John E. Ouelette, CFE (Certified Fraud Examiner) narrates the true story of fraud perpetrated via e-bay online auctions. Ellie (Eleanor) Wallace is a 63 year old widow with three grown-up sons, and runs a small business of brooches, rings and trinkets. Her husband had left her sufficient money to live comfortably but Roland Granger, an experienced antique sales person, woos Ellie and convinces her that they should operate together in the antique business. He divorces his wife of 7 years, moves in with Allie and the couple gets married. They start their business (Classic Collections) with Ellie’s capital. Ellie’s sons are more in touch with the world then her and they suspect 61 years old, Roland Granger of being a ‘gold digger’, after Ellie’s money. However, Ella angrily refutes this and accuses her sons of being afraid of losing their inheritance.
Classic Capital does a good business and Roland increases their clientele easily as he is a competent salesperson. He decides to stock expensive antique statues of wee people etc. and takes the firm on the road for further increasing footfalls. By this time, Ellie realizes that she is out of her league and the firm is soon controlled by Roland alone, though they withdraw and deposit money at a joint account in a local account. Online auctions are starting now and Roland is quick to use them as he figures the untapped potential of online auctions. Classic Collections become a well-known brand. As sales and prices go up, Ellie and Roland have saved about $230,000 in the bank. Roland However, they start receiving complaints from a few of their customers. Then one fine day, Roland vanishes and after a couple of days Ellie finds out that Roland had withdrawn about $ 230,000 from their common account.
The numbers of complaints grow up sharply and Ouellete enters the picture at this stage. He is entrusted with the case and complaints start coming from Internet Fraud Complaint Center (IFCC) and Ouellete first finds himself buried in complaints. He decides to organize the information in a excel work sheet and finds that about forty parties have been victims of Roland’s crookedness. He gets an unexpected bonus when he discovers an earlier trigger of one assistant of Roland, with the help of whom (as a witness), he presents the case to the Grand Jury.
The Fraud Triangle shows how the 10-10-80 theory makes organizations susceptible to the perpetration of financial fraud by employees. This theory says that 10% employees are extremely honest and will never be engaged in any financial
impropriety. Another 10% are devoid of scruples and are
always on the lookout for personal benefit. The balance 80% is a kind of fence-sitters who will not say no to the perfect opportunity i.e. carry out fraud without getting caught. These employees are indicated by the fraud triangle. The employee is initially under pressure due to work related stress and deadlines or gambling debts etc. in his personal life. If the opportunity is given to this stressed employee he will fatten up expense statements and carry out the necessary and will indulge in fraud. The employee will then seek to rationalize his action by blaming the management for the raise never given, very slow promotion, low salary as compared to industry standards, etc.
As regards Ouellete’s delay in building up the case, he took time as he was buried in data. All evidence is data whereas all data is not evidence. To differentiate between data and evidence will be very tough, unless data is stored in an ordered and disciplined matter. Generally data from a system which is not fraudulent will follow more or less general patterns. Therefore, anything which deviates from the normal trends require checking. Fraud, if carried out, will be reflected in these points. The time period was mainly responsible for the delay. On line auctions had just started than and nobody was very knowledgeable or experienced as regards their abuse by crooks. The same story can also be told as regards sites like PayPal where funds are transferred vide an electronic mail id.
All evidence is data whereas all data is not evidence. To differentiate between data and evidence will be very tough, unless data is stored in an ordered and disciplined matter. Generally data from a system which is not fraudulent will follow more or less general patterns. Therefore, anything which deviates from the normal trends, should be checked into. Fraud, if carried out, will be reflected in these points.
Ouelletete may have been late but after two and a half years, but Roland is arrested near LA after two and a half years. He has been sentenced to jail jailed for 6 years and is ordered to pay $323,261.54 to e-bay bidders, PayPal, Wells Fargo and eBay.
Ouelletete admits that his success is due to the following three reasons.
1. Excel spreadsheets which kept the data organized.2. Compiling a past crime (child pornography) folder on Roland’s which was used as leverage on Mark Mollencamp, Roland’s assistant who was cheated out of his bonus.
3. His rudimentary knowledge of cybercrime and computer forensics. & Internet research
Finally we have bad news for Allie. She filed for bankruptcy under Chapter Seven and her financial liabilities came out as $415, 200. Of which she paid some $ 21,400.06. Today Allie is a pauper but she has her three sons to care for her. In her case, it was just collateral amage.
