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2016 September Lucheon

2016-september-luncheon

Cybersecurity consultant Chris Duque lends his expertise to the Honolulu Prosecutor’s Office following a one-year grant as an investigator in its white collar crime unit in 2013. These days, he lends his expertise on a wide range of issues, typically on cases involving any device that can access the Internet, such as cell phones.

The anonymity afforded by such devices should cause people to be more vigilant in verifying who they are sharing information with. However, he shared a case in which a CEO used a single email account for business, personal matters, shopping, and company financials using Quicken. Worse yet, he had a simple password that was easy to hack, let’s say “hawaii123”. Within one day, a single hacking incident caused $80,000 from sales to be diverted to the hacker’s bank account in the Netherlands. The hack was discovered when the CFO was unable to access his account, and learned that the hacker had changed the password.

In another case, a retired shipyard worker was referred to a financial planner by a friend. The financial adviser convinced him to make several wire transfers, incurring service fees and subsequently falling behind on their mortgage. His friend dissuaded him from calling the police; he later found out the financial planner and the friend was one and the same.

The biggest risk in social media is oversharing. LinkedIn does not have dual authentication, so anyone can pose as a fake company, and claim that it is hiring in order to obtain personal information from resumes.

Cybersecurity tips from Chris Duque:
 For passwords:
o use 5-8 characters
o use foreign language or pidgin phrases, combining words and numbers
o have 5-7 “core” passwords, e.g. “p1l1k1a*”
o add a prefix or suffix by website, e.g. “p1l1k1a*fb” for Facebook account
 Separate business email accounts from personal emails and other purposes
 To battle fake profiles, use dual authentication to verify identities of message sends, e.g. call or contact friends outside of social media.

 

2016 July Luncheon

2016 July Luncheon PhotoU.S. Marshals are responsible for the protection of the federal judiciary and conduct special missions during security crisis events, and national emergencies. The U.S. Marshal Service is the premier agency focused on fugitive apprehension, and coordinate Asset Forfeiture-Equitable Sharing Programs focused on seizing criminal enterprises and reinvesting these proceeds to support local and state law enforcement agencies in enhanced training, equipment and personnel costs.

Gervin Miyamoto was nominated by President Barack Obama on January 20, 2010 to serve as the (19th) District of Hawaii, United States Marshal. U.S. Senator Daniel Inouye and U.S. Senator Daniel Akaka selected Marshal Miyamoto based on 45 years of combined military and civilian law enforcement experience. He served 25 years with the Honolulu Police Department and served in 10 different elite HPD assignments. He shared news clips of past Hawaii Fugitive Task Force Cases, how this “public school guy” who attended school to play football, run track and baseball, with below average grades was able to achieve his prestigious position.

Special Agent Marcus Ivey of the Secret Service discussed the agency’s role in financial fraud investigations, in line with its original 1865 mandate to suppress counterfeiting of U.S. currency and protect the integrity of the nation’s financial payment systems. In 2001, the USA Patriot Act created a nationwide network of Electronic Crimes Task Forces to provide support and resources to field investigations meeting specific criteria: significant economic or community impacts; or use of schemes involving new technology.

 

2016 May Luncheon

ACFE Newsletter July-Aug 2016.pdf - Adobe Acrobat Pro

Addie Lui, AVP and Information Security Officer at Hawaii National Bank discussed the latest in Electronic Scams and Fraud Trends, such as the most used tactics by hackers, which include the following:

  • Phishing is a type of scam that often uses email messages that appear to be from legitimate sources, in order to collect money, passwords, account numbers or other non-public information from unsuspecting individuals
  • Other forms of social engineering include calls apparently coming from the IT staff to allow remote control into your computer, USB drive in the parking lot marked “company salaries” or a visit from a utility company such as Hawaiian Tel or HECO to perform “maintenance” or fake social media profiles as ploys to install malware.
  • Exploitation of weaknesses in IT systems, i.e. old fashioned hacking

Examples of these attacks include:

  • CEO/Executive impersonation – using information gained from LinkedIn or other social media sites, contact staff via email and request confidential information or electronic transfer of funds
  • W-2 scheme – impersonation of payroll company or company officer requesting HR staff for copies of W-2’s which can be used for ID theft and/or filing false tax returns
  • Ransomware – tricking a user into clicking on links to install ransomware, which encrypts files and locks it, holding them “hostage” until you pay a fee for an encryption key.

Companies such as health care firms, law firms and CPA firms are particularly vulnerable.

2016 March Luncheon

ACFE Newsletter May-June 2016 (2)

Our luncheon featured speakers from the FBI, who discussed their recent fraud investigations:

A $26 million Ponzi scheme called “The Parking Lot” perpetrated by former Maui residents George Lindell and his daughter Holly Hoaeae associated with their mortgage and insurance business. In connection with the operation of their business “The Mortgage Store,” they issued promissory notes promising to pay a guaranteed return of 7 percent.

Through radio ads, magazines and a weekly radio show, they urged potential investors to attend weekly workshops where they taught seminars on how to use the equity in their homes for investment purposes. Lindell and Hoaeae would then utilize their status as mortgage brokers to refinance investor residences for this purpose. “The Parking Lot” lost a net amount of $8.9 million. They used the funds to support luxurious lifestyles such as a $3.5 million home, trips, cars and extensive credit card debt.

  • Jennifer McTigue, Marc Melton and Sakara Blackwell were involved in a mortgage fraud scheme in which they created false bank documents that made it appear that properties were free of their mortgages, when in fact they were facing foreclosure. The false documents were filed with the state Bureau of Conveyances to create a public record showing no mortgage and a clear title. These properties were then sold to buyers who were unaware of the mortgages, and thus subject to foreclosure. According to their indictment, the scheme had been running since 2011 before they were caught in 2014. They fraudulently obtained releases of over $4.5 million in mortgages and other official liens against those properties. Sales resulted in the trio making over $3.3 million. Blackwell was a real estate brokers and McTigue presented herself online as a financial strategist and real estate investor.

September 2015 Seminar and Luncheon

Allan Bachman crop1 Sept 2015 seminarThanks to all who joined us for our first day-long seminar, offering 8 hours of CPE!
The first session, “Hidden in Plain Sight: Investigating on the Internet” was presented by Allan Bachman, ACFE Education Manager. He provided a virtual tool box of websites to help fraud examiners find people across social media sites, government websites, along with real-time demonstrations of how to use the sites in real time.

State Rep. Isaac Choy discussed Professional Ethics, encouraging participants to review the ACFE Code of Ethics and how it could apply to day-to-day situations fraud examiners could face.

Jason Pa from the Department of Homeland Security, and one of our most popular speakers, shared his experiences through his “Update on Money Laundering and Other Crimes in Hawaii”. As he prepares to retire at the end of this year, he reflected that the war on drugs continues, and advised our members to stay alert for the sake of their families, friends and the larger community.

He discussed the need to provide control and oversight over the upcoming medical marijuana dispensaries, which are tempting targets for drug dealers. He warned our members to be aware of state and federal regulations associated with the dispensaries, before engaging in business dealings with potentially criminal investors looking to lend legitimacy to their operations.

July 2015 Luncheon

ACFE 7-19-15 speaker

We were honored to have as our July luncheon speaker John Madinger, author of the book, Money Laundering: A Guide for Criminal Investigators, now in its third edition and available on the ACFE website. At our luncheon, he discussed the Short History of Money Laundering, covered by one of the chapters in his book.

In total, this book provides a clear understanding of money laundering practices and explains the investigative and legislative processes that are essential in detecting and circumventing this illegal and ultimately dangerous activity. After a 36-year career in law enforcement where he developed and presented money laundering training in the United States, Europe, Asia, Africa, and the Caribbean, John is now an anti-money laundering consultant for the Department of Justice, developing AML and counter terrorism financing programs, mostly in the Middle East and North Africa.

March 2015 Luncheon

ACFE 3-19-15 compressedOur speakers were from the Office of the Securities Commissioner, the “cops on the beat” for securities fraud, the only state office that enforces Hawaii Securities Laws (HRS Chapter 485A) in the state. Their cases come from formal written complaints from investors or the public, anonymous tips from their SCAM Hotline: 58-SCAMS (587-2267) or 1-877-HI SCAMS (1-877-447-2267)

Common threats investors face in Hawaii are:  Ponzi schemes, affinity fraud, unregistered individuals selling securities, unregistered investment products, variable annuity sales practices, and sales pitches

In addition to various case studies, our speakers discussed a case in which a fraudster was identified by tracking his daughter’s social media activity, proving that anyone can use the Internet to investigate fraud. Using posts on such sites as Facebook and Instagram, they were able to put a face to the name of the suspect on paper.  In addition, they extrapolate data onto Google maps and a scheduled garage sale at his home to pinpoint a time and place where he could be apprehended. One caveat to using social media as an investigative tool is to make sure your own identity is protected, so as not to prematurely alert someone that they are being watched by someone from your organization.

In addition to investigations, the agency also has an Investor Education Program, providing free investor information and educational presentations. For more information, check out their website at http://cca.hawaii.gov/sec/

 

January 2015 Luncheon

ACFE Jan 2015 luncheon Bruce Kim cropBruce Kim, Executive Director of the Office of Consumer Protection at the State of Hawaii Dept. of Commerce and Consumer Affairs, gave us an overview of the office and its responsibilities under the Hawaii Revised Statutes.

The OCP is consumer counsel for the State of Hawaii and is responsible for investigating and prosecuting allegations of unfair and deceptive trade practices in consumer transactions. OCP also promotes consumer awareness about important consumer protection issues through its programs, media releases and educational materials.

OCP enforces Hawaii’s unfair and deceptive practices laws over a wide range of commercial activities, from payday lenders, unaccredited degree granting educational institutes and mortgage failure rescue scams.

For OCP investigations, showing an entity’s capacity for deception is sufficient to issue a violation; intent or actual deceptions is not required – negligence is enough. Penalties can range from $500 to $10,000, with enhanced penalties against elder abuse. The OCP partners with other states on issues such as a lawsuit against T-Mobile for allowing third-party vendors to cram charges onto consumers’ bills.

Internet violations that cross state boundaries can result in joint enforcement action, as in the case of a Miami debt adjusting firm that contacted a Hawaii consumer online who was behind on their payday loans and accessed their bank account. In this case, they went after the payment processors who were charging fees and successfully obtained a judgment against them. Hawai‘i is at increased risk for mortgage failure rescue fraud due to the higher percentage of those who fall behind payments by more than 90 days. This is reported publicly in the Bureau of Conveyances Foreclosure Filings at Circuit Court, which fraudsters use a list of potential victims.

OCP also operates the Hawaii Residential Landlord-Tenant hotline, a free service that offers information to the general public about the Landlord-Tenant Code. Callers can access the Hotline by calling (808) 586-2634 or by visiting any of the OCP offices between 8 a.m. to noon.

Also, check out OCP’s Facebook page at https://www.facebook.com/HIConsumerProtection

November 2014 Luncheon

November 2014 luncheon crop
Lorie K. Sides, Brand Integrity Service Specialist from the Better Business Bureau, provides consumer education, conducts public outreach presentations to the Military, Community Groups and Senior Citizens, and assists with dispute resolution, investigation and advertising reviews. During our November luncheon, she discussed tips on Outsmarting Investment Fraud from the Financial Industry Regulatory Authority (FINRA). She reminded us to help protect our family and friends and prevent fraud by letting them know how investment fraudsters operate and by reporting suspicious sales pitches and scams. Some common tactics include the following:

  • Phantom Riches – dangling the prospect of wealth, enticing you with something you want but can’t have, e.g. “This investment is guaranteed to produce $6,800 a month in income.”
  • Source Credibility – trying to build credibility by claiming to be with a reputable firm, or special credentials or experience, e.g. Senior Vice President of XYZ firm.
  • Reciprocity – offering to do a small favor in return for a big favor e.g. “I’ll give you a break on my commission if you buy now – half off.”
  • Scarcity – creating a false sense of urgency by claiming limited supply e.g. “There are only two units left, so I’d sign today if I were you.”

Legitimate marketers use the same tactics, except the deals they offer are legitimate, so it pays to take the time to stop and think before making a decision. Here are two ways to respond:

  • End the conversation – Practice saying no, or simply telling the person, “Sorry, I’m not interested. Thank you.”
  • Ask your own questions – ask if the person and the firm are registered with FINRA, the Securities and Exchange Commission, or a state securities regulator, and ask them to name which one. Verify answers by checking the seller’s background at www.SaveandInvest.org or check out the firm’s Better Business Bureau Review at www.bbb.org/search.
  • Talk to someone first – Even if the seller and the investment are registered, it’s always a good idea to discuss these sorts of decisions with family or a trusted financial professional.

For more information, check out these resources:

Before You Invest with … If A Problem Occurs …
  • A Broker or Firm www.finra.org/brokercheck
    (800) 289‐9999
     
  • A Investment Adviser SEC Investment Advisor Public Disclosure Database
    www.adviserinfo.sec.gov
     
  • A Broker‐Dealer, Investment Adviser or Investment North American Securities Administrators Association
    www.nasaa.org
    (202)737‐0900
     
  • An Insurance Agent National Association of Insurance Commissioners
    www.naic.org
    (866)470‐6242
     
  • An Investment SEC’s EDGAR Database
    www.sec.gov/edgar.shtml
     
  • Any business that wants your money
    www.bbb.org
     
  • FINRA Complaints and Tips www.finra.org/complaint
    www.finra.org/fileatip
     
  • SEC Office of Investor Education and Advocacy
    www.sec.gov/complaint.shtml
    (800)SEC‐0330
     
  • State Securities Regulator North American Securities Administrators Association
    www.nasaa.org
    (202)737‐0900
     
  • Better Business Bureau
    www.bbb.org/smartinvesting
     

October 2014 Luncheon

 

Luncheon speaker  Brian Shaughnessy, with ACFE Board Member and Treasurer Kenny Stanley

Luncheon speaker
Brian Shaughnessy, with ACFE Board Member and Treasurer Kenny Stanley

U.S. Postal Inspector Brian Shaughnessy has investigated some of the most noteworthy financial fraud cases in Hawaii over the past seven years. In 2010, he was a finalist for the prestigious Citizenship Award by the City & County of Honolulu for his work in combating identity theft and financial crimes.

Inspector Shaughnessy discussed some of the cases that have led to the successful prosecution of numerous defendants for felony offenses of forgery, theft, identity theft, credit card fraud, and bank fraud. He also discussed some of the challenges law enforcement faces in today’s digital era of financial fraud. Some ongoing issues included the following:

• Check kiting is still a problem in Hawaii, both with stolen and worthless checks being uttered. While fraud involving personal checks have declined slightly in recent years, forgeries involving stolen & altered business checks continue to be a problem. Slow reporting by victim businesses can hinder these investigations.
• Check fraud schemes involving online banking: A suspect in Hawaii opens up numerous online bank accounts with mainland banks, has checks mailed to Hawaii, and then uses the checks issued by those banks to commit check kiting at local banks here.
Money laundering investigations: Postal Money Orders are often the number one choice for drug trafficking organizations to get dirty money back into the U.S. banking system.
• Increase in ACH fraud & corporate account takeovers: $39 trillion went through ACH network in 2013. Criminals like ACH fraud due to the anonymity it provides. Smaller financial institutions and mid-size businesses are being targeted because they are perceived by criminals as more likely to have insufficient controls.
• Synthetic Identity Fraud: Thieves combine real and fake personal identifying information to create new credit profiles, submitting fraud applications with one financial institution after another until credit accounts are approved. This often creates a fragmented file attached to victim’s main credit file that still negatively affects their credit report, but is typically impervious to fraud alerts & credit freezes. It’s the worst case scenario for both person victim and financial institution victim. This scheme is causing millions of dollars in losses on the mainland.
• Operation Plastic Surgery: Postal Inspectors and Secret Service agents in Charlotte & Florida recently took down operators of website, www.fakeplastic.net that was selling counterfeit credit cards. Suspects only accepted payments from other co-conspirators in Bitcoins.
• Operation Rapid Refund: Large-scale stolen identity tax refund scheme that has resulted in more than $5 billion in losses to U.S. Government. Case highlights importance of protecting one’s Social Security Number more than other personal identifying information.
• Elder Abuse continues to be major problem in Hawaii – investigative efforts in these cases are being led by Honolulu Police Department’s Financial Crimes Detail & Elder Abuse Justice Squad at City Prosecutor’s Office. Recent elder abuse cases range from incidents in which the suspect and victim are known to each other (such as family member or caregiver), to cases where the victim receives a fraudulent sweepstakes notice in the mail. In the latter scheme, the victim in Hawaii often mails cash or Postal Money Orders to a middle man on the mainland, who then wires the stolen money to perpetrators outside the U.S., commonly to Jamaica.