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This Company Grew Their Fraud and Compliance Unit 500% Last Year 🔥
Frank McKenna
May 02, 2023
Hello Fraud Fighters from FrankonFraud,
Every week I hear some nuggets about fraud that think are telling about where we are heading. This week here are some of the things I heard;
SAR Filings hit the highest point ever in March of 2023 (351,088 filings). Thank you, Jim Richards.
Wire Fraud attempts are up 18% since the Silicon Valley Bank collapse, according to CertifID.
Elder fraud across the country is up 84% from last year, according to the FBI - $3.1 billion in 2022 compared to $1.7 billion in 2021.
Card compromise is up 368% since COVID ended, according to FICO.
Keeping up with all of these stats gets hard, but they are pretty telling that fraud is still a major issue - particularly as the economy tightens.
Here are some of the more interesting fraud stories of the week.
This Company Hired An Army Of 700 In Their Fraud And Compliance Units
Tigran Gambaryan a former IRS Special Agent, took over the job as Head of Fraud in Compliance for Binance about 18 months ago.
He wasted no time, increasing the size of his team by 500% last year. His fraud and compliance team now makes up nearly 10% of the company. And that team is responding to 1,300 Law Enforcement requests a week - over 41,000 since he took the job.
Speaking at the Consensus 2023 crypto and blockchain conference in Austin, Texas, last week, he provided a glimpse into how he and the team are taking on fraudsters toe to toe - handling a massive amount of fraud requests and investigations.
Watch This Car Dealer Shred A Fraudster And His Fake Documents
This car dealer is fed up with a fraudster that tried to pass a fake driver’s license and document to get a car.
I am not sure what is going on with the guy’s hair in this clip, but it looks like it could be a hairpiece – perhaps part of his disguise.
In any case, the dealer confiscates the forged docs and agrees to shred them if the guy leaves the dealership without trying to press the issue further.
327 People Were Arrested 6,000 Times And Accounted For A Third Of All Shoplifting Arrests in New York
This isn’t a story about fraud. It is a story about how a tiny number of people can represent an inordinate amount of crime - including fraud. And how, when left unchecked, can cause crime to skyrocket.
In New York, statistics reveal a startling reality: A relative handful of shoplifters are responsible for an outsize percentage of retail crime.
Nearly a third of all shoplifting arrests in New York City last year involved just 327 people, the police said. Collectively, they were arrested and rearrested more than 6,000 times.
The victims are also concentrated: 18 department stores and seven chain pharmacy locations accounted for 20 percent of all complaints, according to police.
Over the past five years, shoplifting complaints nearly doubled in New York, peaking at nearly 64,000 last year, police data shows. Only about 34 percent resulted in arrests last year, compared with 60 percent in 2017.
The lesson in this story is that if we want to win the war against the growing army of fraudsters and scammers, we need to go beyond just detection and really focus on bringing some of these fraudsters to justice - particularly repeated offenders that cause the most losses.
FBI Request $63 Million In New Funding To Focus on CyberSecurity Citing International Threat
FBI Director Christopher Wray presented to Congress asking for $63 million in new funding to fight cybercrime threats which he said are more pervasive, hit a wider variety of victims, and carry the potential for greater damage than ever before.
He said that the key to the Chinese government’s strategy to surpass as a superpower is cybercrime.
“To give you a sense of what we’re up against”. Wray said, “if each one of the FBI’s cyber agents and intel analysts focused exclusively on the China threat, Chinese hackers would still outnumber FBI Cyber personnel by at least 50 to 1”.
Cyber thieves target new victims with more sophisticated card-skimming devices.
According to FICO, the number of compromised cards jumped 368% last year compared to the year before.
"I think that we're seeing a burst of skimming activity coming out of the pandemic," said T.J. Horan, vice president of product management at FICO. "During the pandemic, there were a lot less point-of-sale transactions. Many of us were staying at home and not doing the normal kinds of things that we do. And so, we've suddenly seen a big increase. The other thing is fraudsters always are looking for weak links and looking for opportunities."
Hiding $17 Million In Dirty Apple Money Wasn’t Easy For This Internal Fraudster.
You probably saw the news about the incredibly large internal fraud case involving Apple employee Dhirendra Prasad.
He siphoned off $17 million over seven years from Tim Cook and Co through kickbacks, stealing parts, inflating invoices, and fraudulently charging Apple for goods that were never delivered.
He was ordered to repay Apple and the IRS $19 million in restitution, so they stand to get their money back. If he pays, that is.
As part of his elaborate scheme, he had to create shell companies to issue fake invoices to his affiliates as well as to hide money from the IRS. Prasad purchased five properties and had nine separate living trusts, annuities, and insurance policies all of which were confiscated as part of the restitution payments.
It wasn’t easy for him to hide his fraud or the $17 million in dirty Apple money he had to hide in the process.
New Analysis Shows Synthetic Identities Rarely Do This One Thing
The Natural Intelligence Fraud Analyst Team at Point Predictive uncovered some interesting insights into the behavior of synthetic identities last week.
The team analyzed the public records of several hundred confirmed synthetic identities that had well-established credit profiles and submitted fraudulent applications to the network.
While about 11% of the fake identities could be linked back to phone ownership with the fake identity name, and about 13% could even be tied to driver’s licenses registered in the state, there is one thing the synthetic identities never bothered to do - register to vote.
Not a single synthetic identity was tied to voter registration which points to the fact that voter registration could be yet another indicator of validating the validity of identity tied to social security numbers.
The analysis conducted by the fraud team is part of a larger 2023 Auto Lending Fraud Trends report the company will release in the next several weeks.
Ai-Generated News Sites Proliferate, Stoking Fear Of How Tech May Supercharge Fraud
Do you realize the sheer amount of low-quality rubbish that is proliferating online thanks to ChatGPT and other generative Ai software?
This week NewsGuard found dozens of news websites generated by AI chatbots proliferating online. These are low-quality websites run by anonymous sources churn-out posts to bring in advertising and promote fraud and misinformation.
The agency published a list of 49 sites that appear to be completely Ai generated.
And this might just be the beginning; we can expect to see more rubbish-generated Ai websites designed to fool consumers and phish their details very soon!
Fraud Fighter Matt Beardsley Is My Go-To Guru On Synthetics, Bust Out, Fake Tradelines, and Credit Repair Fraud
Do you know Matt Beardsley? He is the Senior Manager of The Consumer Underwriting High-Risk Unit at PenFed.
And when it comes to all things shady credit repair, credit washing, synthetic identity, and bust-out, he is one of the most amazing fraud fighters in the industry.
I call him a fraud guru because when I have a scheme, I can’t quite figure out he always has the answer.
Over the years, Matt has helped me crystallize ongoing schemes countless times like;
Identifying multiple fake tradelines and fraudulent data furnishers that were submitting totally bogus items to credit reports for synthetic identities
Pinpointing highly active credit repair companies that are associated with questionable schemes like credit washing and CPN selling.
Imparting his knowledge of Phantom Auto Loan schemes involving fictitious vehicles, buyers sellers, and dealers.
Resolving bust out, first party, and systematic loan stacking.
The guy is a master of his craft and one of the most knowledgeable and friendly guys in the industry. Thanks Matt for all you do!
Who Is Headed To The Fraud Fight Club In New York City Next Week? 🙋
If you’re not, you might want to check it out here – Fraud Fight Club.
The event brought to you by About Fraud will take place alongside Fintech Nexus USA, and it’s more than a conference; it’s a club. Best of all, it is built for fraud fighters by fraud fighters.
You’ll catch Brett Johnson, Mary Ann Miller, PJ Rohall, Ian Mitchell, Ronald Praetsch, Arthi Makhija, Erin Vertin, Sheryl Pinto, Jeffrey Dant, Alexander Hall, Sophia Carlton, Brian Davis, Gabriel Friedlander, and hundreds of other fraud fighters all in one place.
Thanks for reading my weekly newsletter. I hope you all have an amazing and positive fraud-fighting week.