All posts by Aaron Gilland

How the Pandemic Changed Fraud

Greetings!
This month I’m stepping away from the timber industry to discuss the broader topic of the changing fraud climate because of the pandemic.

Even in normal circumstances, the fraud landscape is constantly evolving. Criminals and all industries are locked in a perpetual battle to maintain the integrity of their operations and of the clients they serve. This battle is not new. 

Then COVID-19 spread around the world. This time, the organization that has been negatively impacted the most is the federal government and the people most hurt and taxpayers and legitimate individuals and small businesses who desperately needed government support to stay afloat. In its effort to quickly get financial relief to millions of individuals, families and small businesses, the door was opened for old and new fraudsters to emerge. Their efforts took money away from legitimate claims and has burdened the current and next generations with a trillion-dollar debt.


In this newsletter, I wanted to look at the face of fraud introduced by the PPP (Paycheck Protection Program). I can only touch the surface in this newsletter, but I thought we could at least get some idea of the breadth of the problem, the blatant spending of falsely claimed government funding, some cases of how it was done, and a warning to those who have accepted PPP funds.


Although these issues may not impact your business specifically today, it is a good idea to keep tabs on the changing fraud environment as fraudsters are not afraid of expanding their operations.


As always,
Aaron
How the Pandemic Changed Fraud

PPP: Ushering in the Biggest Fraud in a Generation

The PPP (Paycheck Protection Program) was intended to help those harmed by COVID-19, but others could not resist purchasing luxury automobiles, mansions, private jet flights and swanky vacations.

Some experts say the theft amounted to about $80 billion – or about 10% of the total given out. To make matters worse, it is estimated that at least half of that was taken by international fraudsters as reported by NBC News.

The prevalence of COVID relief fraud has been known for some time, but the enormous scope and its disturbing implications are only now become clear. Programs in 2020 sacrificed security for speed. There were minimal checks on the legitimacy of the claims.

The PPP authorized banks and other financial institutions to make government-backed loans to businesses. The loans were forgiven if the companies spent the money on business expenses. Millions of borrowers inflated their numbers of employees or created companies out of mid-air. The Government Accountability Office warned of fraud risk, but the program continued.

The fraud not only hurt taxpayers, but also legitimate businesses who needed the funds to continue. When the money ran out, there was not enough for legitimate claims. Businesses closed and people lost their jobs. Never has so much been stolen so quickly.

David Hines, 29, of Miami, admitted to a fraud scheme that netted him $3.9 million, according to his guilty plea. He bought a $318,000 Lamborghini Huracan and spent thousands on luxury hotels, jewelry, clothing and dating sites. Prosecutors recovered much of the money.

In another Florida case, a man used a $7.2 million emergency loan to buy a 12,579-square-foot mansion, a Lincoln Navigator, a Maserati and a Mercedes-Benz.

A California couple were convicted in June of stealing $18 million and bought three houses, diamonds, gold coins, luxury watches, expensive furniture and other valuables. Just as they were to be sentenced, they cut off their ankle bracelets and fled, leaving their children behind. They were captured in Montenegro and sentenced to 17 years in prison.

Elias Eldabbagh from Washington, DC, had no prior criminal record, but was charged last summer with trying to steal $17 million. He earned a degree in computer engineering from California State University, Sacramento, and has worked in various technology jobs. Prosecutors seized his Tesla Model 3.

A Texas man was sentenced to more than 11 years in prison for wire fraud and money laundering charges for his scheme to obtain $24.8 million in PPP loans. Dinesh Sah submitted 15 fraudulent applications to eight different lenders of businesses he allegedly owned. He claimed numerous employees and hundreds of thousands in expenses and fabricated federal tax filings.

There’s More – Vacations, Unemployment, Food from Kids

Other frauds took place related to the Pandemic as struggling industries tried to save their businesses by whatever means possible.

In South Carolina, Troy Benjamin Bittner, of Myrtle Beach, was indicted by a Florence grand jury for defrauding a local resort of nearly $1 million. According to the indictment, during the pandemic, Bittner mishandled refunds for guests who canceled reservations. Instead of directing refunds to the credit cards on file, the indictment alleges Bittner issued the refunds to his own personal credit cards and received more than $800,000 in fraudulent refunds at the expense of Carolina Pines over a 26-month period.

In Minnesota, three plead guilty to stealing food money from kinds in a $250 million pandemic fraud. The money flowed to organizations that were supposed to be feeding needy kids, but instead pocketed most of the money. Their guilty pleas were made just three weeks after they were charged. They may have been dozens of other people part of the massive scam.

In addition to the estimated losses of $80 billion from PPP fraud, it is believed $90 – $400 billion was stolen from the $900 billion COVID unemployment relief program.

Much of COVID unemployment relief was carried out by individual criminals or organized crime groups using stolen identities to claim jobless benefits from state workforce agencies disbursing federal funds. Each identity could be worth up to $30k in benefits according to Justice Department Inspector General Michael Horowitz, who oversees COVID relief spending.

Most of the losses are considered unrecoverable. Fortunately, $600 billion has not yet been distributed and new verification rules imposed last year will help to curb fraud.

Finally, another $80 billion was potentially pilfered from a separate COVID disaster relief program.

A Warning if Your Business Received Funds



I’m sure we will hear more about all that happened as the investigators continue to review the cases.

The statute of limitations for False Claims Act cases is 10 years, so there is still plenty of time for investigators to dig into the claims related to the pandemic. They are starting with the low-hanging fruit – the claims on businesses that don’t exist.

The more complex cases are yet to come and will take longer to investigate. The government is making sure the funds are being used by businesses that need them and are being used for the business. So if you participated in this program document how the money was spent!

Because of the unprecedented nature of the pandemic, rules were changing daily. Sometimes business owners and financial institutions were unclear about how the program worked. Business owners need to make sure they keep good records. If the business gets it wrong, it’s potentially a false statement to the government.

Resources

Myrtle Beach Man Indicted for Fraud Scheme in RV Resort, by Christina Lee Knauss, South Carolina Business News, cknauss@scbiznews.com, September 20, 2022.

Biggest Fraud in a Generation: The Looting of the Covid Relief Plan Known as PPP, NBC News.com, March 28, 2022, Ken Dilanian and Laura Strickler.

How Billions in COVID Relief Funds were Lost to Fraud, NBC News, Ken Dilanian and Laura Strickler

The Changing Face of Fraud During the Pandemic, by Will Maddox, Dallas, TX, Sep 8, 2021, D Magazine.

Three Plead Guilty in $250 million pandemic fraud that stole food money from kids. Stephen Dinan, The Washington Times, October 13, 2022.

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Timber Theft Suspect Nabbed in Texas

Greetings!

I’ve shared several articles over the years discussing the various cases where landowners have been scammed during timber harvests by purchasers who violate the terms of their contract. In some cases, landowners are not even aware harvesting is taking place on his/her property. In others, a contract is never even drawn up as landowners trust the relationship will be implemented as defined by a conversation and a handshake.

In any case, whether written or not, the transaction is built on trust. In this case, that trust is emphasized because the harvesters are considered trustees and responsible for acting in the best interests of the landowners. When that doesn’t happen, the consequences are serious.

And unfortunately, some timber theft cases are never resolved, so I was happy to read about this case in Texas. I first stumbled on the case from an article by Trendon Hooker of KXXV and KRHD news as part of the 25 News team in Waco, Texas.

The Texas A&M Forest Service Law Enforcement Department is particularly aggressive in finding fraud and taking action. It’s a good thing, since the rising cost of timber can bring temptation to thieves.

Landowners who are unfamiliar with selling their timber are urged to contact their local Forest Service office and/or a reputable consulting forester to ensure their best protection before, during and after the sale.

As always,
Aaron

Timber Theft Suspect Nabbed in Texas with a Third-Degree Felony for Breach of Contract

Timber Theft Suspect Nabbed in Texas

Forty-nine-year-old Troy Grice of Groveton, Texas has been charged with timber purchase as trustee with intent to defraud, a third-degree felony.

The Texas Natural Resource Code has a section which states that money collected from timber is trust money. If the trustee of that money doesn’t pay all the beneficiaries for the timber within 45 days of the timber being sold, that person has committed timber fraud. Although the statutes may change somewhat state-by-state nearly all states view the situation the same.

In January 2019, Grice entered a contract with a Jasper County landowner to harvest 314 acres of timber. He was working under his company Apex Timber. Grice started the agreed-upon harvest and made initial payments as outlined in their agreement. However, when delinquent payments started occurring, the landowner halted the harvest in April 2019. The landowner promptly notified the Texas A&M Forest Service Law Enforcement Department about the unpaid balance, and they began investigating the case.

Josh Mizrany, an investigator with Texas A&M Forest Service Law Enforcement Department, said “The past few years we have seen an increase in Timber Fraud cases. Most of these cases started off with a legitimate contract, but then the landowner only receives partial payment, or no payment at all.”

Once notified of the unpaid balance, the Texas A&M Forest Service Law Enforcement Department began its investigation of the case. They were unable to verify that Grice had paid all the trust money owed to the landowner. Grice turned himself in to authorities after a warrant was obtained by Texas A&M Forest Service law enforcement officers and was later released on a $30,000 bond.

Grice was arrested on March 5, 2020. The case was eventually brought before a grand jury. After hearing testimony, on February 25, 2021, the grand jury decided there was probable cause for Grice to be charged with a felony of the third degree. Grice was charged with defrauding the landowner of between $20,000 and $100,000 worth of timber.

Timber theft can take a variety of forms, from harvesting timber without the landowner’s knowledge or consent, to entering into a formal agreement, harvesting a landowner’s timber, and then not paying them the full purchase price. Sometimes while processing the landowner settlements it seems tempting to withhold some payments.

Mizrany points out that there are a lot of losers in these types of situations. Not only is the landowner put in a situation where he/she must take legal action to get what is rightfully theirs, but it puts a blemish on the timber industry as landowners become skeptical of those who are invited on their land, but turn into trespassers and thieves.

Fortunately, in this case the landowner acted quickly and contacted the proper authorities to get quick action. The longer the case sits the less likely it is to get a positive verdict or even to get restitution when it is awarded since most harvesters will have spent it quickly.

Landowners are encouraged to monitor any harvesting activity closely if they want to protect their property. It is very important that every timber contract clearly state terms of payment. If a contractor fails to adhere to those terms, the landowner should halt the process until payment is received, as the landowner in the above case did. Acting quickly is key to getting a positive result.

I know I’ve provided prevention tips before, but I think they are worth repeating.

To prevent timber theft, landowners should:

  • Visit their property frequently.
  • Have someone they know and trust report any cutting on their land immediately.
  • Never sign a contract without checking several references of the buyer.
    For the best price, insist on getting bids for their timber.
  • Mark all property lines to assure cutting on adjacent property does not encroach on theirs.
  • Utilize trail/deer cameras on their property that can record suspicious activity or individuals.
  • Always hold their timber contractor to the agreed upon terms.
  • Notify local Forest Service Law Enforcement as soon as possible. They will work with local law enforcement officials to support landowners in protecting their property.
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Fuel Theft Anyone?

You may remember I asked for feedback for last month’s newsletter on zone jumping fraud. It’s clear I need to update the term, as many of you let me know, that zones aren’t used in your area and others couldn’t believe the comments I quoted from a few foresters. I can assure you the attitudes reflected by their comments are accurate for some folks in our industry. Other comments were well thought out and very passionate. I appreciate the feedback and am always open to suggestions!

Now for this month’s topic, fuel theft.

As always,
Aaron

Fuel Theft

As fuel prices have increased dramatically over the past two years the fuel utilized to operate woods equipment has become a target for thieves. A small logging job consisting of a skidder, a feller buncher, a loader and one portable fuel drum could easily have 750 gallons of fuel in the woods. At $5.13 per gallon that raises the potential loss to over $3800 for the fuel alone, without considering potential damage and downtime.

Security Breach

A logger returning to the logging job one morning discovered his log loader out of fuel. Upon closer inspection, it was discovered that someone had cut the fuel line and drained the fuel from the tank. Apparently, the thief did not have the capacity to handle all of the fuel in the tank and drove off, letting the rest of the fuel drain onto the ground

This theft cost the logger down time for repairs to the fuel line, the value of the fuel stolen and additional costs in the clean-up and disposal of contaminated soil.

Actions Taken

The logger notified local law enforcement, but there was little that could be done to find the thieves or recover the costs from the damage. Taking the advice of local law enforcement officers, the logger installed motion-activated cameras in an attempt to monitor traffic into the job site. In addition, gates were closed during off hours in an attempt to prevent further access to the site.

Prevention Methods

Loggers routinely operate in remote locations that are difficult to monitor, giving potential thieves the perception that the theft is low risk. Loggers should work to change that perception.

It is recommended that organizations with exposure to the risks of fuel theft develop a security plan which implements daily defense measures using some or all of the recommendations below.

Securely lock equipment cab doors and provide locks for the service access doors, fuel tanks, and master switches.

Block vehicle access and prevent driving to within close proximity of equipment. Use gates when possible, or use barriers of cut trees to block roads.

In the case of a fuel trailer, consider pulling it out of the woods during off hours. If that is not feasible, then remove the pumping mechanism and secure the trailer to a stationary object.

Maintain a record of all the gallons pumped from the tank. This will not only provide an accurate record of fuel usage by equipment/individuals, but it will also serve as a record that can be utilized by law enforcement and insurance companies should a theft occur.

To prevent siphoning of fuel, install an anti-siphon screen in the neck of each tank. This prevents hoses from being inserted into the tank.

To prevent fuel lines from being cut, harden the target by limiting access to the engine compartments when possible. If that is not an option, replace the existing fuel lines with steel braided fuel lines.

When possible, leave equipment near the homes of friendly neighbors who are willing to observe the machine periodically. And avoid parking two or three machines together in one place.

Install surveillance cameras to record all visitors to the site and post signs at the entrance to the job stating that the premises are under surveillance.

Installation of motion activated lights on the job site as well as motion activated alarms on equipment would warn if equipment is being abused and could also be a good deterrent.

In areas known to be “trouble spots” consider hiring a local person to patrol the area at night (preferably a retired or off-duty law enforcement officer).

Camp out on the site.

Have signs printed, stating that the area is under surveillance by “XYZ Security Services” and post signs in obvious areas. (buy cheap signs, since they will be stolen or vandalized!).

Notify the local sheriffs office, since they may be able to patrol the area more often if they know to expect trouble. They may even use the situation to increase surveillance, hoping to catch a habitual offender in the act of committing a crime.

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Zone Jumping – Business as Usual?

Two conversations related to zone jumping raised some alarming questions for me and if these beliefs are widespread the forest industry has a very large problem.  These conversations were with a consulting forester and a procurement forester, both with over 20 years of experience. And to be clear, these were separate conversations. One conversation involved whether or not zone jumping is actually theft and fraud in the first place. 

The speaker contended it was normal for wood procurement foresters to maximize their profits this way. To him, they should even get kudos for work well done in improving profitability for their company (or themselves). His rationale? The mill foresters occasionally tell the procurement foresters to “just submit the higher zone card” or use the established contract delivery cards and don’t worry about the mileage differences. Additionally, if the mill foresters don’t monitor where the wood comes from, then it must be OK to fudge the distance the tract is from the mill (or the zone).   

The other disturbing conversation to me was with a forester who commented on the apparent proclivity of kickbacks within the procurement world. The gist of his argument hinged on personal observation that very few mills have active anti-zone jumping programs in the first place. For him, that lack of attention meant they didn’t want to look into the matter because the mill procurement personnel were getting rich from the kickbacks they received from the contractors zone jumping.

What do you think? Is zone jumping theft and fraud, or is it business as usual? Do kickbacks prevent the mill procurement personnel from highlighting zone jumping as a crime? Does the forest industry devote enough time and resources to addressing this issue? Does widespread zone jumping raise the wood costs at your mill? What is your opinion? I’d like to hear your opinions, please.

And, I offer my apologies to all procurement personnel now if I have insulted you with this article. As a former procurement forester myself, I think I know how an article like this makes you feel. However, I do want to explore the extent of these ideas and perspectives. It’s my hope that in having this conversation, together, we can educate the forest industry as a whole about the dangers of following ineffective practices and/or inadvertently encouraging theft by ignoring the problem.

 As always,

Aaron

The Problem of Zone Jumping

First, let’s make sure everyone understands the concepts of zones, zone pricing, special pricing and how that can lead to zone jumping or “cheating on the miles to the mill”. .

Some mills, which have a sufficient source and supply of wood for their needs, tend to offer just one market price for all wood purchased regardless of supplier or distance to the mill. In this case, there is little cause for fraud since all wood is delivered at the same price. Few have this situation, however. As the wood inventory in the mill declines or the demand for wood increases, the use of “special prices” increases as all mills compete for adequate supplies.

When competition for wood suppliers increases, mills take on a variety of strategies to ensure inventory levels are met. Since all the wood hauled into a mill must be trucked from various distances, the mill will often agree to pay a higher price for that which is farther away. A zone is established when a purchaser prices wood based on distance, for example, one rate for 1-20 miles from the mill, another rate for 21-50 miles, and so on. In the old days, mills would take a map and draw concentric circles around their location and call them zones. Prices would be set by these zones. Underlying all pricing decisions is the mileage to the mill, whether or not zones are used.

Furthermore, in many cases, mill procurement personnel will negotiate special prices (above the normal distance zones) with some suppliers to ensure a steady supply of wood into the mill. This is typical in situations where wood inventories are low or production requirements are demanding enough to require purchases from various locations and suppliers. At times procurement personnel are under enormous pressure to get raw materials to the mill at almost any cost. As the pressure mounts and the complexity of the process increases, the ability to monitor fraud can be compromised.
To subvert this system, supplier’s misrepresent where the wood actually originated at the point of delivery. Subverting the system can take the form of lying about the source of the wood, turning a blind eye to mileage discrepancies, or simple inability or unwillingness to monitor the sources of the wood being delivered. For whatever reason.

Zone jumping is further impacted by the following:

Company Policy is not being implemented. Some mills and companies establish a zone pricing policy but don’t really monitor or enforce their rules or contract
stipulations. They have the right processes in place but choose not to follow them.

A wide ranging price differential. There is a greater risk of fraud and loss if the price differential is large (say, $7 – $10) compared to a difference as low as $1 – $3. However, today’s higher fuel costs have added to the financial strain to all within the supply chain and an extra 50 cents per ton is a help.

Time constraints impact the ability of companies to police zone jumping. Most companies have fewer staff, procuring the same amount of wood, and certification programs (Forest Stewardship Certification and Sustainable Forestry Initiative) have added additional responsibilities. Certifications mean a greater responsibility to track where wood originates. Most companies will require GPS coordinates before they price a tract, which has led many companies to price tracts on a tract-by-tract basis. If the mill buys a significant amount of wood, that translates to a lot of office work and increases the number of special prices within the system.

Mill Procurement foresters trust their suppliers and it’s easy to ignore the possibility of zone jumping altogether. If a problem arises, many foresters are quick to claim it was probably an error or simple mistake by the trucker, even if it seems unbelievable that they can’t remember the location they just hauled wood from.

Mill Procurement foresters calculate that the risk of cheating and loss is minimal. They simply don’t realize how much they can lose by this crime. One forester I know recently worked a zone jumping case that had losses exceeding $100,000 per year. How many years can your company afford the higher wood costs?

Some prosecutors are reluctant to take this criminally. This is especially true if they don’t see the company making an effort to monitor or enforce zone jumping. This makes them lean towards civil remedies.

Prevention Methods for Zone Jumping

Require all contractors provide location maps, descriptions and/or GPS coordinates for all tracts delivered to the mill.

Require all contractors notify mill personnel when moving to new tracts. Then require new contracts for every price change or new tract. And have a system in place to collect old or expired delivery cards.

Conduct regular, unannounced audits on tract locations. Follow the empty truck back from the mill to verify the tract location. Visit the tract based on the contract data provided. Utilize GPS as a tool to verify tract locations. Possible use of Google Maps to verify tract locations using GPS coordinates. Conduct zone jumping audits utilizing an independent third party.

Check weekly scale tickets or delivery information from each supplier to become aware of any locations that don’t seem to make sense or that don’t match wood procurement’s expectations. Obtain truck ID’s and monitor truck turn-around times.

Aggressively pursue any cases of zone jumping and terminate business agreements. If the violation appears willful and/or ongoing, gather evidence while the security breach continues, in preparation for legal action.

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Why People Cheat — What Does the Research Say?

You may remember back in 2015 I shared with you a very interesting guy who has actually spent much of his career studying the hidden ways people deceive themselves into cheating and lying. And I decided to share that newsletter again, so we keep in mind the reasons folks lie, cheat and steal.

Dan Ariely is a professor of Behavioral Economics at Duke University and MIT and is the Director of MIT’s Center for Advanced Hindsight. He has written several books and has several YouTube recordings. His book Predictably Irrational shows how people are irrational in calculable and dependable ways, ways you might not expect when it comes to long-standing views of those who steal. 

The connection to our work in the security field is obvious. Fundamentally, cheating is the root cause of all fraud and theft cases. I have often discussed a character profile of a thief and emphasized that they may not be who you might expect. Ariely’s research brings a different perspective. Ariely demonstrates that a lot of people (maybe all) steal a little, and that can be as devastating as a few stealing a lot. Perhaps we shouldn’t look so much for a particular character type, but rather create security programs that impact everyone. His hope is that by understanding why people cheat, he can help them find better ways of resolving some of life’s issues. 

I’ve provided a summary of his findings below. I hope you think he’s as fascinating as I do. If you want to learn more, you can search the internet under his name for several references. One of those references was a presentation he gave October 11, 2013 from the Amazing Meeting 2013. In this presentation, The Honest Truth About Dishonesty: How We Lie to Everyone, he explains his research and tells us why he thinks people cheat. Click the link below to listen to his presentation.

As always,
Aaron

Dan Ariely on Cheating: Not What you Might Expect

Conventional wisdom assumes people cheat or steal utilizing a cost/benefit analysis. In other words, people cheat because they weigh the probability of getting caught and the level of punishment they’ll receive. With that assumption, we should make examples of those who steal in an effort to make the cost outweigh the benefit. As you know, that isn’t as easy as it sounds and, additionally, may not be as effective as we had hoped. If harsh penalties were effective in deterring crime, then crime should be low in states with the death penalty, and that just doesn’t seem to be the case. Although the fear of getting caught may have an impact on some, for the majority of people it just doesn’t seem to really work that way. 

To learn more, Ariely and his team conducted a series of experiments where he gave participants 20 math problems that they could work, but they didn’t have enough time to do so. Their task was to complete as many as possible, and they would receive $1 for each correct answer. They then conducted a series of versions of this to check how participants would react. 

Here are the major findings: 

1. A lot of people cheat a little.   

At the end of the experiments, out of 35,000 participants, 20 were big time cheaters (ripping them off for $250 in total) and 25,000 were little cheaters, essentially stealing $50,000. In this experiment, the chance of getting caught was very low, so there didn’t seem to be any rational model. When the time was up, the students were instructed to shred their results and then go to another room and tell the person there how many they got right.   His conclusion was that people seemed to balance two things. They like to think of themselves as good, but they actually get some benefit out of cheating or lying. Therefore, the temptation is there, and so they will cheat just enough that they can still feel they are good people. It’s not about consequences. It’s about how you feel about doing it. People steal from companies because they think it won’t matter, or they deserve it, or they were somehow wronged, or they have some internal “rule” that makes it ok, such as “they didn’t catch me, so it’s their fault.”  They also experimented with having participants try to remember the 10 commandments before doing the math exercise. He didn’t find any college students who actually knew the 10 commandments (he did get some creative new ones) but in the end, whether Christian, Jew, or atheist, no one cheated. He tried the same with swearing on the bible and/or making them sign a paper saying they understood that they were to follow the college’s code of conduct in this experiment, again no one cheated. Apparently being reminded of your better self goes a long way in making sure people don’t cheat. 

2. If other people are doing it, then it’s ok. 


Think about illegally downloaded material. How many would do it if they knew others would find out? Or thought they were the only one who did this? How many would feel comfortable about leaving a restaurant without paying? Generally, according to servers he talked to, people almost never do this, even when they have several ways to get away with it. They just don’t leave without paying.  

So Ariely modified the experiment. Instead of having them earn the money, he gave them the $20 up front and told them to work the math problems and return any money that they hadn’t earned (e.g., by getting a math problem right). In this case, most people cheated. There were no consequences, and they already had the money in hand.  

At Carnegie Mellon University, he planted a paid actor to cheat. After 30 seconds (way too short of a time to complete the 20 questions) the actor got up and left, saying he got all the questions right. This was clearly a lie. What they found was interesting. If the person wore a Carnegie Mellon t-shirt, people identified with the person, and nearly everyone cheated as well. If the actor wore a University of Pittsburgh shirt, no one cheated. In essence, they said, “We are better than they are. We’re above that.” 

3. If the object is not actual money, people are more likely to cheat. 

When they changed up the original experiment so that they paid the participants in tokens rather than money and then asked them to go to another room to get their money, it doubled the amount of cheating. As the distance between the cheating and the money increases, the number of cheaters increases.  
This idea is the foundation for much of high level embezzlement and fraud. It doesn’t feel like money. It feels like a computer transaction — like a million other transactions they do every day. For many, they have even convinced themselves that it’s not really cheating and/or it doesn’t deserve very strict punishment.

What can we take from this?

Reduce the number of opportunities for cheating. Once it starts, it seems to build. Dishonesty seems to build over time. It’s like a diet. Once you go off the honesty diet, you decide, “What the heck, I’ve already blown it!”

Remind people of their better selves. 

Draw the line at petty theft – don’t just focus on the big stuff. A lot of little thefts can be much more devastating than one big one.

Create an atmosphere where everyone feels people here have integrity and don’t cheat, so they identify with that group and not the group that says people don’t get caught here, so you’d be a fool not to steal.

It’s studies like this that have me thinking about ways we can improve our prevention stance as an industry. 

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Camera Deployment Reveals Fraud

A few years ago I attended the annual meeting of the Forest Resources Association. Like others, I tend to be early in the breakfast line and this particular morning I sat next to a logger from Pennsylvania. We had not previously met so we had the usual introductory style conversation; Where are you from? What do you do? Etc..

The following summary explains how he discovered fraud by employing the same techniques DRM uses to monitor loggers, scale houses, and wood inventories.
As always, Aaron

Logger Purchases Surveillance Cameras

As we sat talking that morning, I explained to him how, as a forestry audit services firm, we provide operational auditing throughout the forest industry supply chain and also assist our clients in monitoring and testing their timber security systems. I told him one method used to utilize surveillance systems is to count the production of a log crew and verify the use of security tags.

He explained that he ran multiple crews and used subcontractors on the wood processing and trucking side. After hearing how DRM works to monitor operations, the logger returned home and purchased several remote cameras to monitor activity at and around the various log landings. He understood that it needed to occur without the knowledge of his employees and subcontracted crews.

I’m happy to report that he discovered no theft of his products occurring, which of course pleased him as well. However, he was surprised to learn of the frequency of after-hours and weekend activities happening on his roads and landings (a very common observation once cameras are deployed). He understandably was distressed to see his crews routinely arriving and departing to and from the work site at times that did not match their time-cards. 
Mitigation MeasuresAs a result of his camera surveillance, he installed GPS monitoring systems on all his company trucks. Thus, he was able to routinely match date and time stamp/location to the time-cards of his employees. Because of this foresight in monitoring the comings and goings of his employees and the discovery of time-card fraud, he was able to take disciplinary action. The real issue turned out to be with two employees who ultimately were fired for stealing time. This logger has continued to employ camera surveillance on his job’s to monitor traffic and activities.

Lessons Learned by the Logger

Even though camera surveillance has many benefits, there is a definite learning curve associated with setting them up and getting them to deliver the pictures you want. The first tree you come too isn’t always the best choice for camera placement. And cameras can have sight limits especially in low light and dark conditions.

He also learned that a camera can’t replace a locked gate. Gates are still the best at reducing the after hours site seers and thieves.

What Camera should you Use?

This is a very common question and my response these days is to use the cameras you are familiar with. There are so many options in the game-camera world that it is best to stick with cameras you are familiar with and that you can setup quickly in order to get the pictures you want. However, about a year ago, the best camera for low light conditions was in the Browning game camera family. Many game cameras use visible IR llight at night to light up the picture the camera sees, and in doing so it also lights up where the camera is placed. Use models with invivislbe IR light so you can prevent camera theft. When you purchase a game camera set it up on your driveway and experiment with how the camera placement impacts triggering the sensors. Keep experimenting until you can consistently get the camera sensors to trigger where you want in order to get the best pictures.

Keep in mind, new camera systems are always being brought to market and in the high tech world a year is a very long time.
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