, an engineer who worked for Absa Bank in Sandton, South Africa, was arrested on charges of defrauding his employer of R103 million (about US$6.6 million). He is charged with transferring the cash into six different bank accounts between September and December 2021.
Source: https://www.news24.com/fin24/companies/absa-engineer-accused-of-stealing-over-r100m-from-bank-appears-in-dock-with-lover-20220127
Construction Company Manager Built $2.2 Million Nest Egg
Donna Cook, 52, an office manager at a Tinton Falls, New Jersey, construction company, has been charged with theft, forgery, and false uttering in a scheme in which she allegedly stole more than $2.2 million from the company. Cook allegedly began the scheme in 2015 by writing unauthorized checks to herself, forging the signature of the firm's principal. Cook wrote individual checks of up to $475,000 to herself.
Source: https://www.nj.com/monmouth/2022/01/ex-office-manager-for-construction-company-stole-22m-authorities-say.html
Theater Head Bounced on Charges of Embezzlement
Kamal Bayezid has been relieved of his secretary-general post at the Bangladesh Group Theatre Federation on charges of embezzlement. Bayezid is charged with transferring funds from the BGTF’s bank account to his personal account at another financial institution. Three months earlier, the federation's finance secretary, Rafiqullah Selim, received the same fate on similar charges.
Source: https://www.newagebd.net/article/160822/bgtf-secretary-general-kamal-removed-for-fund-embezzlement
More than 178,000 Nigerian Police Firearms Go Missing
Nigeria's Centre for Anti-Corruption and Open Leadership (CACOL) has endorsed the nation's House of Representatives investigation of 178,459 police firearms that have gone missing. The investigation follows an audit report indicating that thousands of AK-47 rifles, other rifles, and pistols could not be accounted for. Officials have suggested that the disappearance is the result of corruption and mismanagement.
Source: https://dailypost.ng/2022/01/22/cacol-backs-reps-probe-of-missing-178459-police-firearms
Aviation Firm Claims Competitor Poached Its Eggheads
Insurance company QBE filed a lawsuit claiming that competitor Applied Underwriters, working with former QBE senior vice president Steven Allen, poached key aviation division employees. QBE says 13 of its employees jumped ship to join Applied Underwriters, taking along confidential information. The suit accuses Allen and a colleague of breach of contract, breach of loyalty and duty, misappropriation of confidential information, and unfair competition.
Source: https://www.insurancejournal.com/news/national/2022/01/21/650436.htm
Nurses Faked Covid Vaccinations for Anti-Vaxers
Italian police have arrested several nurses who purportedly pretended to vaccinate anti-vaxxers, then provided proof of vaccination--a so-called green pass, which allows people to use public transportation and enter bars, restaurants, and entertainment venues.. The nurses allegedly emptied their syringes into cotton gauze or a trash can before delivering the shots. Some nurses charged a fee for this service. Some nurses also allegedly faked their own shots.
Source: https://www.businessinsider.co.za/italian-nurses-faked-covid-19-shots-anti-vaxxers-police-2022-1
Banker Resigns After Publicly Flouting Covid-19 Regulations
Credit Suisse chairman António Horta-Osório resigned when it was discovered that he violated Swiss Covid-19 regulations by using a corporate aircraft to attend the Wimbledon tennis finals in July when he was supposed to be in quarantine. In the fall, the chairman allegedly flew to the Maldives for a vacation in corporate aircraft.
Source: https://www.forbes.com/sites/jackkelly/2022/01/17/credit-suisse-chairman-quits-after-breaching-covid-19-protocols--flying-to-the-wimbledon-tennis-finals-and-vacationing-in-the-maldives