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Faces of Fraud: Cases and Lessons from a Life Fighting Fraudsters

Faces of Fraud: Cases and Lessons from a Life Fighting Fraudsters

Martin T. Biegelman

ISBN: 978-1-118-23545-4 February 2013 288 Pages




The ultimate tool for understanding, investigating and preventing fraud

Fraud is an evil with a life of its own that leaves a financial, repetitional, and emotional toll on its victims. While monumental scandals, such as Enron, WorldCom, and Madoff's Ponzi scheme make the front pages, fraud is a daily occurrence impacting companies and individuals alike. Faces of Fraud reveals must-know characteristics of fraudsters and the skills needed to outwit them. Recognized Fraud Fighting Expert Martin Biegelman draws from his 40 years of experience fighting fraud to profile not only the key traits fraudsters share, but also the qualities fraud examiners must possess to be successful.

  • Each chapter contains stories from actual cases that the author investigated
  • Profiles the must-know characteristics of fraudsters and the skills you'll need to outwit them
  • Reveals the traits of accomplished fraud examiners
  • Explores the best practices in fraud detection, investigation and prevention to cultivate in order to maximize success
  • Written by fraud fighting expert Martin T. Biegelman

Although fraud will never be completely eradicated, there is much that can be done to reduce the number and size of frauds that take place in any organization. Boiling down the key lessons the author has culled from his long career, Faces of Fraud entertains and informs with stories from real cases the author investigated over his long career, and imparts useful tips you can start using right away in the fraud examination field.

Preface xi

Acknowledgments xiii


The Fraudster Mindset 1

A Silver-Tongued Devil 2

Sell the Sizzle, Not the Steak 3

Dr. Donald Cressey and the Fraud Triangle 5

Fraud Diamond 9

Fraud Theories 10

Fraudster Mindset 17


A Short History of Fraud in America 23

Growth of Mail Fraud 24

Green Goods Swindles 24

Grifters 26

Baker Heirs’ Swindle 27

Golden Age of Fraud 28

Rise of Boiler Rooms and Bucket Shops 31

Other Frauds over the Years 32

Enactment of the Mail Fraud Statute 37

The Continuous Onslaught of Fraud 39


Use Your Imagination 41

The Mob Stings Fraudsters 41

Making the Typewriter Talk 44

Where the Law of Gravity Doesn’t Apply 45

Welfare for the Deceased 51

The Value of Imagination 52


Make Yourself Lucky 55

Fraudster Stupidity Is Your Friend 56

One Man’s Trash Is an Investigator’s Gold 57

Let Them Talk 58

Arson for Profit Case: Impeaching the Defense Expert 59

One Federal Agent’s Attention to Detail 62

Look and You Shall Find 63

Don’t Take No for an Answer 65

If You Don’t Ask, You Will Never Know 66


Patience Is a Virtue 71

Stopping a Fraud Scheme 71

New York State of Fraud 78

Recommendations to Prevent Property Insurance Fraud 91


Fraud Can Be Murder 95

Good Humor Ice Cream Scandal 97

Bad Ham and Bribes 102

Golden Needles Acupuncture 108

Blast from the Past 110

Security Guard Indignity 114

Next Time Dead 119


Arrogance and Recidivism 121

If You Are Here, You Are Not As Smart As You Think

You Are 122

Arrogance Is Common 125

Arrogance and Recidivism Often Go Hand-in-Hand 126

Arrogance and Rebate Fraud 131

Making It a True Federal Case 133

Fraudsters Say and Do the Darndest Things 136


Informants and Whistleblowers: The Good, the Bad, and the Ugly 141

Managing Confidential Informants 143

Informants Gone Bad 152

Falling in Love with an Informant 155

Nightmare Informants 156

A Rogue FBI Agent Strikes a Deal with Two Devils 157

Avoid a Failed Investigation 159


A Tale of Deceitful Pitches and Vendor Kickbacks 161

History of American Chemical Industries 162

Description of the Fraud Scheme 163

Detection and Investigation 169

The Continuing Investigation 173

Prosecution 174

Special Circumstances 176

Fraud Prevention 177


Cruise to Nowhere 179

Description of the Fraud Scheme 180

Detection 182

Investigation 183

Factoring of Credit Card Charges 186

Investigative Reporting 187

Execution of Search Warrant 187

Circularization 188

Undercover Trip 189

Prosecution 193

Special Circumstances 194

Fraud Prevention 194

Investigative Best Practices 195


Who’s Who of Fraud: A Story of Vanity and Deception 197

The Making of a Fraudster 198

Fraud Scheme 199

Investigation 204

Prosecution 208

Special Circumstances and Additional Fraud 210

Postscript 211


Kids and Coins: Scoundrels without a Conscience 213

Genesis of the Fraud 214

Description of the Fraud Scheme 216

Investigation 219

Prosecution 224

Special Circumstances 226

Fraud Prevention 227


More Tips, Best Practices, and Lessons 231

Become a Subject Matter Expert 231

Documents, Documents, and More Documents 232

Remember the Boy Scout Motto 234

Why I Love Liars 235

Fraudsters Love Expense Report Fraud 236

San Francisco Metergate 239

Yellow Pages Invoice Scam 242

Best Laid Plans of Mice and Men Often Go Awry 244


Power of Prosecution and Prevention 247

Fraud Prevention for Individuals 249

Fraud Prevention for Business Organizations 250

Fraudsters Are the Same Everywhere 253

Fraud Is the Golden Goose for Criminals 254

It’s Deja vu All Over Again 256

Sadly, Fraud Is Here to Stay 260

About the Author 263

Index 265