The Hunt For Cybercrime
Tracking down embezzlers, computer hackers, money launderers, shady stock promoters and other white-collar criminals may lack the pizazz of James Bond outwitting Goldfinger or decapitating Oddjob.
But in a post-Cold War global economy, don't be surprised if some of the first movie heroes of the new millennium are bespectacled, Palm VII-packing auditors from Big Five accounting firms, Web browsers at the ready. "The breadth of criminal activities facilitated by global computer networks, such as lifting personal credit card information, redirecting electronic funds and stealing proprietary and other confidential information, continues to grow," said Stephen O. Pierce, a partner at PricewaterhouseCoopers who heads its investigations unit.
And crimes could hit close to home. One of the firm's clients, the Pension Benefit Guaranty Corp., a federal agency that sends checks to some 500,000 retirees, recently found its computer defenses penetrated by security experts who could have robbed it blind. The reason they didn't was that the break-in was a test of the agency's systems, determining that for all the electronic safeguards, it was vulnerable to external and internal attack. With businesses rushing to go online, theft and fraud are not far behind. E-commerce has spawned its own array of hard-to-detect cybercrimes, like transaction fraud and Web site destruction. The crimes are producing not only fear in corporations, but also many new assignments for auditors and consultants, who are increasingly being asked to trace e-mail and ferret out smoldering diskettes.
But in trying to find gumshoes who can sniff out white-collar crime from three cubicles away, Big Five recruiters obviously won't find many candidates on the B-school campus. That is why, over the last 18 months, almost all of the 25 new employees hired for the Deloitte & Touche forensic and investigative services division came with law-enforcement experience. And PricewaterhouseCoopers, in addition to hiring former FBI and Interpol agents, has just recruited Scott Charney, 43, formerly a top cybercop at the Justice Department.
At Ernst & Young, the forensic investigations practice has more than tripled in two years, said Cheryl Sparkes, a partner. "We've gone from 30 to 100 employees and we're aggressively seeking more," she said, "mostly with law enforcement and other investigative backgrounds."
C onsider Don Svendson, 50, hired last year after a 26-year career with the Royal Canadian Mounted Police to run Deloitte & Touche's investigative office in Chicago. "There's no end in sight to the rise in embezzlement, executive malfeasance and money laundering," he said. Though a roaring economy and the dot-com invasion make pastures greener for criminal activity, Svendson says there is more to it than that. "Corporations are leaner and meaner, the management turnover is high and companies can't exercise all the controls they really need," he said.
Svendson may well be a typical recruit - someone with professional training in criminal justice and decades of hands-on experience. While the job may not sound as adrenaline-pumping as his previous work - which included commanding a SWAT team in Manitoba and breaking up riots - he says he finds it thrilling.
Having extracted confessions from rapists and hit men, Svendson was recently asked to put his interrogation skills to work on someone suspected of embezzlement at a company after irregularities were found. Svendson said he got the employee to confess; the employee was dismissed. "You need to know what body language to look for and how to ask the questions," Svendson said. Ed Rial, 40, recently made the leap from criminal justice to corporate fraud investigation, and is now a Deloitte partner.
Rial, who dreamed as a boy of being a detective, graduated from the University of Pennsylvania law school in 1984 and took a job at the Justice Department in Manhattan. He spent almost a decade as a federal prosecutor and four years in charge of a New York office of the department's business and securities fraud unit, bringing to trial cases involving drugs, murder and kidnapping. With Deloitte since November, Rial specializes in hunting down corporate fraud, kickback schemes and insurance fraud. These days, he sees stock fraud as the fastest-growing white-collar crime. In particular, he cites outfits that take shell companies public, trade with cronies, then dump the shares into the public's lap through cold calls.
"Many of these boiler-room brokers worked for years as telemarketers," Rial said. "They have phenomenal sales skills and are completely unscrupulous. And it's incredible the amount of participation they get from smart people - doctors, lawyers and educators."
The quick stock-market success of Internet companies, he added, makes people more susceptible to high-technology pitches from fraudulent promoters. And many people don't think of white-collar crime as a big issue anyhow.
"It's because the perpetrators are often the people you grew up with, the best friend of your father," Rial said."They're almost always people in very senior positions. Believe me, no one ever says, `I always suspected him."'.
Written By Laura Pedersen-Pietersen - 13-01-00