fighting fraud in the government disposal of documents and media ... why social engineering attacks...

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FIGHTING FRAUD IN THE GOVERNMENT


Fighting Fraud in the Government i

TABLE OF CONTENTS

I. INTRODUCTION TO GOVERNMENT FRAUD Course Introduction ................................................................................................................................................. 1 Overview of Government Fraud ............................................................................................................................ 2

Definition of Government Fraud ......................................................................................................................... 2 The Impact and Significance of Government Fraud .................................................................................... 2 Video .................................................................................................................................................................... 3 The Public’s Perception of Government Organizations .............................................................................. 3 Factors Leading to Government Fraud .......................................................................................................... 3

Victims of Government Fraud ............................................................................................................................... 5 Why People Commit Fraud ..................................................................................................................................... 5

Video .................................................................................................................................................................... 6 Video .................................................................................................................................................................... 8

Who Commits Government Fraud? .................................................................................................................... 12 Types of Government Fraud ................................................................................................................................ 15 II. OCCUPATIONAL FRAUD BY GOVERNMENT EMPLOYEES Introduction ............................................................................................................................................................. 17 Asset Misappropriation: Cash Schemes ............................................................................................................... 17

Cash Larceny ..................................................................................................................................................... 18 Skimming Schemes .......................................................................................................................................... 19 Video .................................................................................................................................................................. 21 Fraudulent Disbursements .............................................................................................................................. 24 Video .................................................................................................................................................................. 25 Video .................................................................................................................................................................. 27 Video .................................................................................................................................................................. 30 Video .................................................................................................................................................................. 31

Asset Misappropriation: Noncash Schemes........................................................................................................ 31 Misuse of Noncash Government Assets and Resources ........................................................................... 32 Theft of Noncash Assets ................................................................................................................................ 32 Inventory Theft and Inventory Shrinkage .................................................................................................... 34 Video .................................................................................................................................................................. 34

Fraudulent Statements in Nonfinancial Matters................................................................................................. 36 Internal Control Weaknesses .......................................................................................................................... 37 Red Flags of Fraudulent Statements in Nonfinancial Matters .................................................................. 37 Prevention of Fraudulent Statements Concerning in Nonfinancial Matters ........................................... 37

Review Questions ................................................................................................................................................... 39 III. PUBLIC CORRUPTION Introduction ............................................................................................................................................................. 43 Corruption Data from the 2016 Report to the Nations ......................................................................................... 43 Types of Corruption Schemes .............................................................................................................................. 44

Bribery ............................................................................................................................................................... 44 Kickbacks .......................................................................................................................................................... 45


ii Fighting Fraud in the Government

III. PUBLIC CORRUPTION (CONT.) Video .................................................................................................................................................................. 46 Illegal Gratuities ............................................................................................................................................... 46 Economic Extortion ........................................................................................................................................ 46 Undisclosed Conflicts of Interest .................................................................................................................. 47 Video .................................................................................................................................................................. 47 Video .................................................................................................................................................................. 49 Breach of Loyalty ............................................................................................................................................. 49

Methods of Making and Concealing Corrupt Payments ................................................................................... 49 Video .................................................................................................................................................................. 50 Gifts, Travel, and Entertainment ................................................................................................................... 50 Video .................................................................................................................................................................. 50 Cash Payments .................................................................................................................................................. 50 Checks and Other Financial Instruments ..................................................................................................... 50 Hidden Interests ............................................................................................................................................... 50 Loans .................................................................................................................................................................. 51 Credit Cards ...................................................................................................................................................... 51 Transfers Not at Fair Market Value .............................................................................................................. 51 False Transfers .................................................................................................................................................. 51 Promises of Favorable Treatment ................................................................................................................. 51 Video .................................................................................................................................................................. 52

Red Flags of Corruption ........................................................................................................................................ 52 Red Flags of Corrupt Employees .................................................................................................................. 52 Red Flags of Corrupt Third Parties ............................................................................................................... 52 Internal Control Red Flags of Corruption ................................................................................................... 53

Corruption Risk Factors ........................................................................................................................................ 54 Internal Corruption Risks ............................................................................................................................... 54 External Corruption Risks .............................................................................................................................. 54 Video .................................................................................................................................................................. 55

Laws Prohibiting Public Corruption .................................................................................................................... 55 U.S. Laws Prohibiting Corruption ................................................................................................................. 55 Video .................................................................................................................................................................. 60 Video .................................................................................................................................................................. 61 The United Kingdom Bribery Act ................................................................................................................. 63 International Anti-Corruption Initiatives ..................................................................................................... 66

Preventing and Detecting Public Corruption ..................................................................................................... 68 Anti-Corruption Policies and Procedures .................................................................................................... 70 Use of Corruption Risk Assessments ............................................................................................................ 70 Internal Controls to Prevent Corruption...................................................................................................... 71 Periodic Testing and Review .......................................................................................................................... 72

Review Questions ................................................................................................................................................... 74 IV. PROCUREMENT FRAUD Introduction ............................................................................................................................................................. 77 Basics of Contract Law .......................................................................................................................................... 77

Elements of a Contract ................................................................................................................................... 77 Breach of Contract ........................................................................................................................................... 78

Methods of Procurement ....................................................................................................................................... 78


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IV. PROCUREMENT FRAUD (CONT.) Video .................................................................................................................................................................. 79 Competitive Bidding Using Sealed Bids ....................................................................................................... 79 Video .................................................................................................................................................................. 79 Contracting by Negotiation ............................................................................................................................ 80 Simplified Acquisition Procedures ................................................................................................................ 82 Video .................................................................................................................................................................. 83

Employees Involved in the Procurement Process ............................................................................................. 84 Procurement ..................................................................................................................................................... 84 Accounts Payable ............................................................................................................................................. 85 Operations ......................................................................................................................................................... 85

Phases in the Procurement Process ..................................................................................................................... 86 The Pre-solicitation Phase .............................................................................................................................. 86 The Solicitation Phase ..................................................................................................................................... 87 The Bid Evaluation and Award Phase .......................................................................................................... 88 The Post-Award and Administration Phase................................................................................................. 89

Categories of Procurement Fraud Schemes ........................................................................................................ 91 Collusion Among Contractors ....................................................................................................................... 91 Video .................................................................................................................................................................. 92 Collusion Between Contractors and Employees ......................................................................................... 97 Fraud in Procurement Without Competition ........................................................................................... 108 Defective Pricing Schemes that Violate the U.S. Truth in Negotiations Act....................................... 113 Performance Schemes .................................................................................................................................. 116

Preventing Contract and Procurement Fraud ................................................................................................. 126 Video ............................................................................................................................................................... 127 Employee Education .................................................................................................................................... 127 Internal Controls ........................................................................................................................................... 127 Monitoring Activities .................................................................................................................................... 127 Video ............................................................................................................................................................... 128 Vendor Management .................................................................................................................................... 128 Video ............................................................................................................................................................... 128

U.S. Laws Relating to Government Contracting............................................................................................. 136 Review Questions ................................................................................................................................................ 144 V. FRAUDULENT FALSE CLAIMS AND STATEMENTS Introduction .......................................................................................................................................................... 147

What Is a False Claim? ................................................................................................................................. 147 What Is a False Statement? .......................................................................................................................... 147

Elements of False Claim or Statement Violations .......................................................................................... 147 Common False Claims and Statements ............................................................................................................ 148

Video ............................................................................................................................................................... 149 U.S. Laws Prohibiting Fraudulent False Claims and Statements .................................................................. 149

False Statements (18 U.S.C. § 1001) ........................................................................................................... 150 Video ............................................................................................................................................................... 150 Criminal False Claims Act (18 U.S.C. § 287)............................................................................................. 151 Civil False Claims Act (31 U.S.C. § 3729 et seq.) ..................................................................................... 151 Conspiracy to Defraud Federal Government with False Claims (18 U.S.C. § 286) ............................ 152 False Entries in Federally Insured Banks (18 U.S.C. § 1005) ................................................................. 152


iv Fighting Fraud in the Government

V. FRAUDULENT FALSE CLAIMS AND STATEMENTS (CONT.) False Statements on Loan and Credit Applications (18 U.S.C. § 1014) ................................................ 152 The Major Fraud Act of 1988 (18 U.S.C. § 1031) .................................................................................... 152 Civil Monetary Penalty Law (42 U.S.C. § 1320a–7a) ............................................................................... 153 Perjury (18 U.S.C. §§ 1621 and 1623) ........................................................................................................ 154 Bankruptcy Fraud (18 U.S.C. § 152)........................................................................................................... 154 False Statements in Tax Returns (26 U.S.C. § 7206(1)) ........................................................................... 154

Qui Tam Suits ....................................................................................................................................................... 155 Filing a Qui Tam Action .............................................................................................................................. 155 Who Can Bring a Qui Tam Action ............................................................................................................ 156 Protections for Whistleblowers of Fraudulent False Claims and Statements ...................................... 157

Red Flags of Fraudulent False Claims and Statements .................................................................................. 158 Preventing Fraudulent False Claims and Statements ...................................................................................... 158

Video ............................................................................................................................................................... 159 Review Questions ................................................................................................................................................ 160 VI. FRAUD IN GOVERNMENT SOCIAL PROGRAMS Introduction to Fraud in Government Social Programs................................................................................ 163

Video ............................................................................................................................................................... 163 Health Care Fraud................................................................................................................................................ 164

Types of Health Care Systems .................................................................................................................... 164 Types of Health Care Fraud in Public Systems ........................................................................................ 167 Video ............................................................................................................................................................... 175

Fraud in Income-Loss Benefits ......................................................................................................................... 181 Types of Claimant Fraud in Income-Loss Benefit Programs ................................................................. 181 Types of Income-Loss Benefits .................................................................................................................. 182 General Red Flags of Claimant Fraud in Obtaining Income-Loss Benefits ........................................ 185 Red Flags of Claimant Fraud Involving Disability and Sickness Benefits ............................................ 186 Red Flags of Claimant Fraud Involving Work-Injury Benefits .............................................................. 186 Preventing Claimant Fraud in Income-Loss Benefits .............................................................................. 187

Fraud in Housing-Assistance Programs ........................................................................................................... 188 Types of Housing Assistance Programs .................................................................................................... 188 Tenant Eligibility for Housing Assistance ................................................................................................. 189 Perpetrators of Fraud in Housing-Assistance Programs ......................................................................... 189 Preventing Fraud in Housing-Assistance Programs ................................................................................ 192

Review Questions ................................................................................................................................................ 193 VII. OTHER TYPES OF GOVERNMENT FRAUD Introduction .......................................................................................................................................................... 197 Agricultural Subsidies Fraud .............................................................................................................................. 197

Forms of Agricultural Subsidies .................................................................................................................. 197 Types of Fraud in Agricultural Subsidy Programs ................................................................................... 198 Preventing Fraud in Agricultural Subsidy Programs ................................................................................ 199 Crop Insurance Fraud .................................................................................................................................. 199

Tax Evasion .......................................................................................................................................................... 204 Video ............................................................................................................................................................... 204 Types of Tax Evasion Schemes .................................................................................................................. 205 Tax Laws in the United States ..................................................................................................................... 207


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VII. OTHER TYPES OF GOVERNMENT FRAUD (CONT.) Common Defenses to Tax Evasion Charges ............................................................................................ 208 International Tax Avoidance and Evasion ................................................................................................ 209

Counterfeit and Forged Documents ................................................................................................................. 211 Identifying Counterfeit and Forged Documents ...................................................................................... 212 Red Flags of Counterfeit Money................................................................................................................. 212 Red Flags of Counterfeit and Forged Documents ................................................................................... 213

Conspiracy to Defraud the Government ......................................................................................................... 213 Basic Elements to Prove Conspiracy to Defraud the Government ...................................................... 214 U.S. Laws Criminalizing Conspiracies to Defraud the Government .................................................... 214

Grant Fraud .......................................................................................................................................................... 215 Video ............................................................................................................................................................... 216 Basic Responsibilities of Grant Recipients ................................................................................................ 216 Common Grant Fraud Schemes ................................................................................................................. 216 Perpetrators of Grant Fraud ........................................................................................................................ 217 Common Motivations for Committing Grant Fraud .............................................................................. 218 Red Flags of Grant Fraud ............................................................................................................................ 218 Measures to Prevent Grant Fraud .............................................................................................................. 220

Student Financial Aid Fraud ............................................................................................................................... 221 Video ............................................................................................................................................................... 222 Student Financial Aid Fraud Perpetrated by Students ............................................................................. 222 Student Financial Aid Fraud Perpetrated by Employees of Educational Institutions ........................ 223

Review Questions ................................................................................................................................................ 225 VIII. MEASURES TO PREVENT GOVERNMENT FRAUD Introduction .......................................................................................................................................................... 229 Ethical Tone at the Top ...................................................................................................................................... 229

Tone in the Middle ....................................................................................................................................... 230 Minimize Motivations and Pressures to Commit Fraud ................................................................................ 230

Increasing Morale .......................................................................................................................................... 231 Offering Employee Support Programs ...................................................................................................... 232 Promoting and Rewarding Loyalty ............................................................................................................. 233 Establishing an Open-Door Management Policy .................................................................................... 233 Measuring Employee Attitudes About Anti-Fraud Efforts .................................................................... 233 Establishing a System of Disciplinary Procedures ................................................................................... 233

Fraud Policy .......................................................................................................................................................... 234 Video ............................................................................................................................................................... 234 Scope of Policy .............................................................................................................................................. 235 Policy Statement ............................................................................................................................................ 235 Actions Constituting Fraud ......................................................................................................................... 235 Investigation Responsibilities ...................................................................................................................... 235 Confidentiality ............................................................................................................................................... 236 Authorization for Investigation .................................................................................................................. 236 Employee Responsibilities ........................................................................................................................... 236 Reporting Procedures ................................................................................................................................... 236 Acting in Good Faith ................................................................................................................................... 236 Whistleblower Protection ............................................................................................................................ 236 Termination.................................................................................................................................................... 236


vi Fighting Fraud in the Government

VIII. MEASURES TO PREVENT TO PREVENT GOVERNMENT FRAUD (CONT.) Administration ............................................................................................................................................... 236

Fraud Risk Assessments ...................................................................................................................................... 237 What Factors Influence Fraud Risk? .......................................................................................................... 237 Benefits of a Risk-Based Approach ............................................................................................................ 237 Planning for a Fraud Risk Assessment ...................................................................................................... 238 Video ............................................................................................................................................................... 239 Fraud Risk Assessment Framework ........................................................................................................... 240 Video ............................................................................................................................................................... 242 Video ............................................................................................................................................................... 247 Risk Assessment Checklist ........................................................................................................................... 247 The Fraud Risk Assessment Tool ............................................................................................................... 247

Internal Controls .................................................................................................................................................. 248 Video ............................................................................................................................................................... 248 Video ............................................................................................................................................................... 248

Reporting System ................................................................................................................................................. 249 Video ............................................................................................................................................................... 249 Video ............................................................................................................................................................... 250

Employee Anti-Fraud Education ...................................................................................................................... 250 Video ............................................................................................................................................................... 250 Video ............................................................................................................................................................... 251 Who Should Attend? .................................................................................................................................... 251 Frequency and Length of Fraud Awareness Training ............................................................................. 251 Training Delivery Methods .......................................................................................................................... 251 Video ............................................................................................................................................................... 252 Topics to Cover in Training ........................................................................................................................ 252 Video ............................................................................................................................................................... 253 Video ............................................................................................................................................................... 254 Document Training ...................................................................................................................................... 254

Continuous Monitoring ...................................................................................................................................... 254 Video ............................................................................................................................................................... 254 Video ............................................................................................................................................................... 255 Video ............................................................................................................................................................... 255 Video ............................................................................................................................................................... 255

Employee Background Checks .......................................................................................................................... 256 Video ............................................................................................................................................................... 256

Due Diligence for Third Parties ........................................................................................................................ 258 Mandatory Vacation and Job Rotation Policies .............................................................................................. 258

Video ............................................................................................................................................................... 259 Fraud Prevention in Local Government .......................................................................................................... 259

Video ............................................................................................................................................................... 260 Video ............................................................................................................................................................... 260

Review Questions ................................................................................................................................................ 262 IX. USING DATA TO COMBAT GOVERNMENT FRAUD Introduction .......................................................................................................................................................... 265

Video ............................................................................................................................................................... 265 Video ............................................................................................................................................................... 265


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IX. USING DATA TO COMBAT GOVERNMENT FRAUD (CONT.) Video ............................................................................................................................................................... 266

Barriers to Using Data Analytics to Prevent and Detect Fraud .................................................................... 267 Large Volumes of Data ................................................................................................................................ 267 Silo Systems .................................................................................................................................................... 267 Inadequate Data Sharing .............................................................................................................................. 268 Inadequate Access to Data .......................................................................................................................... 268 Poor Data Integrity ....................................................................................................................................... 269 Format Inconsistencies ................................................................................................................................ 269 Limited Analytic Capabilities ....................................................................................................................... 269 Cultural Impediments ................................................................................................................................... 269

Data Analysis Process ......................................................................................................................................... 270 The Planning Phase ...................................................................................................................................... 270 Video ............................................................................................................................................................... 270 The Preparation Phase ................................................................................................................................. 271 The Testing Phase ......................................................................................................................................... 272 Video ............................................................................................................................................................... 272

Spectrum of Analysis Capabilities ..................................................................................................................... 272 Common Data Analysis Techniques ................................................................................................................. 273

Aging ............................................................................................................................................................... 273 Compliance Verification .............................................................................................................................. 273 Expressions or Equations ............................................................................................................................ 274 Testing for Frequently Used Values ........................................................................................................... 274 Fuzzy Logic Matching .................................................................................................................................. 274 Gap Tests ....................................................................................................................................................... 274 Identifying Amounts Below a Threshold .................................................................................................. 274 Video ............................................................................................................................................................... 275 Identifying Unusual Dates and Times ........................................................................................................ 275 Round-Dollar Payments ............................................................................................................................... 275 Benford’s Law ................................................................................................................................................ 275 Video ............................................................................................................................................................... 275 Statistical Analysis ......................................................................................................................................... 276 Trend Analysis ............................................................................................................................................... 277 Predictive Modeling ...................................................................................................................................... 277 Qualitative Data Analysis ............................................................................................................................. 277 Video ............................................................................................................................................................... 277 Textual Analytics ........................................................................................................................................... 278 Video ............................................................................................................................................................... 278 Video ............................................................................................................................................................... 279 Conflict Checking ......................................................................................................................................... 279 Transaction Risk Scoring ............................................................................................................................. 279

Scheme-Specific Data Analysis Tests ................................................................................................................ 279 Data Analysis Tests for Billing Schemes ................................................................................................... 280 Data Analysis Tests for Payroll Schemes................................................................................................... 281 Data Analysis Tests for Expense Reimbursement Schemes .................................................................. 281 Data Analysis Tests for Corruption Schemes ........................................................................................... 282 Data Analysis Tests for Inventory Schemes ............................................................................................. 283

Review Questions ................................................................................................................................................ 285


viii Fighting Fraud in the Government

X. PROTECTING SENSITIVE AND CLASSIFIED DATA Introduction .......................................................................................................................................................... 287

Video ............................................................................................................................................................... 287 Video ............................................................................................................................................................... 287

Common Threats to Sensitive and Classified Data ........................................................................................ 288 Video ............................................................................................................................................................... 288 Theft and Espionage..................................................................................................................................... 288 Employee Sabotage ....................................................................................................................................... 288 Advanced Persistent Threats ....................................................................................................................... 289 Malware .......................................................................................................................................................... 289 Uneducated Users ......................................................................................................................................... 289 User Errors and Omissions ......................................................................................................................... 289 Social Engineering Threats .......................................................................................................................... 289 Email Security Risks ..................................................................................................................................... 289 Internal Threats ............................................................................................................................................. 289 Malicious Hackers ......................................................................................................................................... 289 Foreign Government Threats ..................................................................................................................... 290 Threats to Personal Privacy ......................................................................................................................... 290 Exploitation of Trusted Relationships ....................................................................................................... 290

Types of At-Risk Information ........................................................................................................................... 290 Proprietary Government Information ....................................................................................................... 290 Government Secrets ..................................................................................................................................... 290 Personally Identifiable Information ........................................................................................................... 291 Business Identifiable Information .............................................................................................................. 292 Private Financial Information ..................................................................................................................... 292 Personal Health Information....................................................................................................................... 292

Sources of Data Leakage ..................................................................................................................................... 293 Employee Negligence ................................................................................................................................... 293 Video ............................................................................................................................................................... 293 Loss of Physical Media ................................................................................................................................. 293 Inadequate Business Processes ................................................................................................................... 293 Improper Disposal of Documents and Media .......................................................................................... 294 System Failure ................................................................................................................................................ 294 Malicious Insiders ......................................................................................................................................... 294 Hacker Attacks .............................................................................................................................................. 294

Perpetrators of Information Theft .................................................................................................................... 294 Insiders ........................................................................................................................................................... 295 Hackers ........................................................................................................................................................... 300 Competitors ................................................................................................................................................... 300 Organized Criminal Groups ........................................................................................................................ 300 Government-Sponsored Groups ................................................................................................................ 301

Information Espionage ....................................................................................................................................... 301 Targets of Information Espionage ............................................................................................................. 301 High-Risk Industries ..................................................................................................................................... 302 Forms of Information Espionage ............................................................................................................... 303 Video ............................................................................................................................................................... 303 Exfiltration Techniques ................................................................................................................................ 303

Social Engineering ............................................................................................................................................... 304


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X. PROTECTING SENSITIVE AND CLASSIFIED DATA (CONT.) Video ............................................................................................................................................................... 304 Why Social Engineering Attacks Succeed ................................................................................................. 305 Information Targeted by Social Engineers................................................................................................ 305 How Social Engineering Works .................................................................................................................. 306 Red Flags of In-Person Social Engineering Schemes .............................................................................. 309 Preventing Social Engineering Schemes .................................................................................................... 309

Common Challenges with Protecting Information ........................................................................................ 311 Video ............................................................................................................................................................... 311

Protecting Sensitive and Classified Data .......................................................................................................... 311 Video ............................................................................................................................................................... 312 Security Risk Assessments ........................................................................................................................... 312 Video ............................................................................................................................................................... 312 Security Policies and Procedures ................................................................................................................ 313 Awareness Training ...................................................................................................................................... 313 Nondisclosure Agreements.......................................................................................................................... 314 Data Retention and Destruction Policies .................................................................................................. 314 Security Controls ........................................................................................................................................... 315 Incident Response Plan ................................................................................................................................ 316 Video ............................................................................................................................................................... 316

Information Security in Bring-Your-Own-Device Environments ............................................................... 316 BYOD Challenges and Risks ...................................................................................................................... 316 Video ............................................................................................................................................................... 317 Video ............................................................................................................................................................... 317 BYOD Policies .............................................................................................................................................. 321 Mobile-Device Management Platforms ..................................................................................................... 326 Video ............................................................................................................................................................... 326

Cloud Computing and Information Security ................................................................................................... 328 Video ............................................................................................................................................................... 328 Video ............................................................................................................................................................... 328 Cloud-Computing Security Challenges ...................................................................................................... 328 Video ............................................................................................................................................................... 329 Protecting Data in the Cloud ...................................................................................................................... 329 Challenges of Investigating in the Cloud ................................................................................................... 331

Review Questions ................................................................................................................................................ 333 XI. INVESTIGATING GOVERNMENT FRAUD Introduction .......................................................................................................................................................... 337 Government Fraud Investigations Versus Private Fraud Investigations .................................................... 337

Video ............................................................................................................................................................... 338 Individual Rights and Protections ..................................................................................................................... 339

Rights and Obligations Under Criminal Law ............................................................................................ 340 Government Search and Seizure................................................................................................................. 340 Privacy Laws .................................................................................................................................................. 341 Protections Against Unlawful Confinement ............................................................................................. 343 Video ............................................................................................................................................................... 344 Video ............................................................................................................................................................... 345 Protections Against Harms to Reputations ............................................................................................... 345


x Fighting Fraud in the Government

XI. INVESTIGATING GOVERNMENT FRAUD (CONT.) What Fraud Examination Entails ...................................................................................................................... 346

Obtaining Evidence ...................................................................................................................................... 346 Reporting ........................................................................................................................................................ 346 Testifying to Findings ................................................................................................................................... 347 Assisting in the Detection and Prevention of Fraud ............................................................................... 347

Fraud Examination Methodology ..................................................................................................................... 347 Assume Litigation Will Follow .................................................................................................................... 347 Act on Predication ........................................................................................................................................ 347 Video ............................................................................................................................................................... 348 Move from the General to the Specific ..................................................................................................... 348 Use the Fraud Theory Approach ................................................................................................................ 348 Video ............................................................................................................................................................... 349

Develop a Fraud Response Plan ........................................................................................................................ 349 The Response Team ..................................................................................................................................... 350 Factors Used to Decide on the Course of Action .................................................................................... 350 Litigation Hold Procedures ......................................................................................................................... 351 Principles for Documenting the Response ............................................................................................... 351 Incident Report Log ..................................................................................................................................... 351

Typical Steps in a Fraud Investigation .............................................................................................................. 352 Conduct an Initial Response ....................................................................................................................... 352 Assemble the Fraud Team ........................................................................................................................... 354 Video ............................................................................................................................................................... 354 Develop an Investigation Plan .................................................................................................................... 355 Video ............................................................................................................................................................... 356 Video ............................................................................................................................................................... 356 Video ............................................................................................................................................................... 357 Video ............................................................................................................................................................... 358 Conduct the Investigation............................................................................................................................ 360 Report the Findings ...................................................................................................................................... 363 Written Versus Oral Reports ....................................................................................................................... 363 Respond to the Findings .............................................................................................................................. 365

Review Questions ................................................................................................................................................ 368 XII. INVESTIGATING WITH THE INTERNET Introduction .......................................................................................................................................................... 371

Video ............................................................................................................................................................... 371 Five-Step Approach to Using the Internet in Fraud Examinations ............................................................. 371 Using Internet Search Engines to Find Information ...................................................................................... 372

Search Engines .............................................................................................................................................. 372 Meta-Search Engines .................................................................................................................................... 372 Advanced-Search Operators ........................................................................................................................ 372 People Search Engines ................................................................................................................................. 375 Foreign Search Engines ................................................................................................................................ 376 Additional Tips When Using Internet Search Engines to Find Information ...................................... 376

Using Online Databases to Find Public Records ............................................................................................ 377 Online Sources of Public Records .............................................................................................................. 377 Limitations of Online Public Database Searches ..................................................................................... 379


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XII. INVESTIGATING WITH THE INTERNET (CONT.) Using the Deep Web to Find Information ...................................................................................................... 380 Using Internet Archives to Find Information ................................................................................................. 381 Using Social Networking Sites to Find Information ...................................................................................... 382

Video ............................................................................................................................................................... 382 Video ............................................................................................................................................................... 383 Types of Social Media................................................................................................................................... 383 Popular Social Media Platforms .................................................................................................................. 384 Social Media Search Tools ........................................................................................................................... 386 Privacy Issues When Collecting Evidence from Social Media ............................................................... 387

Using Newspaper and Media Databases to Find Information Online ........................................................ 388 Factiva ............................................................................................................................................................. 389 LexisNexis ...................................................................................................................................................... 389 HighBeam Research...................................................................................................................................... 389 ProQuest ........................................................................................................................................................ 389

Using the WHOIS Protocol to Find Information .......................................................................................... 389 Pitfalls of Using the Internet for Investigative Purposes ............................................................................... 390 Review Questions ................................................................................................................................................ 392 XIII. APPENDIX: VIDEO TRANSCRIPTS ........................................................................................... 395 XIV. SOLUTIONS TO REVIEW QUESTIONS II. Occupational Fraud by Government Employees ................................................................................. 435 III. Public Corruption ...................................................................................................................................... 443 IV. Procurement Fraud.................................................................................................................................... 448 V. Fraudulent False Claims and Statements ................................................................................................ 453 VI. Introduction to Fraud in Government Social Programs ..................................................................... 457 VII. Other Types of Government Fraud ........................................................................................................ 463 VIII. Measures to Prevent Government Fraud ............................................................................................... 470 IX. Using Data to Combat Government Fraud .......................................................................................... 475 X. Protecting Sensitive and Classified Data ................................................................................................ 479 XI. Investigating Government Fraud ............................................................................................................ 484 XII. Investigating with the Internet ................................................................................................................ 490 FINAL EXAMINATION .............................................................................................................................. E-1 INDEX ................................................................................................................................................................... I-1