Pennsylvania District Attorney Alerts Business Owners to Fraud and other Economic Crimes

Is your business at risk of embezzlement, fraud, or computer data theft? In this interview with Delaware County, Pennsylvania’s District Attorney, find out about the kinds of crimes that are a concern for small businesses.

This past May the Delaware County, Pennsylvania District Attorney’s Office presented their first business security seminar for small business people.

The District Attorney’s Office held the seminar due to a good number of embezzlements and other financial crimes the prosecutors have seen in recent times.

I was unable to attend the seminar but I recently contacted the Delaware County District Attorney, G. Michael Green, and I interviewed him about the seminar and about economic crimes committed against the business community.

Below is my Q & A with the District Attorney:

Davis: How did your first seminar go? Any feedback?

Green: Yes, we received a lot of compliments. We had LT Joe Ryan of our Fraud and Economic Crimes Unit speak and he presented a number of different schemes we’ve seen by insiders. We also had Assistant DA Mike Dugan, the unit’s chief prosecutor, speak about a couple of prosecutions that had just been concluded prior to the seminar.

Davis: What can a small business do to avoid embezzlement and to prevent other insider crimes?

Green: When hiring people, do background checks to make sure they’re straight. But in the day-to-day operation of business, it’s really maintaining the simple accounting controls that we all learned in Accounting 101 in college. Not allowing a single person to have access to both sides of a transaction, and not allowing the same person who makes book entries for the company to also do deposits to the bank or wire transfers or anything of that nature. You can’t absolutely prevent theft, but what you want to do, I think, in at least in one billing cycle, one 30 day cycle, is look for a wrong doer. He’ll be spotted by looking at canceled checks and other transactions inside the organization. This will minimize the theft. What we’ve seen in Delaware County over the past seven years is sort of the unchecked theft from for-profit businesses and non-profit civic organizations like little leagues and churches, where for years there has been a single individual on both sides of every transaction. He or she is walking out of the businesses with buckets full of cash. We’ve investigated cases of million dollar thefts. The people look like the little old loveable lady who makes everybody a birthday cake. She’s the first person in the office in the morning and puts the coffee on, the last person to leave and of course, never takes a vacation.

Davis: Is economic crimes a priority in your office?

Green: Yes. Delaware County is physically located just south of Philadelphia and the population is about 560,000 people. About 80% of the jobs in Delaware County are created by small business. The reality in this office is that it is critically important for keeping crime down so we have a strong job environment in the county. If these businesses start to fail in significant numbers and we lose jobs, the strength of our legitimate economy is weakened and the opportunity for illicit enterprise is strengthened. One of our challenges is trying to maintain decent employment statistics in this international economic environment that we now face. We’ve been able to hold up OK against that, but we certainly don’t want to see businesses fail because they can’t maintain their internal integrity and insiders are walking out the door with what otherwise would be bottom-line profit.

Davis: What is the business community like in Delaware County?

Green: We have a number of significant large employers like Boeing Aircraft, Philadelphia Electric Company and Sunoco Oil Refining, along with a number of chemical processing firms and a number of smaller chemical, petroleum and other handling firms. And the large businesses have vendors that really feed off of those larger enterprises. In the county we have eleven colleges and universities, each of which is a significant employer and has small business suppliers feeding there. So it is really important that we help those businesses succeed.

Davis: Do you have a significant problem with the criminal con artists called the Travelers, or gypsies, in Delaware County?

Green: One of the things we’ve tried to do is educate people to look for licensing in contractors. Ensure they are licensed in the municipality, have appropriate insurance and the like. That’s one factor that keeps criminal gypsies out of the community. Ask for a license and if they don’t have one, don’t bite on the quick driveway job, the small flat roof repair job.

Davis: What other kind of crimes should business people be aware of?

Green: Another crime we see comes from unprotected wireless environments in small businesses. They are basically through the use of real simple technology in which professional criminals can actually gain access to an unprotected wireless database and mine data, including financial information. So when we speak to business groups, trade organizations and the like, we try to remind them every time – encrypt your wireless environment. Through the use of simple technology, one can gain access from the front curb into a wireless system and into the data base and server.

Davis: So all of your other security protections and procedures are out the window…

Green: That’s right. It’s an easy way. We understand now that the professional criminal does not want to get caught and secondly he does not want to get hurt. A real professional is unlikely to walk into the corner store and try to do a theft with a firearm, for instance, because his fear is the shopkeeper has a firearm.

Davis: And the punishment for white collar crime is less severe as well, right?

Green: We can talk to you about sentencing, not just here in Pennsylvania, but across the country. If I’m a bad guy and I get a 1,000 pieces of personal identifying information – in other words, 1,000 people and their name, address, date of birth information – theoretically, I can create a limitless number of phony financial accounts through credit cards, banks and other financial facilities. If all I do is steal a hundred dollars from each one and I get caught once or twice, I’m probably going to get no jail time. I’m going to plead for mercy, agree to make restitution and go to some community service program for a day or a weekend, but I’ll walk away with several million dollars in cash and other property that had never been detected by law enforcement. That’s how huge we think the problem may be. We think we are only touching on the tip of an enormous iceberg.

Davis: Have you prosecuted any cases involving unprotected wireless?

Green: We have not, but we know it’s going on. One of the reasons why is when you do your computer forensics analysis of the transaction, most likely you will not pick up an Internet protocol address, an IP address, from the bad guy’s device or the bad guy’s name. It’s going to come back to the IP address of the victim.

Davis: A small business that is victimized like this may be put out of business, am I right?

Green: It can mean the end of the day. And it can have a dramatic impact on their ability, for instance, to raise financing through borrowing. If you destroy that business’ credit, who is going to loan them money?

Davis: Do you plan another business security seminar in the future?

Green: Yes, and we’ll probably double our attendance.

In my next column I’ll offer my interview Lt. Joe Ryan, the head of the Delaware County District Attorney Offices’ Fraud and Economic Crimes Unit, and Assistant District Attorney Mike Dugan, the unit’s chief prosecutor.

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