Wirecard continues to dominate the headlines in the realm of corporate fraud thanks to $2 billion missing from the company’s books, but it’s not the only company at the center of questionable activity.
With the global pandemic continuing to cause market disruptions, the opportunities for fraudsters remain on the rise. At the same time, however, new research from Harvard Business Review found that the percentage of businesses that actually report attempted or actual fraud is actually on the decline.
Analysts had initially believed that businesses were reluctant to report fraud in order to protect their reputations, but according to Harvard Business Review’s latest study, firms are also reportedly not confident in the legal system to address their cases appropriately — and researchers warn that this could be troublesome for companies in the long term.
This week’s look at the latest cases of B2B fraud finds a surge of business email compromise (BEC) attacks, as well as emerging trends in fraud related to government coronavirus relief efforts.
34 percent of furloughed employees were asked to commit furlough fraud, according to a survey from U.K.-based Crossland Employment Solicitors. Researchers found that furloughed employees are widely reporting that their bosses have asked them to continue to conduct their normal work duties despite being furloughed in order for their employers to secure funding.
In a statement, Crossland Managing Director Beverly Sunderland said the tactic is “potentially making the company money and so increasing their profits, and the government will pick up 80 percent of the employee’s wage and. could potentially foot a bill of billions in fraudulent furlough wage claims.”
The U.K. government has given companies a 30-day window to confess to furlough fraud, reports noted.
200 percent more BEC scams hit U.S. companies between April and May this year, Abnormal Security data revealed, according to Helpnet Security reports. Researchers also found that in addition to a higher volume of BEC attacks, cybercriminals are also going after larger dollar amounts of wire fraud or redirected vendor payments. The number of businesses that reported an increase in BEC attacks targeting their operations increased by 36 percent. While reports did not indicate the impact of coronavirus on a surge of BEC scams, the 200 percent jump coincides with businesses shifting to a work-from-home environment.
$115,000 worth of fraudulent payments were reportedly made by former leaders of a small town in Missouri, the New York Times recently reported. Parma was the target of a recent audit by state Auditor Nicole Galloway, who found evidence of payroll fraud and/or “improper payments to the mayor, city clerk, and to city officials and others who were related to the major or city clerk.” There is also reportedly evidence that former city officials misused government prepaid procurement cards to purchase goods for personal use.
$1.8 million was embezzled by a former commercial real estate employee from Milan Capital Management, an Orange County, California company, leading to the imprisonment of the former employee, according to local OC-Breeze reports. The individual, who pleaded guilty to one count of wire fraud, was accused of abusing his position as an accounts payable clerk within the company’s accounting department. The case says he stole the password of the company’s treasurer to alter bank account and routing numbers of vendor partners to replace them with his own, in essence enabling him to pay himself using company funds.
$6.7 million worth of business loans were allegedly obtained fraudulently by a California auto body shop owner, reports in Repair Driver News said. Geoffrey Palermo has been accused of wire fraud from state law enforcement officials, which claim that he made false statements on a loan application to obtain the financing for the shop. About $1.7 million of that financing was obtained in the form of a Paycheck Protection Program loan, officials noted, with U.S. Attorney David Anderson releasing a statement last month noting that the shop “was not paying required payroll taxes for his employees” despite obtaining the PPP funding.
$91.4 million was lost to B2B invoice fraud in Australia last year, new statistics from the Australia Competition and Consumer Commission’s Targeting Scams report revealed. According to the Australian Financial Review, scammers are increasing their use of invoice fraud to target companies, sending fake bills and posing as legitimate suppliers to steal funds from their targets. These tactics often hit in the form of the business email compromise scams, the ACCC said, which are the most financially damaging to target companies.
“These combined losses from the ACCC, other government agencies and the big four banks show how financial harmful these scams can be,” the ACCC’s Deputy Chairman Mick Keogh told the publication.