STRATEGIC REMEDIES FOR FRAUD VICTIMS

Early Warning Signs…And Resources

ORRICK, HERRINGTON& SUTCLIFFE

213/612-2204www.orrick.com

BACKGROUNDINTELLIGENCE, INC.

213/243-0707www.backgroundintelligence.co

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“...not by the hand of Pablo Picasso.”

Department OF Justice

OPTIONS FOR FRAUD VICTIMS

TOP BIGGEST COLLEGE SCAMS OF ALL-TIME

Email harvesting scam

Financial aid scam

Student aid heist

Textbook Scam

Website Hackers

U.S. News College Rankings Manipulation

Fake college enrollment

Terrorist Visas through fake college enrollment

Unqualified admissions for privilege

Student loan scandal

WHO ARE THE SCAMMERS?

Based on Top Biggest College Scams Former and current students College presidents, university officials,

trustees, director of admissions, and other administrators

International gangs Politicians Financial aid and lending institutions Other, including grandmothers and

multi-generational swindles

CURRENT TRENDS

Organized fraud rings and financial aid fraudsters target

University of Phoenix: 850 potential fraud schemes reported to federal authorities since 2009 (prosecution rate: approximately 25%)

WHAT TO DO ABOUT “RED FLAGS”

Depends on: Type of fraud or loss Who is involved Evidence Corroboration from others

Get facts: Before making a major decision Before reacting to a situation

IMMEDIATE STEPS

Follow your institution’s protocol and published Policies and Procedures Manual

Contact legal counsel (attorney-client privilege)

Get facts: fully investigate the incident with the assistance of independent professionals

THEN…you can start to make intelligent decisions

INVESTIGATIVE TOOLS

Interviews Proprietary databases* Public records Internet and social networking sites Surveillance, dumpster diving,

undercover

TYPES OF INVESTIGATIVE SUPPORT AVAILABLE TO FRAUD

VICTIMS Verifying identities

Finding assets

Defining complex business structures and personal interrelationships

Identifying potential “bad guys” or people in cahoots with the bad buys

Clarifying anomalies

Identifying potential witnesses

Obtaining documentation and independent verification for self-reported “facts”

NATURE OF FRAUD

Most fraud and white collar crime goes unreported

Only 8% of cases reach proper authorities

MEANING: they’re out there to do it again (Source: National Public Survey on White Collar Crime)

COMPLEXITY OF THE RISK

Critical to understand: The nature and extent of the fraud The individual(s) involved Domestic or international

REASONS NOT TO MAKE A REFERRAL

WHERE TO MAKE THE REFERRAL?

COORDINATED EFFORT REQUIRED

No panacea for dealing with fraud

Lengthy, dedicated, persistent effort

Leadership and coordination required

ACTIVE…ON-GOING CYBERCRIME CASE

Fraud took place: June 2011

PRO-ACTIVE STEPS TAKEN

PROBLEMS

Unknown identity of the fraudster(s) Unknown nature of the scam Identifying other victims Unknown potential sources of remuneration, due to

all of the above

SAMPLE RESPONSE…EMAIL FROM FBI AGENT

Tuesday, December 13, 2011

“Olivia,

Per my office’s investigative supervisors, this case doesn’t meet our guidelines or the guidelines for the U.S. Attorney’s Office.

If you get more victims and a higher dollar loss, please let us know.”

Special AgentLos Angeles Field Office

INTERNET FRAUD RING INDICTED

MITIGATING LIABILITY

SELF-POLICING STRATEGIES BEING USED BY COLLEGES

Community Colleges are adopting pro-active strategies

Challenges to financial aid applicants

TYPICAL REACTIONS

Disbelief… Whistleblowers and victims are always

placed in a challenging position Victims are embarrassed at being

duped

MOSTLY…WANT TO AVOID BAD PRESS

PRESENTED BY:

Olivia RobinsonBACKGROUND

INTELLIGENCE, INC.

213/243-0707www.backgroundintelligence.

com

Mark MermelsteinORRICK,

HERRINGTON& SUTCLIFFE

213/612-2204www.orrick.com