The Internet Crime Complaint Center
2006 Internet Fraud Crime Report:
January 1, 2006-December 31, 2006

Executive Summary

In December 2003, the Internet Fraud Complaint Center (IFCC) was renamed the Internet Crime Complaint Center (IC3) to better reflect the broad character of such criminal matters having a cyber (Internet) nexus. The 2006 Internet Crime Report is the sixth annual compilation of information on complaints received and referred by the IC3 to law enforcement or regulatory agencies for appropriate action. From January 1, 2006 – December 31, 2006, the IC3 website received 207,492 complaint submissions. This is a 10.4% decrease when compared to 2005 when 231,493 complaints were received. These filings were composed of fraudulent and non-fraudulent complaints primarily related to the Internet.

In 2006, IC3 processed more than 200,481 complaints that support Internet crime investigations by law enforcement and regulatory agencies nationwide. These complaints were composed of many different fraud types such as auction fraud, non-delivery, and credit/debit card fraud, as well as non-fraudulent complaints, such as computer intrusions, spam/unsolicited e-mail, and child pornography. All of these complaints are accessible to federal, state, and local law enforcement to support active investigations, trend analysis, and public outreach and awareness efforts.

From the submissions, IC3 referred 86,279 complaints of crime to federal, state, and local law enforcement agencies around the country for further consideration. The vast majority of cases were fraudulent in nature and involved a financial loss on the part of the complainant. The total dollar loss from all referred cases of fraud was $198.44 million with a median dollar loss of $724.00 per complaint. This is up from $183.12 million in total reported losses in 2005. Other significant findings related to an analysis of referrals include:

• Internet auction fraud was by far the most reported offense, comprising 44.9% of referred complaints. Non-delivered merchandise and/or payment accounted for 19.0% of complaints. Check fraud made up 4.9% of complaints. Credit/debit card fraud, computer fraud, confidence fraud, and financial institutions fraud round out the top seven categories of complaints referred to law enforcement during the year.

• Of those individuals who reported a dollar loss, the highest median losses were found among Nigerian letter fraud ($5,100), check fraud ($3,744), and other investment fraud ($2,695) complainants.

• Among perpetrators, 75.2% were male and half resided in one of the following states: California, New York, Florida, Texas, Illinois, Pennsylvania and Tennessee. The majority of reported perpetrators were from the United States. However, a significant number of perpetrators where also located in United Kingdom, Nigeria, Canada, Romania, and Italy.

• Among complainants, 61.2% were male, nearly half were between the ages of 30 and 50 and one-third resided in one of the four most populated states: California, Texas, Florida, and New York. While most were from the United States, IC3 received a number of complaints from Canada, Great Britain, Australia, India, and Germany.

• Males lost more money than females (ratio of $1.69 dollars lost per male to every $1.00 dollar lost per female). This may be a function of both online purchasing differences by gender and the type of fraudulent schemes by which the individuals were victimized.

• Electronic mail (e-mail) (73.9%) and webpages (36.0%) were the two primary mechanisms by which the fraudulent contact took place.

• Recent high activity scams seen by IC3 include hit man scams, phishing attempts associated with spoofed sites, and counterfeit checking scams.

To download the full report, go to: http://www.ic3.gov/media/annualreport/2006_IC3Report.pdf

TRAINING

Association of Certified Fraud Examiners

18th Annual ACFE Fraud Conference and Exhibition

Orlando, FL • July 15-20
Disney’s Coronado Springs Resort
www.FraudConference.com

Tampa Bay Chapter

Dinner Meetings

April 10, 2007
Steve Hooper, Sr. Auditor,
Hillsborough County, Clerk of the Circuit Court

8th Annual Fraud & Computer Crimes Seminar

May 8-9, 2007
Ruth Eckerd Hall
Clearwater, Florida1111 McMullen Booth Road
Clearwater, FL 33759

2005 - 2006
OFFICERS & DIRECTORS

PRESIDENT
Christine Dever, CPA, CFE
Accountabilties Consulting Services
(813) 417-1825

VICE PRESIDENT
Gary Chapman, CFE, CGAP
City of Tampa, Internal Audit
(813) 274-7163

SECRETARY
William H. Miles, CFE
Florida Department of Law Enforcement
(863) 701-1474

TREASURER
Laura Krueger Brock, CPA, CFE
Cherry, Bekaert, Holland, LLP
(727) 822-8811

DIRECTOR
Mark Dubina, CFE
Florida Department of Law Enforcement
(813) 878-7366

DIRECTOR
Ellen Wilcox, CFE
Florida Department of Law Enforcement
(727) 298-2482

DIRECTOR
Steve Hooper, CIA, CFE, CCSA
Clerk of the Circuit Court Hillsborough County, FL
(813) 276-2029 x3703

CHAPTER TRAINING
Wayne Boytim, CFE
City of Tampa, Internal Audit
(813) 274-7167

SOMETHING VISHY
Be Aware of a New Online Scam

It’s one of the latest breakthroughs in telecommunications—Voice Over Internet Protocol, or VoIP, which enables telephone calls over the web.

And guess who’s hopping on the VoIP bandwagon along with millions of legitimate customers? Criminals, that’s who. They’re using the technology to hijack identities and steal money. It already has a name: “vishing.”

New wine, old wineskins. Vishing is really just a new take on an old scam—phishing. You know the drill: you get an e-mail that claims to be from your bank or credit card company asking you to update your account information and passwords (perhaps, it says cleverly, because of fraudulent activity) by clicking on a link to what appears to be a legit website. Don’t do it, of course. It’s just a ruse, nothing more than an illegal identity theft collection system.

Vishing schemes are slightly different, with a couple of variations.

• In one version, you get the typical e-mail, like a traditional phishing scam. But instead of being directed to an Internet site, you’re asked to provide the information over the phone and given a number to call. Those who call the “customer service” number (a VoIP account, not a real financial institution) are led through a series of voice-prompted menus that ask for account numbers, passwords, and other critical information.

• In another version you’re contacted over the phone instead of by e-mail. The call could either be a “live” person or a recorded message directing you to take action to protect your account. Often, the criminal already has some personal information on you, including your account or credit card numbers. That can create a false sense of security. The call came from a VoIP account as well.

Vishing, as you might imagine from these scams, has some advantages over traditional phishing tricks. First, VoIP service is fairly inexpensive, especially for long distance, making it cheap to make fake calls. Second, because it’s web-based, criminals can use software programs to create phony automated customer service lines.

But if the thieves are giving out their phone numbers, they should be easy to track, right? Wrong. Criminals can mask the number they are calling from, thwarting caller ID. And in some cases, the VoIP number belongs to a legitimate subscriber whose service is being hacked.

So how prevalent is vishing? Hard to say, due to reporting difficulties. “A lot of would-be victims are reporting this as SPAM or phishing,” says Dan Larkin, chief of the FBI’s Cyber Initiative and Resource Fusion Unit. “But we know it’s out there. It’s happening.”

Don’t let it happen to you. Larkin recommends greeting a phone call or e-mail seeking personal information with a healthy dose of skepticism. If you think the call is legit, you can always hang up and call back using the customer service number provided by the financial institution when the account was opened.

Source: http://www.fbi.gov/

News from the ACFE

Chapter News

8th Annual Fraud & Computer Crimes Seminar

The speakers are booked, Ruth Eckerd Hall is reserved, and the registration forms are now available. All you have to do is register. Please visit our website at: http://tampabaycfe.org/seminar.htm

Chapter Elections

Last chance to vote! Chapter CFEs and Associate Members, please cast your ballot by visiting http://tampabaycfe.org/ballot.htm. The results will be announced at the Chapter's Annual Meeting.

Another New CFE

Stacie Gettle, an internal auditor with the W. S. Badcock Corporation, was informed by the ACFE that she passed the CFE Examination in January 2007.   

Congratulations to Stacie.

New CFEs Recognized at Dinner Meeting

Lynn Zimmerman, a consultant with the Axiom Professional Group, was notified by the ACFE that she passed the CFE Examination in January 2007. 

Johnnie Huneycutt, a Senior Corporate Investigator with TECO Energy, passed the CFE Examination in December 2006.

Congratulations to Lynn and Johnnie.

Tampa Bay Chapter Directory

The membership directory of the Tampa Bay Chapter is available at:
2007 Membership Directory (Adobe Reader format)

Dinner Meeting News

Our next Dinner Meeting is scheduled for April 10th

The dinner meeting will be held at the Westshore Hotel (Best Western), located at 1200 N. Westshore Boulevard in the Hyde Park Room (first floor). The hotel is just north of I-275 and Cypress Avenue on the east side of Westshore (map). Evenings will begin with a social at 6:00 P.M., followed by a buffet dinner at 6:30 and a presentation at 7:00. The cost is $20, payable at the door.

To make your reservation, please use the following link Chapter Meeting Reservation and complete the form at the bottom of the page.  You can also make your reservation by emailing Wayne Boytim or calling him at (813) 274-7167 by the Friday before the meeting date.

NEW POLICY: Reservations will NOT be accepted after 1:00 PM Friday afternoon. Walk-ups will be accommodated only if space is available.

Please remember that cancellations are accepted up to the afternoon of the meeting. No shows will be billed after the second missed meeting. Please help us keep our costs down by letting us know if you are unable to attend.

January 9th Dinner Meeting

Darrin Morgan, Assistant Vice President, Special Investigations Unit, Fifth Third Bank, Cincinnati, OH, presented "Mortgage Fraud." The focus of the presentation will centered on fraud-for-profit mortgage scams.

COMMON FRAUD
Ponzi Endures With Lure of Riches

James E. Brown Jr. spent money obtained from investors to buy 28 luxury vehicles for himself and his staff. Brown's investment ploy was a classic Ponzi scheme that brought in about $8 million. His seized vehicles, including a $450,000 Mercedes-Benz, are to be auctioned this month.

The sales pitch was seductive: the young visionary behind Brown Investment Services in Virginia guaranteed investors he would double their money in 30 business days by tapping into the complex world of foreign currency trading.

In investment seminars in the Richmond area last summer, James E. Brown Jr. freely displayed the trappings of his own financial success—luxury cars, jewelry, and a doting staff—as he educated potential investors about his expertise trading on the Foreign Currency Exchange Market (FOREX). Lingering doubts about the 21-year-old financial guru’s legitimacy were softened somewhat by happy investors who had already received their promised returns—and then some.

At its peak, Brown Investments had over 350 investors, including churches and small businesses, who entrusted the company’s president and owner with about $8 million. There was a major sticking point, however. While he dabbled a little in foreign currencies market, he was putting the majority of the money into his own bank account and paying “dividends” to old investors with the cash from new investors. This was a classic Ponzi scheme.

“Each month he was probably sweating,” said Special Agent Sherri Onks, who investigated the case and specializes in white-collar crimes in our Richmond field office. Had all his investors cashed in at once, Brown’s scheme would have come crashing down. But the essence of Ponzi schemes is to dangle the promise of riches down the line—if you can double your money in a month, imagine the return after two months, or three—so many investors let it ride.

“A lot of the people weren’t cashing out,” said Onks. “They wanted the big pay-out.”

It was Brown, however, who was getting rich. While he spent about $2.6 million paying off investors, he spent another $1.9 million on 28 luxury cars for himself and his staff, including a Mercedes-Benz worth about $450,000. He paid his staff handsomely, with each earning about a $115,000 salary. He freely withdrew tens of thousands of dollars in cash and debited proceeds from the investment fund. Brown’s own salary was $640,000.

Following our work on the case, Brown was arrested and charged in September on mail fraud charges. He pleaded guilty to money laundering and mail fraud in December. Seized were the 28 vehicles, jewelry worth $200,000, and bank and trading accounts containing about $1.2 million—a fraction of the funds invested.

“At the end of the day, when the jig is up, you are left with a whole group of people and have no money to pay them,” Onks said. The FBI, along with the IRS and U.S. Postal Inspectors, learned of the scheme last summer when people called asking if Brown’s company was legitimate.

Onks said the old cliché has never been truer: If it looks to good to be true, it probably is. “No one can guarantee any kind of return,” she said. “And he guaranteed to double everything.”

The scheme is named after Charles Ponzi of Boston, Massachusetts, who in the 1920s guaranteed investors a 50-percent return on their investment in postal coupons. Although he was able to pay his initial investors, the scheme fell apart when he couldn’t pay investors who entered the scheme later. There is scant data tracking Ponzi schemes and annual losses, but headlines about recent arrests show the illegal practice endures.

Brown, meanwhile, is scheduled to be sentenced in federal court next month in Richmond. The property seized—including all the cars Brown bought with his investors’ cash—will be auctioned this month by the  U.S. Marshals Service. Like many Ponzi scheme investors seduced by promises of easy money, in the end Brown was left with nothing.

Source: http://www.fbi.gov/
 

FBI NEWS QUIZ
Snapshot of Recent Investigations

Heavy seasonal rains in an Arizona community last summer opened a 35-foot-deep hole in the spongy ground around a septic system. Peering into the yawning fissure, a passerby noticed an unlikely cache that would prompt him to call local police, who would then call the FBI. Here in the form of a quiz is a look at the Arizona case and others from the FBI’s 56 field offices.

1. In the case mentioned above, what did the hole reveal?

A. An ancient tribal burial ground
B. Videotapes containing child pornography
C. A drug mule’s tunnel to Mexico
D. Al Capone’s vault

2. A former U.S. Navy sailor was indicted March 21 on terrorism and espionage charges. What did he allegedly do?

A. Attended training camp in Afghanistan
B. Created an Internet video that promoted violent jihad
C. Passed classified materials containing U.S. battleship movements
D. Both B and C

3. What did a federal prisoner send to a Virginia courthouse in 2005 that resulted in a life sentence?

A. An improvised explosive device
B. A written confession
C. Anthrax
D. A chain letter

4. How did a 40-year-old intern at the National Archives in Philadelphia distinguish himself last summer?

A. He recited the Bill of Rights from memory
B. He robbed a bank dressed as Ben Franklin
C. He spot welded the crack in the Liberty Bell
D. He allegedly stole priceless documents and hawked them on eBay

5. Where was a 27-year-old Mexican fugitive captured while on the run for allegedly killing a police officer in his hometown with a spray of gunfire from an UZI machine gun.

A. Houston
B. Los Angeles
C. Charlotte
D. Miami

6. A 48-year-old Connecticut man pleaded guilty in February to stealing trade secrets from his employer and trying to sell the product information to competitors. What was the product?

A. Cola
B. Ice cream
C. Batteries
D. Pharmaceuticals

7. What did a Kentucky judge buy last year to improve his chances of becoming Bath County Judge Executive?

A. An extreme makeover
B. A phony résumé
C. Internet video attack ads
D. Votes

Answers:

1: B - A cache of videotapes containing old footage of a man having sexual relations with underage girls overseas was discovered in a hole in Sierra Vista. An 81-year-old man who managed the property was arrested in February for producing the videos, some that date back to 1965. Read more.

2: B and C - Hassan Abujihaad, formerly known as Paul R. Hall, was charged in Connecticut for his role managing websites that promoted violent jihad and for sharing material containing a U.S. Navy battle group’s planed movements to the Persian Gulf region in the spring of 2001, and its perceived vulnerabilities. Read more.

3: A - A 41year-old inmate at a federal prison in Leavenworth, Kansas, sent an improvised explosive device in a manila envelope to the Clerk of the United States Court of Appeals for the Fourth Circuit in Richmond. He pleaded guilty March 15 to the explosives charge, a crime he’d previously been convicted of in 1992. Read more.

4: D - Denning McTague of Philadelphia was charged March 15 with stealing 165 documents from the National Archives, including an order from the War Department announcing the death of President Abraham Lincoln, and a letter from J.E.B. Stuart, one of the most famous cavalry men of the Civil War. Read more.

5: B - Odilon Carlos, 27, of Zacatecas, Mexico, was taken into custody March 19 by the FBI’s Fugitive Task Force near his girlfriend’s home in Huntington Park, a suburb of Los Angeles. Carlos, a member of the 18th Street gang in L.A., was turned over to Mexican law enforcement officials. Read more.

6: C - Edward R. Grande of Seymour pleaded guilty to one county of stealing trade secrets from the Duracell Corporation, where he worked as a cell development technologist. He sent research regarding the company’s AA batteries to two competitors, which returned the information. Read more.

7: D - Bath County Judge Executive Walter Bascom Shrout was found guilty on March 16 of conspiracy to buy votes, making false statements to a federal agent, and obstruction of justice. Shrout, 54, is among 12 individuals indicted in relation to the county’s May 2006 primary election. Read more.

Source: http://www.fbi.gov/