A BEC scam has robbed a Virginia school of funds to pay for a new football field. Separately, AppZen finds that artificial intelligence (AI) can aid firms in illuminating dubious employee expense requests and details a few “questionable” attempts to get firms to foot the bill.
Business email compromise has come to high school sports.
As reported this past week by Fox 5 in Washington, D.C., more than a half-million dollars of taxpayer money in Virginia’s Spotsylvania County has been taken in tandem with a BEC scam — and the money was supposed to be used to build a football field for a local high school.
“The real vendor responsible for the field is still awaiting payment,” reported the site.
The scheme apparently unfolded the way many BEC scams do — with a fraudster posing as a legitimate vendor, and where payments had been wired into scammers’ bank accounts.
“What we’re doing right now is we’re looking at our processes in place … to make sure this doesn’t happen again,” said Rene Daniels, director of communications and community engagement for Spotsylvania County Public Schools, according to the site, which added that no personal details or confidential information were compromised.
The news comes as the Financial Crimes Enforcement Network (FinCEN), part of the U.S. Department of the Treasury, has estimated in recent weeks that fraudsters have tried to scam as much as $9 billion through business e-mail compromise attempts since 2016.
The agency has found more than 32,000 documented cases of BEC attempts during that timeframe. Taken on a daily basis, the BEC scams have tried to siphon off $8.7 million daily from companies individual victims.
The tally means that the monthly reports have a run rate of more than 1,100 as seen last year, and that’s up sharply from the less than 500 reports estimated by FinCEN as of 2016.
Separately, AppZen, said that within companies themselves, expenses are not monitored as closely as they might be with the aid of technology.
As noted in the August 2019 “The State of AI in Business Spend,” 96.3 percent of an enterprise’s non-payroll business spend is accounts-payable based and 3.7 percent is travel and expense (T&E)-based.
Most enterprises, found AppZen, that don’t use AI only audit up to 10 percent of spend, while companies that use AI are able to audit 100 percent of invoices, contracts and expenses. Anecdotal evidence pf questionable spend includes examples spanning invoices for IT equipment five times the market price, payments for expired contracts and invoices from debarred suppliers (contractors that the government will no longer work with).
In Canada – and in the US, too
In a smattering of individual instances of fraud:
In Canada, SaskEnergy said that it fired an employee amid allegations that the unnamed worker had misappropriated a fuel card, racking up $30,000 in charges between 2004 and 2019. The employee had been given the fuel card as part of their job, which included driving a corporate vehicle. The employee was terminated in May and the company, according to the Saskatoon Star Phoenix, reports that the matter is under investigation and that steps are being taken to recover the losses.
Separately, in the states, the Associated Press reported that a California man, Robert Shapiro, has pleaded guilty in Florida for a $1.3 billion scheme that bilked money from thousands of investors across the country. The scheme was centered around the premise that real estate loans would pay high levels of interest. In fact, the real estate was owned by Shapiro or did not exist — and represented a Ponzi scheme.
Meanwhile, the Brixmor Property Group of New York City said this past week that it has agreed to pay $7 million to settle charges of accounting fraud tied to former executives of the company.
The Securities and Exchange Commission said that the four former executives, including former CEO Michael Carrol and former Chief Financial Officer Michael Pappagallo, had devised a scheme known as “making the sausage” that helped misstate financial results — underreporting income in certain periods and showing ostensibly better results in later periods as desired between the third quarter 2013 and the third quarter of 2015. The maneuver is also known as “cookie jar” accounting. The scheme, according to the SEC, helped the firm hit metrics that had been watched by investors.
The company, as reported, set aside $7 million during the fourth quarter of last year and had said earlier this year that a settlement was likely with investors.
Brixmor owns 421 retail locations, according to The Morning Call.