By Cora Bullock, Assistant Editor, Fraud Magazine
What does a fraudster look like? People often ask Martin Biegelman, CFE, CCEP, that very question. His answer? “The faces of fraud are everywhere.” David Greenburg was a famous police detective, a hero in the New York Police Department in the late 1960s and early ‘70s. Remember the TV show “Starsky and Hutch”? It was based on Greenburg and his partner. Turns out he was conducting insurance fraud and later served four years in jail.
Biegelman regaled the audience with stories of fraudsters from throughout history, plus case after case from his 40-year career fighting fraud. He is Managing Director of Global Investigations & Compliance with Navigant and presented his entertaining session, “Silver-Tongued Devils: Case Studies and Best Practices from 40 Years Confronting the Evil of Fraud.”
He told attendees, “We as a society have a problem: We suffer from short-term memory syndrome.” Simultaneously he showed a slide with side-by-side photos of Charles Ponzi and Bernie Madoff, who perpetrated Ponzi’s same scheme 80 years later, making his point that people still fall for the same schemes over and over.
Biegelman’s first big case was in 1974 with Good Humor ice cream company. The aging manufacturing facility was unsanitary: When roaches fell into the vats of vanilla ice cream, the company covered them up by adding chocolate chips. They kept two sets of books for the E. coli contamination: the genuine book recording the outrageously high levels and the fake one showing compliance to government standards. Two chemists aware of the fraud came to Biegelman and blew the whistle on the company.
He said that case taught him how valuable informants and whistleblowers are, saying, “Informants make you lucky.” The informants he uses include:
- Bookkeepers, secretaries, administrative assistants
- Former spouses
- Terminated or disgruntled employees
- Doormen and mail carriers
Those informants’ motivations cover the gamut:
- Fear of jail
- Good citizens
- Elimination of competition
One particularly intriguing case illustrated his “Potato Chip Theory of Fraud,” which he explained as, “Once you start committing fraud and get away with it, you can’t stop at just one. You also start branching out.”
Biegelman was investigating an employee at one company who used his corporate credit card for his bachelor party. One of his investigators looking into the employee’s emails noticed an unusual question that a friend had sent him: “Did the subject of your name ever come up?” It turns out this employee had stolen an identity years before and since he had gotten away with it, had continued with his fraudulent activities.
Biegelman outlined best practices for fraud examiners, including:
- Value of imagination
- How fraudster stupidity is your friend
- Why fraud can be murder
- Never take no for an answer
Biegelman’s vast experience was aimed toward his more-experienced colleagues, but his practical advice could help novices. He said he learned early on that 80 per
cent of success is just showing up and though it’s better to be good than lucky, “it’s even better to be good and lucky.”