Fraud Prevention and Investigation - Raymond Widders, Milan Rakic - Case Study Example

Frаud Рrеvеntiоn аnd Invеstigаtiоn 1. Fraud case involving Raymond Widders Location: Queensland, Australia Raymond Widders, aged 62, was involved in a fraud scheme of gaining a financial advantage through deception, which made him get a social security benefit overpayment of $169,390.89 (Commonwealth Director of Public Prosecutions (CPDD), 2017a). The fraud scheme entailed Raymond Widders making a claim for Centrelink benefits using two names – Raymond John Widders, which was his birth name, and Ray John Ireland, which is the name by which he was known (CPDD, 2017a). Centrelink is a programme that is run by the Australian Government and delivers a variety of social services and payments for retirees, carers, families, the unemployed, people with disabilities, parents and other special-interest groups. The key party involved in the fraud was Widders himself. Widders deliberately misrepresented his real circumstances to Centrelink in order to claim social security income support payments using the two names (CPDD, 2017a). The fraud took place over a period of nine years. Widders got the Newstart Allowance payments using his name as Widders between December 2002 and January 2005, and also from May 2006 onwards. The same person also received Disability Support Payments using the other name, Ray John Ireland, during the same period (CPDD, 2017a). CPDD (2017a) notes that the fraud committed by Widders was uncovered as follows. Centrelink launched investigations regarding Widder’s eligibility for the social support payments after receiving information from a member of the public in April 2014. Private investigators as well as the Australian Federal Police carried out a surveillance of Widders’ house at the start of 2015, and a search warrant was enforced at his home. The search revealed bank statements, correspondence and identification cards bearing the two names of Ireland and Widders. Investigators also obtained photographic cards that showed pictures of the same person but with the different names of Ireland and Widders. This evidence added to the fact that bank statements showed that the suspect had withdrawn all the pension funds paid in the name of Ireland on the same day that the payment was made. He had also made arrangements for the payment to Widders to be immediately transferred to a home loan account. These activities were suspicious in relation to the use of social support payments by any beneficiary (CPDD, 2017a). According to CPDD (2017a), the final outcome of Raymond Widders’ case was as follows. Widders was charged in court on two counts of getting a financial advantage from the Commonwealth through deception in contravention of section 134.2(1) of the Crimes Act 1914. He pleaded guilty and was sentenced to three years in jail on December 13, 2016 (CPDD, 2017a). CPDD has not indicated whether the money that had been overpaid to Widders ($169,390.89) was recovered by Centrelink after the sentencing process. 2. Milan Rakic’s fraud case Location: Queensland, Australia The fraud scheme by Milan Rakic involved the man using a fake identity, or deception, to claim welfare payments from the Australian Government through its social welfare programme known as Centrelink (CPDD, 2017b; Frost, 2015). Milan Rakic, a 70-year-old man, made claims for welfare payments using two names – his adopted name of Gordon Megson, as well as his original name as Milan Rakic. In a period of 13 years, from May 2001 to June 2014, Milan Rakic received Disability Support Pension funds in the amount of $199,186.24, which was paid to his adopted name (CPDD, 2017b; Frost, 2015). At the same time, during that period, Rakic received the Disability Support Pension payments, which were made in his original name as Milan Rakic. Rakic was the key party involved in the fraud scheme. He went to great lengths to come up with false documents, which he used to prove to the authorities that he was Gordon Megson. He even produced the falsified documents when he was challenged by the authorities. According to CPDD (2017b), the fraud committed by Milan Rakic was uncovered in 2013 following a Medicare data matching process. When suspicions emerged regarding Rakic’s identity, a search was conducted at his home. During the search, the police uncovered bank cards, banks statements, compensation details, prescriptions medication, credit cards, information about taxation, as well as Medicare cards having the name Gordon Megson. Further evidence emerged of how one of Rakic’s bank accounts had more than $400,000 in 2014 (Frost, 2015). In addition, Rakic had bought a house near Caboolture without requiring a mortgage to finance the payment, implying that he possibly had other sources of funds since the could not have afforded the house had he solely relied on the welfare payments in his name (Frost, 2015). When investigations ended, Milan Rakic was charged in court. The prosecutor described Rakic’s case using the words “the only conclusion to be drawn is that this would be a case of greed and not need” (Frost, 2015). This is because Rakic had been so meticulous in making the false claims and had even made false documents to enable him to carry out the fraudulent activities unnoticed. In addition, the fraud had been committed over such a long period – 13 years. Rakic pleaded guilty to one count of getting financial advantage through deception, which was in breach of section 134.2(1) of the Crimes Act 1914 (CPDD, 2017b; Frost, 2015). The presiding judge agreed with the prosecution’s position that Rakic’s offence was motivated by greed. This was based on the long period over which the fraud was committed and high level of sophistication that was involved in carrying out the fraud. The judge sentenced Rakic to four years imprisonment but ordered that the man be released after one year because of his health condition (CPDD, 2017b; Frost, 2015). Additionally, Rakic paid back the $199,186 that he had received illegally, along with an additional amount of about $9000 (Frost, 2015). This was after a term deposit related to Rakic was frozen and an order made for $208,486.47 to be released from the frozen account to settle the amount that he had illegally obtained from Centrelink (CPDD, 2017b). 3. The fraud case of Jason Gilby Where the crime was committed: Western Australia, Australia Jason Gilby, 34, who was an employee of a Perth accountancy company, committed a fraud involving identity theft (CPDD, 2017c). Identity theft is a type of fraud in which a person obtains the personal details of another person and uses such details to gain an advantage such as access to money (Streff, 2007). In Jason Gilby’s case, he used the identities of other people to lodge false tax documents using the client portal of the Australian Taxation Office (ATO) of his employer (CPDD, 2017c). As noted by CPDD (2017c), Gilby was a team leader for the client services section in a leading accountancy company located in Perth. In this position, which was a position of trust in regard to his employer, the ATO system and his employer’s clients, Gilby was able to have access to confidential information. From February 2013 to June 2014, he established an intricate regime by utilising five fictional entities as well as five different bank accounts to gain access to the dormant account balances of 20 entities, most of which were his employer’s ex-clients and current customers. Gilby lodged fake Business Activity Statements and channelled the resulting funds into his personal bank accounts. In the end, Gilby got a total of $339,856. He used this money to fund a lavish lifestyle that included gambling, buying drugs like cocaine and spending at high-end retail stores (CPDD, 2017c). Indeed, the desire to have a lavish lifestyle and addiction to things such as drugs and gambling are some of the incentives or pressures that make people commit fraud (Johnstone, Gramling & Rittenberg, 2016, p. 45). There is no information regarding how the fraud that was committed by Gilby was detected. However, it is noted that while undertaking his activities at the accountancy firm, Gilby had the permission to use the ATO Internet portal (CPDD, 2017c). He used this access to electronically alter the pertinent details of his firm’s clients such as banking details and postal addresses. It is by doing so that he was able to transfer funds to five fictional parties (CPDD, 2017c). Once the fraud was detected, Gilby was charged in court, found guilty and sentenced for imprisonment. The charges involved 46 counts of dishonestly getting a financial benefit in breach of section 134.2(1) of the Crimes Act 1914 (CPDD, 2017c). Gilby was also convicted in relation to one count of fraudulently influencing a public officer, which was in contravention of section 135.1(7) of the Crimes Act 1914 (CPDD, 2017c). This charge arose because when the Australian Taxation Office attempted to audit one of Gilby’s falsified Business Activity Statements, Gilby provided fake documents so as not to be detected (CPDD, 2017c). The judge handling the case handed Gilby a prison sentence totalling four and a half years with a non-parole duration of three years. It is not indicated whether the money that Gilby had obtained illegally was recovered. 4. Joash​ Boyton​’s online scam Location: Melbourne, Victoria, Australia At the age of 19, Joash Boyton started engaging in a series of deceptions that involved using stolen credit card numbers to purchase household goods and airline tickets. Boyton would then sell the items that he bought using the stolen funds on auction websites (Cooper, 2015). Joash Boyton was the main perpetrator of the fraud, although at some point he recruited some people to help him sell the items that he was dealing in. It also appears that he might have collaborated with some people to steal credit card information, although this is not clear from the information that is available. Boyton would steal people’s credit card details and use them to sell cheap online tickets on websites such as Gumtree (“Man found guilty of Internet scams”, 2016). Some of the “cheap flights” that he sold were for Qantas Airways (“‘Remorseful’ Melbourne credit card fraudster”, 2016). Another of Boyton’s scams involved the purchase and selling of white goods (household items such as washing machines, refrigerators, air conditioners and many others) on websites like Ebay (“Man found guilty of Internet scams”, 2016). The amount of money that Boyton obtained from the online fraud activities was estimated to be more than $100,000 (“‘Remorseful’ Melbourne credit card fraudster”, 2016). However, it is also reported that approximately half of this amount was to be refunded through a compensation order to 55 people who made complaints regarding the transactions (Cooper, 2015). Boyton is also said to have made arrangements to reimburse the remaining $50,067 that was owed to the victims of the fraud (Cooper, 2015). Although it is not very clear how Boyton’s fraud scheme was uncovered, it can be argued that the crimes were detected when the victims who had been conned lodged their complaints or when the affected organisations such as airlines refused to recognise the cheap flights that some victims of the fraud had bought. For instance, it is reported that one of the victims of the scam was a woman with cerebral palsy who had purchased a cheap airline ticket and she realised that she had been scammed when Qantas and travel insurance agencies refused to organise any more flights as a result of the scam (Cooper, 2015). Investigations revealed that Boyton had information relating to more than 160,000 credit cards, but it was not where he got the card numbers (Cooper, 2015). Based on the evidence that was collected, Boyton was arraigned in court and charged with engaging in several credit card and Internet fraud scams (“Man found guilty of Internet scams”, 2016). He pleaded quality to 34 charges relating to online fraud and was initially sentenced to a prison term of four years and nine months in September 2015. However, Boyton appealed the sentence and indicated that he had reimbursed about $50,000 to the victims of the fraud as noted above. The Supreme Court of Victoria agreed that the initial sentence was notably excessive and argued that Boyton had shown that he could change for the better (“Man found guilty of Internet scams”, 2016). Thus, the sentence was reduced to a one year prison term and a community correction order of three years. 5. Phishing scam by Olajide Onikoyi Location of Onikoyi: Manchester, United Kingdom Olajide Onikoyi, a Nigerian aged 29, was part of a group of cyber criminals who targeted students in the United Kingdom by sending them emails that requested the students to update the information about their student loan accounts through a link to a bogus website (“Computer fraudster who stole £393,000 from students”, 2013). This was an example of a phishing scam. A phishing scam involves tricking an individual or individuals into disclosing their personal details such as passwords, bank account details or credit card information (Scamwatch, n.d.). The scammer will unexpectedly contact the person who is targeted and create the impression that he or she is from a genuine organisation that the targeted person may or may have not interacted with (Scamwatch, n.d.). The scammer will then ask the targeted person to “confirm” some information, and in turn get an opportunity to access the required information. This is exactly what Olajide Onikoyi and his team did. When the targeted students accessed the site of the link that they were provided with, Onikoyi was able to get an unlawful access to their bank accounts and obtain huge amounts of money. In total, Onikoyi and the other fraudsters obtained £393,000 from the acts of fraud that involved 238 victims. One individual lost £19,000 in the scam (“Computer fraudster who stole £393,000 from students”, 2013; “Man jailed for phishing scam”, 2013). The fraudulent activities by Onikoyi were highlighted when the affected students reported losing their money. Investigations involved seizing computers that were suspected to have been used in committing the crimes from Manchester and London in December 2012 (“Computer fraudster who stole £393,000 from students”, 2013). Onikoyi was arrested a day after the seizure of the computers. An analysis of chat logs in the computers that had been seized from the suspects revealed that Onikoyi has been working in collaboration with other criminals from the UK, Lithuania and Russia to compromise targeted computers and the related bank information (“Computer fraudster who stole £393,000 from students”, 2013; “Man jailed for phishing scam”, 2013). Onikoyi was charged in court, where he pleaded guilty to a plan to defraud financial institutions in the United Kingdom of £393,000 as well as money laundering. He was sentenced to three-year prison term for conspiracy to defraud and another jail term of nine months for money laundering – with the two sentences running consecutively (“Computer fraudster who stole £393,000 from students”, 2013; “Man jailed for phishing scam”, 2013). Four other people who were part of Onikoyi’s group and based in Bolton, Manchester and London were also arrested, charged and imprisoned over the same crimes (“Computer fraudster who stole £393,000 from students”, 2013; “Man jailed for phishing scam”, 2013). There is no information on whether the money that had been gained unlawfully by Onikoyi and his group of fraudsters was recovered or not. References Commonwealth Director of Public Prosecutions (CPDD). (2017a). Raymond Widders. Retrieved from https://www.cdpp.gov.au/case-reports/raymond-widders Computer fraudster who stole £393,000 from students using bogus loans website is jailed (2013, December 14). Evening Standard. Retrieved from http://www.standard.co.uk/news/crime/computer-fraudster-who-stole-393000-from-students-using-bogus-loans-website-is-jailed-9004860.html Cooper, C. (2015, September 22). Man who duped people in online scams jailed for almost five years. The Age. Retrieved from http://www.theage.com.au/victoria/man-who-duped-people-in-online-scams-jailed-for-almost-five-years-20150922-gjsaqc.html CPDD. (2017b). Milan Rakic. Retrieved from https://www.cdpp.gov.au/case-reports/milan-rakic CPDD. (2017c). Jason Gilby. Retrieved from https://www.cdpp.gov.au/case-reports/jason-gilby Frost, P. (2015, September 10). Centrelink fraudster jailed for claiming $200k in fake name. Daily Mercury. Retrieved from https://www.dailymercury.com.au/news/centrelink-fraudster-jailed-claiming-200k-fake-nam/2770268/ Johnstone, K., Gramling, A., & Rittenberg, L. E. (2016). Auditing: A risk based-approach to conducting a quality audit (10th ed.). Boston, MA: Cengage Learning. Man found guilty of internet scams, credit card fraud has sentence cut on appeal (2016. February 22). ABC News. Retrieved from http://www.abc.net.au/news/2016-02-22/online-fraudster-has-sentenced-reduced-on-appeal/7190914 Man jailed for phishing scam that targeted UK students to steal £1.5m (2013, December 14). The Guardian. Retrieved from https://www.theguardian.com/uk-news/2013/dec/14/man-jailed-phishing-scam-uk-students-olajide-onikoyi 'Remorseful' Melbourne credit card fraudster successfully appeals against sentence (2016. February 22). The Guardian. Retrieved from https://www.theguardian.com/australia-news/2016/feb/22/remorseful-melbourne-credit-card-fraudster-successfully-appeals-sentence Scamwatch. (n.d.). Phishing. Retrieved from https://www.scamwatch.gov.au/types-of-scams/unexpected-money Streff, K. (2007). Information security in banking. In H.R. Rao, M. Gupta & S. J. Upadhyaya (Eds.), Managing information assurance in financial services (pp. 59-91). Hershey, PA: IGI Publishing. Read More