Using the Internet to
Investigate Fraud
William N. Dilla, CPA, Ph.D.
wdilla@iastate.edu
December 17, 2010
Person of the Year 2010
Presentation Objectives

We will learn about:
– Using the Internet to develop a
predication of fraud
– How a fraud investigators might use the
Internet
– Using the Internet for background
checks
– Protecting one’s self on the Internet
Two Fraud Triangles

The “motivation triangle”
– Pressure / Incentives
– Opportunity
– Attitude / Rationalization

The “element triangle”
– Theft Act
– Concealment
– Conversion
The Motivation Triangle

Pressure / Incentives
–
–
–
–

Living beyond means
Vice (gambling, drugs, etc.)
Financial Emergencies
Bonuses or stock options (financial reporting fraud)
Opportunity
– Poor internal controls
– Override of internal controls
– Collusion

Attitude / Rationalization
–
–
–
–
Dishonest individual
“Everyone else is doing it”
“They owe it to me”
“I’ll just borrow the money”
The Element Triangle

Theft Act
– Rarely observed directly

Concealment
– Often causes anomalies, investigate with:
• Analytical procedures
• Data mining
• Examination of documents

Conversion
– Sales of stolen assets
– Living beyond means
• Investigate with wealth analysis
– Perpetrator brags to others
Where can the Internet assist
with fraud investigation?

Motivation triangle
– Pressure / Incentives
– Opportunity
– Attitude / Rationalization

Element triangle
– Theft Act
– Concealment
– Conversion
Aviva, USA Case
Exercise: Pretend you are an investigator
who has just discovered a predication of
fraud involving Phyllis and Marla Stevens.
Perform an Internet search to gather
information supporting your case.
Additional Information for
Stevens’ Case

Current residence
– Des Moines, IA

Previous residence
– Indianapolis, IN
Aviva, USA Case


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Alleged $5.9 million fraud over four years
Used terminated employee identity to generate
fraudulent commission payments
Another Aviva employee noticed a discrepancy
(“accidental” discovery)
Alleged perpetrator (Phyllis Stevens) and
spouse (Marla Stevens) owned considerable
property and had made substantial political
contributions
Substantial cash withdrawals made before
alleged perpetrator’s arrest
Categories of Available
Information



Free websites
Proprietary websites
Databases only accessible to law
enforcement
Starting Point—General
Purpose Sites

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google.com
bing.com
yauba.com
– Privacy safe
– Allows search by source type (e.g., news,
images, document type)
– Easy to navigate

Learn how to use advanced features
People Search Sites

spokeo.com
– Notoriously inaccurate!

zabasearch.com / intelus.com
– These two are linked
– Better quality sites, costs to get information

pipl.com
– “Deep web search” engine
– Shows links to other sites

peekyou.com
– Provides links to multiple sites

others??
– search term “people search sites”
 Exercise: find yourself on one of these sites
News Sites

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Free resources
Proprietary resources
– factiva.com
– nexis.com

Public and college libraries
Auction Sites

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ebay.com
craigslist.com
searchtempest.com
Photo / Video Sites
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flickr.com
picasa.com
images.google.com /
images.bing.com
youtube.com
video.google.com
Blogs

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technorati.com
icerocket.com
– Icrerocket also for searching social
networks, images
Social Networks
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linkedin.com
twitter.com
facebook.com
weddingchannel.com
lococitato.com
– Shows maps of relationships between
facebook users
What if the information you’re
looking for is “private”?
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

“Friend” person
Attempt to e-mail
What if you don’t want to use your
real identity?
– See next slide
Pretexting


Private investigators will set up “fake”
accounts
For fun, look up:
– Jorge Beale
– Jinger Rytand

NOT a strategy for non-professionals!
Background checks on the
Internet


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New hires
New clients
Free sources
– Many of the sources we’ve discussed already,
plus:
– http://www.bbb.org/us/
– http://www.linkedin.com/
• Is the job candidate’s online information the same
as what they gave you?
• See “LinkedIn’s top 10 overused resume phrases”
at CNN.com
Other Background Check
Resources

Partly free
– Individual information
• BRB Publications
http://www.publicrecordsources.com/
• http://www.intelius.com/
– Business information (Dun and Bradstreet)
http://www.dnb.com
– Charity information http://www2.guidestar.org/
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Entirely fee-based
– Personal information summary
http://www.spokeo.com
– Online background check
http://www.ussearch.com
Protecting Yourself


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“Opt-out” of background check
information possible, but not easy
Proprietary privacy services available
Social networks, blogs, etc.
– Set privacy settings
– Careful who you friend
– Careful what you share!!!
– See “The internet and the end of
Summary

Internet searches useful for:
– Preliminary fraud investigation
– Basic background checks
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Hire a professional for more involved investigations
Be careful what you post and who you friend!
For more on this topic:
– Cynthia Hetherington
– http://www.hetheringtongroup.com/
– Look under “Training”

Electronic version of this presentation:
– http://www.bus.iastate.edu/wdilla/Acct591/default.asp