By Francisco Mateo, CPP, CFE
Fraud awareness has gained incredible speed in the last two years. It’s no longer just the Nigerian 419 scams; myriad online schemes or even government corruption that we think of when the word fraud comes up anywhere in the world. The global financial crisis has revealed a seeding world of lies and betrayals brought to you straight from the bowls of Wall Street and the exoteric world of high finance. Bernard Madoff, Tom Petters and Allen Stanford are the modern versions of Charles Ponzi in the infamous fraudster’s hall-of-shame. Like the aftermath of a plane crash, forensic fraud examiners have now spend months meticulously analyzing the wreckage trying to determine what caused this disaster. Unfortunately Hedge Funds and other exclusive investment clubs don’t come with a black box that can pin point which systems failed. Their world is shrouded in secrecy hiding behind tax shelters and corporate veils. Luckily there are dedicated fraud experts out there that can make sense of the tangle web these sorcerers of finance weaved.
The recent fraud losses have left a deep financial, moral and cultural impact on our global society. Let’s not squander this opportunity to highlight the evil of unfettered greed masquerading as legitimate business. Let progress be defined by fraud awareness. As President Barack Obama said during his inaugural speech, let’s all “do our business in the light of day” and persuade those less enlightened to do the same.
Fraud awareness is a must have prevention tool that needs to be cultivated from the specialized knowledge, it is today to a level of common knowledge available to everyone, if we stand a chance of avoiding these schemes from growing again.
We also need to encourage the work of people like Harry Markopolos, who wisely alerted the official fraud watchdog (SEC), about Madoff’s Ponzi scheme, years ago. He reveled in the process structural deficiencies in America’s official finance system’s oversight, which left the scheme fester through inaction. To revert to the airplane analogy the watchdog agencies throughout the world have acted as the air traffic controllers gone on holiday, while the radar signals were blinking red. Equally courageous and commendable were the whistleblowers in Stanford and Petters’ case.
Now more than ever fraud fighters have a duty to continue being beacons of light in the prevention and detection of fraud, waste and abuse. I’m proud to be a member of this crowd. The message is also clear for both corporations and government anti-fraud organizations; they all need to be agile in the prevention (meaning properly allocating, training, and fostering a culture of honesty), as well as swift in the persecution of existing fraud schemes.