A visit to the Exhibit Hall at the 24th Annual ACFE Global Fraud Conference brings an interesting journey through the past: the Fraud Museum traveling exhibit features more than 20 pieces of fraud memorabilia and artifacts from the only collection of its kind in the world.
This year’s exhibit, with pieces selected from the Fraud Museum’s permanent display at ACFE Headquarters in Austin, Texas, focuses on an age-old method fraudsters employ for their schemes: correspondence. From letters and posters to investigative essays, “Letter of the Law: Fraud Through Correspondence” highlights infamous frauds perpetrated through the mail system.
One of the oldest pieces is an 1876 French letter. An attempt was made to mail it from Belfort to Tournus, France, on June 17, 1876, with a previously used stamp. Before its delivery, the document was intercepted by the French Postal authorities, who noted in pencil, “timbre réuitilisé, Fraude” (stamp reused, fraud).
Another piece is a letter written and signed by Owen Cosby Phillips (1863-1937) that outlines what was later revealed to be a phony investment opportunity. Phillips, born of blue blood, was knighted in England Feb. 14, 1923, as 1st Baron Kylsant.
But the bigger they are, the harder they fall. In 1931, 1st Baron Kylsant was charged and convicted of fraud in connection with issuing a phony stock prospectus. He didn’t go down without a fight, though. The Baron spent what today would have amounted to £9,000,000 (US $14,400,000) in legal fees on his unsuccessful defense.
Thereafter, he was stripped of his knighthood and served one year in prison. It wasn’t all bad, however. Because of his status as a gentleman, Phillips was entitled to have first-class catered meals delivered to him behind bars.
The 1949 “Revolt of the Admirals” was one of the most contentious feuds in American military history and initially focused on the B-36 intercontinental bomber. In 1947, the U.S. Air Force was created as a separate branch of the armed services, drawing both from the Army and Navy air corps. The U.S. Navy bitterly opposed the new Air Force, as well as the development of a plane that could fly as far as 10,000 miles non-stop and deliver an atomic payload to bomb the enemy. Instead, the Navy preferred continued reliance on a fleet of aircraft carriers whose planes were quite limited in their range.
Once long-distance bombers like the B-36 were developed, the Navy no longer dominated bombing strategy; it was the Air Force. Navy brass did everything it could to scuttle this new technology — to no avail. As early as 1947, when the plans for the B-36 were initially drawn, the Navy began planting newspaper articles critical of the project. It also enlisted the assistance of Cedric R. Worth, a former Hollywood scriptwriter, to pen an “anonymous” letter claiming that the B-36 project was fraught with mismanagement and fraud.
The letter made the rounds to Congress, the public and the Navy, which convened an inquiry board, the picture of which you can see in the Fraud Museum, to look into the allegations. A congressional investigation failed to substantiate any substantive wrongdoing in the project, paving the way for the B-36 and successive long-range aircraft to become a key element of America’s defense.
Conference attendees should make sure to visit the Fraud Museum and see these and other pieces for a reminder of many a fraudster's favorite method of defrauding their victims. Be sure to play the matching game on p. 71 of your conference guide for a chance to win a $250 Visa gift card.