Criminal Tendencies

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crimecannetyoumillionsof pounds
Computerised
bankwasa lrontandthe manwhohadset it up was
wantedby the policein HongKong.The Swissbank
wasgenuine,
butthetwo HongKongcompanies
were
also{ronts.
Themanbehindthemhadalreadybeeninvolved
in a scamwhichhadledto thecollapse
of a Malaysian
institution
andwasknownto havelinkswithorganised
andintheFarEast.
area,and set up a fraudspecifically
to helpgarage crimein NorthAmerica
invoices,
hegave
Fortunately,
oncetheauthorities
hadbeenalerted
owners.
Co-ordinating
alltherelevant
the con menwerearrested,
thegarages
a discount
for himsel{
to be they movedquickly:
lhe
andananged
paida commission.
fee was recovered
Thesum involved
was miniscule, advance
andfurthercriminal
conwereuncovered.
no one
2.5 penceper gallon,but it soon mountedup to nections
Justas importantly,
t26,000.Thecompany
oneof the
onlycaughton whenhe went lostface,butthiscouldeasilyhavebecome
fraudsin history.
successful
bankcomputer
biggest
AndrewBarontooka lookthroughthe recordsto discover
sentence.
crimeswereperpetrated...
howsomefamous
of computer
or 20 yearsandmorethespectre
timeandtimeagainby
fraudhasbeenrarsed
A widely-held
beliefis thatreported
themedia.
crimeis onlythetip oJa verylargeiceberg,
computer
withmostcasesgoingunreported.
Expressoften receivesphone calls from bank
claiming
thatoneoI the BigFivehasbeen
employees
thelactlorfear
butit won'tpublicise
stripped
ol millions
customers.
of panicking
fraudis
Thereis alsoa beliefthatmuchcomputer
no one
because
crime;it goesunreported
a victimless
noticesit, a bit likethe drunkdriverwhogetshome
despite
beingthreetimesoverthelegallimit.
sa{ely
or
Defining
computer
crimeas 'the manipulation
majority
of
theoverwhelming
of a computer',
corruption
crimesinvolvedare input or outputfrauds,The
thefraudswouldhappen
anymachines
areincidental,
way.Wevisitedthe Cityof LondonPolicewhotoldus
invading
mainframes
andstealof hackers
theproblem
a myth.Inthis
ingvastsumsof money
or datais largely
doessousually
astheresult
lield,crimewhereit occurs
ontheinsidecolthiefor someone
o{eitheranin-house
withanexternal
buyerorsupplier.
laborating
crimeslhatdo happenin
Of the computer-related
- areprettymundane.
In
most- whendetected
Britain
therehavebeensomequitespectheStateshowever
a little
tacularfrauds.So we decidedto undertake
of ourown- herearesomeof the more
investigation
caseswe'veencountered.
colourful
CORPORATEFRAUD
#rcrfrrauds{*"
ips{{tadsd
{r It'sLARGEST
onethingto knowyourcustomers,
butwheneverytheChairman
of theBoardisonthetake,
one,including
per {{Nf disrrswnt.frsr
tw;r,s
andbalances
don'tcountformuch.Thebiggest
checks
fraudin history
started
in themid-60s
without
computer
theaidof a computer,
butbythetimethescandal
broke
in 1973,thewebof deceithadbeencastsowidethatil
required
a mainJrame
to keeptrackof all the dodgy
into it, whlch includedover
dealingsincorporated
policies.
fakeinsurance
60,000
Thisbecameknownas the greatEquityFunding
fraud.The EquityCorporation
wasoneof
of America
wasbased
thehotteststocksonWallStreet;itssuccess
in bothmutualfundsand
on thetheorythatby dealing
policies
it couldmakebothformsof investinsurance
menthighly
attractive.
He
Theideawasthatcustomers
wouldinvestin the
on holiday
andthepricescalesreverted
to normal.
prosecuted
prison mutual
fundandthecompany
wouldpaythecustomer's
wassacked,
andgivena four-month
lile insurance
out of this,recording
the payment
sentence.
as a
Evenmoreenterprising
was the clerkwith five loan,thusfreeingcapitalwhichcouldbe usedelseyears'service
who,overa periodof six months,
made where.In 1969,Chairmanof the Board Stanley
programme
beganan aggressrve
of corpooffwitht47,000.Heusedthesystem
to setupfictitious Goldblum
andacouisition.
Thisinflated
companies
completewith letterheadings.Invoices rateexoansion
theshare
SALAMI ZAPPING
priceand Goldblum
and friendswereableto unload
in anAmerican
mail-order
com- authorised
byhimwenlto special
holding
accounts.
In 1985,a programmer
panycreateda salesman
To capit he included
for company
stockat a tidyprofit.
and gave him the name
a two percentdiscount
getssomething
payment.
nobody
fornothing,
lt is notknownif thejudgegavehima
Ofcourse,
and
by rounding prompt
Zwana.Zwanaearnedhis commission
was increasingly
fundedby usingthe
lromothersalesmen
the discount
on hjs sentence,
andtransferring
but he was well and truly the expahsion
downentries
'deadsouls',
bogusrecords
which
nicked.
computer
to generate
account.
oddcentsto hisfictitious
years
A wholedeDartment
wassoeweresoldto re-insurers.
The lraudwas only discovered
atlertwo
to this task,and the companyeven
marketing
MEGAFRAUD
ciallyassigned
when,as a PR exercise,
the company's
headquarters
onthepay- A ThirdWorldcounlrywasnegotiating
a loanol some beganto run 'fraudparties'at company
tookthelirstandlastsalesmen
department
projects,
wellintothenight.
For whichlasted
them.Zwanawasclearly
thelastin the t2.5 billionfor a number
of development
rollandaudited
gets reasons
A mere $144,000was siphonedoff into the
whichare not madeclear,the Dresident
Thiskindof scam,the'salami
technique',
and
alphabet.
presumably
notjust accounts
of particular
conspirators,
ashush
thefraudster
takesa verythinslice vice-president
decided
to keepthedealsecret,
its namebecause
ll is alsoknownas appli- fromthepublicbutfromthe restof thegovernment
untilby the
as money;the reststayedin the company
else'saccount.
offeverybody
withcon- springof 1971thefraudhadgrownto suchproportions
andis veryrare,andfora goodreason. well,so it wasarranged
througha linancier
cationzapping
in theMiddleEastwhosecontacts
andcompany
needed
to generate
zap- rounding
downthegen- nections
demanded thatGoldblum
upto
Tosetup an application
newbogusfilesjustto keepit running.
a anonymrty.
50,000
andsettingup falseones- requires
uineaccounts
Asthescaleof thefraudgrew,sodidthelraudpargreatdealo{lechnical
Anyone
withtheability
Arrangements
weremadethrough
fourinstitutions,
expertise.
got in deeperanddeeper.
findeasierandsaferways two oJ themcompanies
in HongKong,one a long- ties,andthe company
All
to do il canalmostcertainly
Infact,theZwanastoryis almost established
a specialcodeand the
Swissbankand the fourtha Norwegian fake policieswereassigned
to ripofflhecompany.
wasinstructed
in another
commonly-told
variation bank.TheSwissbankwasto provide
to exclude
them.
apocryphal;
thedepositand computer
certainiy
Thebubble
wasfinallyburstin March1973whena
is used.
facilities,
representative
was
drawing
andthe lender's
ofthesamescam,thenameZzwicke
who paida non-returnable
reported
Another
is thatof the fraudster
in formeremployee
thedeadsoulsracketto the
old chestnut
onepercentfeeandsecurity
"Payme halfol whatI stoleandl'll theformoI a largeamount
policeand to a WallStreetanalyst.
By thistimethe
tellsthecompany:
ol negotiable
securilies.
had97,000policies
areurbanlegTheshroudof secrecy
on file,64,000of them
showyouhowI didit",Thisand'Zwana'
sunounding
thedealsuited company
for political
everyone,
ostensibly
reasons.
But at the fake,andwasvaluedat $737million
of which$185milendsinthemaking.
js the eleventh
on the salamitechnique
hourone of the bonowers
Anothervariation
smelta rat and lionwasnon-existent.
fora USoilcompany. arranged{or somediscreetenquiries
andseveral
olherconspirators
received
crookworking
to be made.
Goldblum
storyof a computer
lordealing
withgarages
in a cerlain Within24 hoursit becameknownthatthe Norueoian jailsentences.
Hewasresponsible
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