Ex-con: Keep guard up against financial crimes
It’s difficult to come away from Frank Abagnale’s presentation on white collar crime without feeling a little suspicious, a little paranoid.
After all, according to Abagnale, talented white collar criminals are lurking everywhere. All they need is a working knowledge of some basic, modern technology and information. And many crime victims slough off critical information as part of their daily routines, or worse yet, willingly cough up the valuable information simply because someone asks for it.
Abagnale formerly was a confidence trickster, check forger and impostor. Between the ages of 16 and 21, while successfully posing as an airline pilot, an attorney, a college professor and a pediatrician, he cashed $2.5 million in fraudulent checks in every state and 26 foreign countries. Many Americans know about him thanks to Hollywood. Leonardo DiCaprio portrayed Abagnale in the movie “Catch Me If You Can.” Tom Hanks was the FBI agent hot on his trail.
Apprehended by the French police when he was 21, Abagnale served time in French, Swedish and U.S. prisons. After five years he was released on the condition that he help the federal government, without pay, by teaching and assisting federal law enforcement agencies. Today, Abagnale is an author and lecturer, an instructor at the FBI academy, a designer of security measures used in checks and other documents and a consultant who helps corporations and financial institutions thwart the kind of person he was as a young man.
As the keynote speaker at a financial crimes seminar Wednesday at the Kovalchick Convention and Athletic Complex at Indiana University of Pennsylvania, Abagnale said $994 billion is lost annually in America to white collar crime, considerably more than the Pentagon’s 2013 budget of $712 billion.
“We all pay for these crimes,” Abagnale said, adding that white collar crimes cost every man, woman and child in the U.S. $500 per year.
Much embezzlement is never reported, often out of embarrassment to the victim company. Instead, the embezzler is dismissed and “they go on to steal from someone else,” he said.
A top reason for embezzlement is simply because the opportunity was there. Abagnale said he could not believe how many companies have the same person write checks, sign checks and then reconcile the checking account instead of segregating those duties.
And only about 7 percent of court-ordered restitution is collected.
“Once you lose your money, it’s most likely you’ll never get your money back,” he said.
Abagnale said a strategy he recommends is for the victim of embezzlement to file an IRS Form 1099 for the embezzler. The money stolen is taxable, Abagnale said, and the IRS can garnish the embezzler’s wages and seize his or her property.
Abagnale said the threat of filing a 1099 is often greater than the threat of sending someone to jail.
In 1988, while writing one of five books on white collar crime, he predicted that emerging technology would enable criminals to steal money through “identity theft” — capturing confidential information that would give criminals access to another person’s bank accounts or would allow them to establish credit that ultimately the victim would be responsible for. Today, he said, it is difficult to find a group of three people in which at least one person has not been a victim of identity theft.
To a skilled criminal, there could not be “a more simplistic crime” than identity theft, he said.
“We give people information we have no business giving them, simply because they ask for it,” he said. That is especially true of furnishing Social Security numbers. Abagnale said there are a very few legitimate reasons to furnish a Social Security number, yet Americans are too frequently asked, and too readily agree, to provide that sensitive information.
Even the Selective Service Administration asks registrants to place their Social Security number on return post cards where the numbers are not secure.
Abagnale stated in one of his books that he could steal the identity of anyone in America in 15 seconds, and said he proved that to news reporters.
“Information is everywhere and easily obtainable,” he said. For example, 7ﾽ million Americans under the age of 13 are using Facebook, and many list on the their Facebook accounts where and when they were born.
“If I know your date of birth and birth place, I’m 98 percent to becoming you,” Abagnale said. “There is no identity better to steal than a child’s” because it’s unlikely anyone will be checking a child’s credit history for a few years to come.
Abagnale offered several financial security tips.
- If a company is responsible for credit card information being stolen and offers victims a year of credit-monitoring service as partial compensation, the victims should insist on three years of credit monitoring protection. Stolen data is often “warehoused” for two or three years before it is used, according to Abagnale.
- When selecting a credit-monitoring service, choose one that will notify a client of suspicious activity in real-time, not just on a monthly basis.
- Use a shredder to destroy sensitive documents containing confidential information. “Everything you think is worthless is of great value to someone else,” even discarded catalogs mailed to a home address, Abagnale said. He recommends a “security micro-cut shredder” because they are best at turning paper and documents into confetti that cannot be reassembled.
- He personally doesn’t write a lot of checks. Checks go many places and are seen by many people before they are destroyed. Some of the people seeing them might be tempted to sell confidential information printed on them, he said.
- When retiring an old photocopier, be sure to remove the hard drive. Everything that was copied on the machine can be printed from its hard drive. “This is a world of information,” he said.
“We live in an extremely unethical society,” Abagnale told the audience at the KCAC. “We will never put a dent into crime” until more is done to restore ethics and character in American homes, schools and society in general.