Computer savvy helps bust frauds
Once a tip or complaint about fraud surfaces, local government auditing departments play an important role in proving the case against the offenders. In many cases, computer technology plays a key role in revealing the perpetrators.
Tom Wiss, legislative auditor with the Unified Government of Wyandotte County-Kansas City, Kan., recently wrapped up a case involving two employees of the county’s Auto Licensing Department. The case began when a police officer pulled over a driver on a routine traffic stop. The officer discovered the driver’s license tag documents were not registered with the state, even though they appeared to be legitimate.
The driver returned to the county’s Auto Licensing Department and was told that an employee there had voided his registration. The driver notified the district attorney’s office, which in turn notified Wiss. Wiss ran computer reports of transactions going back two years and found that two employees were randomly taking registration fees from residents, then voiding their registrations after giving them tags and receipts. The employees pocketed the money. “There were over 200 transactions involving $130,000 in stolen cash,” Wiss said. The employees were charged with theft and computer crime.
Alex Valadez, an IT auditor for San Antonio, is working a fraud case dealing with city inventory. In coordination with the city’s Office of Municipal Integrity, he acquired documents and converted them to database format to see if certain products were purchased at a normal periodic rate. Using data mining software, Valadez says, he learned the characteristics of the data, then ran statistical samples to look for abnormalities. “If there is an abnormality, you check to see if it corresponds with the tip,” he says. “If it does, you go ahead and get the supporting evidence.” The case is still under investigation, he says.
While law enforcement is normally called in to lead a fraud investigation, the paper trail hunt in complex accounting cases is left to certified fraud examiners with information technology skills, says Jim Ratley, president of the Austin, Texas-based Association of Certified Fraud Examiners. “Most records are on a computer,” Ratley says. “You need a specialist to tell you what they should look like, someone who can see when something doesn’t look right.”