Über die Autorin bzw. den Autor

JOSEPH KOLETAR, DPA, CFE, is a Principal and Service Line Leader in Ernst & Young LLP’s Forensic and Investigative Services Practice in New York. Previously, he was the Director of the Forensic and Corporate Investigative Services practice of Deloitte & Touche LLP. Before joining the private sector, Dr. Koletar spent twenty-five years as a special agent in the FBI, the last seven in senior executive positions.

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The $600 billion gorilla in the room

"Dr. Joe Koletar has provided an effective road map to the problem of occupational fraud, in both the public and private sectors, in America. Such frauds affect every American worker, shareholder, and taxpayer. His insights and ideas are an important contribution to the effort to fight this growing menace."
Congressman John E. Sweeney, New York s 22nd District

"A superb and timely book for every executive to read. Joe Koletar has brought together all the works done in the past on occupational fraud and given us a road map of what needs to be done. It will be required reading for every candidate in an MBA program."
Thomas J. Pickard, Vice President, Corporate Security, Bristol-Myers Squibb and former Deputy Director, FBI

"Joe Koletar deserves high praise for this timely and trenchant analysis of corporate crime. Bringing to bear his extensive experience in the FBI and the private sector, Koletar dissects the roots of corporate fraud, the means to prevent it, and the best way to investigate it when it occurs. Anyone wanting to understand the current spate of corporate accounting scandals should read this book."
David Zornow, Litigation Partner, Skadden, Arps, Slate, Meagher & Flom LLP and former Federal Prosecuter

While occupational fraud has long been accepted as the cost of doing business, Enron, Global Crossing, and other high-profile cases have proven its potential for catastrophic damage to be significant. And, paradoxically, these headline-grabbing examples are only the tip of the iceberg. The lion s share of the estimated $600 billion lost every year to workplace fraud comes from small-time kickbacks and "ghost vendor" scams that go undetected and unpunished. Fraud Exposed lets the white-collar crime cat out of the bag, presenting comprehensive, provocative solutions for eliminating occupational fraud. Topics covered include:

• Law enforcement response models
• Internal and financial controls
• Organizational intelligence
• Game theory and other fresh, radical perspectives
• Preventive and punitive measures

Auditors, fraud examiners, CFOs, and controllers will find Fraud Exposed to be an essential addition to their professional libraries.

Aus dem Klappentext

As an estimated $600 billion a year "industry," occupational fraud dwarfs most legitimate industries many times over. Yet the vast majority of organizations private, public, governmental, or nonprofit have woefully inadequate internal controls, and what energy is devoted to combating workplace fraud is generally spent on post-infraction detection and punishment, rather than on cost-effective preventive measures. In Fraud Exposed: What You Don t Know Could Cost Your Company Millions, former FBI executive and corporate security chief Joseph Koletar blows the roof off the "dirty little secret" of occupational fraud, proposing new methods for reducing this extraordinary liability.

Applying criminal and law enforcement response models to the workplace, Koletar analyzes seemingly disparate topics such as financial controls, organizational intelligence, and game theory to show how fraud examination methodology must change in order to become more effective. High-profile, high-level cases such as Enron and Global Crossing are dramatic examples of workplace crime, but they are only the tip of the iceberg. Kickbacks, large-scale diversion of goods and services, and the creation of "ghost vendors" are surprisingly common phenomena in such industries as retail, manufacturing, health care, education, financial services, entertainment, advertising, waste management, and energy, costing these industries millions upon billions of dollars every year. And these costs do not simply "go away." They result in higher prices to consumers, lower profits to companies and shareholders, higher cost to taxpayers, lower bonuses to managers and executives, poorer performance on Wall Street, negative impacts on pension and retirement plans, and the failure of more than a few businesses.

Fraud Exposed takes on the status quo, showing how traditional methods of dealing with occupational fraud are inadequate and how an organization s mind-set must change if it is to be more effective in dealing with this problem. Chapters discuss:

• Crime and the Law Enforcement Response
• Lies, Damned Lies, Statistics (and Occupational Fraud)
• Community, Corporate Citizenship, and Quality of Life
• Forensic Professionals as Organizational Pathologists
• The Next Five Years

In each, Koletar debunks fraud orthodoxy, approaches the problem from a fresh angle, and presents provocative new strategies. There is no magic solution to this $600 billion problem. But Fraud Exposed presents both a startling, comprehensive account of the dilemma and a road map to reducing workplace fraud.

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Fraud Exposed

John Wiley & Sons

Chapter One

The history of modern policing as we know it can be traced to London in 1828 when Sir Robert Peel introduced a bill to provide for a trained and uniformed police force. The force, because of Peel's backing, quickly became known as bobbies or peelers. Encouraged by this development, New York City followed the same path in 1844, when the old Night Watch was legislated out of existence. In 1845 the first shield was introduced. The device has a rather peculiar history. Up until that time the police preferred to patrol in civilian clothes, seeing uniforms as a British custom not befitting freeborn Americans. The eight-pointed, star-shaped copper shield was worn on civilian clothes to denote the wearer as a police officer. These persons quickly became known as coppers or cops. In New York City, formal training and official uniforms would not appear until 1853.

Although there is much detailed history related to the subsequent development of policing in New York City and other locations throughout the United States, from this simple beginning the structure of modern law enforcement was laid. As it grew and evolved, it faced challenges both great and varied: draft riots during the Civil War, bandits of various ilk in the unsettled West; the fear of sedition during World War I; Prohibition and the rise of organized crime; black marketeering and military preparedness during World War II; the civil unrest of the 1960s; and, of course, drugs.

As the 1960s began to meld into the 1970s, despite the best efforts of law enforcement, crime continued to be one of the leading concerns of the public. In 1968, crime was the number-one domestic issue cited in the Gallup poll, the first time that had ever occurred. Crime rates were soaring, with the FBI reporting the following increases per 100,000 persons in the U.S. population between 1969 and 1970:

Murder Up 56 percent

Aggravated Assault Up 92 percent

Forcible Rape Up 95 percent

Robbery Up 186 percent

Burglary Up 113 percent

Larceny ($50+) Up 240 percent

Auto Theft Up 150 percent

Rader and McGuigan commented on these times in the following manner in 1983:

Either crime has been increasing over the last decade or clocks are ticking slower. In 1971, Americans could expect a murder every thirty minutes, a rape every thirteen minutes and a violent crime every thirty-nine seconds. In 1981, murders were occurring every twenty-three minutes, a rape every six minutes, and a violent crime every twenty-four seconds. Moreover, the average American is experiencing crime firsthand more often. A 1981 study by the Department of Justice found that 25 million American households (30% of the total) were victims of crime. Accordingly, U.S. families are more prone to have a member attacked in a serious crime (rape, robbery, or aggravated assault) than to have a residential fire or have a member injured in an automobile accident, and more likely to have a member robbed than to have a member stricken by cancer or heart disease, the nation's leading health problems.

Were this not bad enough, urban America-Baltimore, Chicago, Detroit, Miami, Newark, and Washington, D.C.-experienced major riots, and significant parts of some of these cities went up in flames. Police control was tested, with the National Guard and even regular Army units being called up to assist. Serious commentators were debating the proper role of the military in assisting the police in the discharge of their duties and the Constitutional issues this would raise.

Thomas Repetto, the head of the New York City Crime Commission, has commented on the state of crime in that city during the era. In 1961, the NYPD reported 390 murders; by 1964, the rate was 637, an increase of two-thirds in just three years. By 1972, the rate was close to 1,700, quadrupling over a single decade. The number of robberies reported had risen from 23,000 in 1966, the first year statistics for such crimes had been kept accurately, to nearly 90,000 at the beginning of the 1970s.

New York City was hardly alone in its crime problems. Meltzer observes that other cities had their issues as well:

Bad as the situation in New York was, it was worse in other cities. In 1987 New York ranked ninth in murder and manslaughter among the twenty-five largest cities. Detroit was first (with a rate two and a half times that of New York), and New Orleans was second in rates per 100,000 people."

The United States was also not faring well when compared to other countries, as Meltzer also notes:

The United States has a higher homicide rate than any other industrialized country. In the 1980's about 20,000 murders a year were committed in the United States. Each year 10 Americans of every 100,000 were murdered. In West European countries the homicide rate was fewer than 2 per 100,000. Taking Australia, Canada and New Zealand together, the homicide rate was less than 3 per 100,000.

At the same time, he advises, the overall level of violent crime in the U.S. was beginning to show signs of declining, by 21 percent in the period 1980-1984.

Some argued that public concern about crime was merely a function of awareness and perception. To quote the old newspaper adage, "If it bleeds, it leads." As the 1980s approached, sometimes-sensational coverage, aided by smaller and more mobile remotes and eye-cams brought crime into our living rooms. Like the Vietnam War, daily doses of near-real-time carnage had a powerful impact on the public psyche. Reality television producers realized that for the cost of a camera crew, powerful entertainment could be put forward without the need to build sets and pay actors and scriptwriters. Even the search for fugitives, one of the most basic elements of law enforcement for centuries, could be transformed into a long-running television series.

Such respect for the power of the media has not abated. At the 2002 American Bar Association meeting of its White Collar Crime Section, two entire tracts were devoted to media matters: "High Visibility White Collar Crime Cases: Will the Media Shape Your Case?" and "Inherit the Wind-Dealing with the Media in the 21st Century." Considering that these topics were competing for scarce presentation time with items such as "International Investigations-The Expanding Extraterritorial Jurisdiction of the United States and the Bill of Rights" and "Grand Jury Reform," it appears the criminal bar is appropriately sensitive to the influence the media can wield. Indeed, the proceedings of this meeting contained no less than 14 newspaper articles that were believed to bolster the argument for the media's ability to shape public perceptions.

Others saw broader societal forces at work, affecting not only street criminals but many institutions and professions as well. The Hastings Center, in an ethics report at the end of the 1970s, noted:

On the societal level, our newspapers and pundits have bemoaned symptoms of a moral vacuum ... a sense of moral drift, of ethical uncertainty, and a withering away of some traditional roots and moorings. There is a concern about juvenile delinquency, about white-collar crime,...