Don’t Be a Victim

by Chicago Agent

Infamous fraudster Frank Abagnale advises on how to avoid falling victim to financial crime
All too often, real estate professionals are the victims of identity theft, check fraud and other kinds of financial crime, which are too easy to perpetrate and, with new technologies, are getting easier all the time. That was the message Frank W. Abagnale brought to a ballroom filled with RE/MAX affiliates recently at the Drury Lane Theatre and Conference Center in Oakbrook Terrace, Ill., during a presentation sponsored by LaSalle Bank.

On the bright side, he emphasized that there are ways for Realtors, or anyone else, to protect themselves, and they don’t have to be complicated or expensive. Abagnale ought to know. He is a document security consultant with more than three decades of experience and three books on the subject of fraud prevention to his credit. His life as a teenage fraudster in the 1960s was dramatized in the 2002 Steven Spielberg movie “Catch Me If You Can,” which was based on Abagnale’s autobiography. His most recent book, “Stealing Your Life,” contains much of the information and advice he imparted to his RE/MAX audience.

“Fraud is at an all-time high,” he said. “U.S. companies lose some $660 billion to fraud each year. What’s being spent on the war in Iraq and to repair the damage of Katrina is small in comparison. To give you some perspective, the entire defense budget for the United States was $407 billion last year.”

Fraud takes many forms, including embezzlement by employees, identity theft and check forgery, all of which Abagnale addressed during his talk. For example, only about 10 percent of all embezzlement is ever reported, he said, because the companies involved often are embarrassed by the crime. For companies victimized in that way by a former trusted employee — someone who isn’t likely to do any prison time, even if convicted — Abagnale offered an alternative strategy.

“Embezzled income is taxable, and you have three years to file a Form 1099 on the former employee for that ‘income,’” he said. “In almost every case, threatening to file a 1099 is much more effective than prosecution in persuading embezzlers to return the money because they don’t want the IRS going after them.”

Identity theft isn’t new, but Abagnale said identity thieves are constantly creating new ways to go about it. “Because of a combination of information technology and stupid laws, it’s much easier than ever before,” he said.

There are several simple things that everyone can and should do to prevent identity theft. “Buy a shredder that reduces paper to confetti, and use it,” he said. Look for a credit report monitoring service that tracks all three major bureaus, he said, and one that notifies you of any activity in real time because, “once a month isn’t going to cut it.”

Moreover, he recommended that individuals do some of their own monitoring, checking to see what information is freely available about them online. He cited a number of Internet-based services that do just that, including mypublicinfo.com, which searches 12 billion public records in a few hours, and zabasearch.com, which provides information on houses, plus other sites such as docusearch.org and netdetective.com.

Check fraud, Abagnale said, is a serious and growing problem for American businesses. In 1996, there were about $12.6 billion in bad checks; in 2006, that figure had risen to $20.5 billion. Of that total, fraudulent checks accounted for about $771 million, and only 5 percent of fraudulent bad checks are ever collected. Moreover, check fraudsters have only about a 2 percent chance of ever doing any prison time.

“It’s a high-profit, low-risk crime,” he said. “And, not only that, the check itself isn’t likely to go away. We’re going to see a paperless society when we see the paperless toilet. It isn’t going to happen.”

Once upon a time, check forgery was fairly difficult. A crook needed access to a supply of checking paper, as well as the special presses that printed checks (40 years ago, as a young criminal, Abagnale did that covertly at a printing company). Now, anyone can buy check paper, and anyone with a moderate amount of modern printing equipment can print up bogus checks. To demonstrate the point, during the first 45 minutes of his presentation Abagnale had assistants print up a number of checks that looked like real RE/MAX businesses checks, using a real RE/MAX logo, complete with the real names and signatures of audience members taken from their sign-in information at the event. Abagnale then gave each of these audience members their bogus check. “It’s that easy,” he said.

He recommended a certain kind of pen for signing checks and other important legal documents: the Uniball 207, which has ink containing a pigment that cannot be chemically erased or altered, as crooks do when they “wash” checks to increase the amount payable. “It’s a cheap, simple solution, and I like cheap, simple solutions,” Abagnale said. “Each Uniball will set you back about a $1.50. Banks ought to give them away to their customers.”

Another way to guard against check fraud is to use “positive pay,” Abagnale said, asking those in the audience who made use of it to raise their hands. Few did. Positive pay is the generic term for a system that automatically transmits to a bank a list of checks written every day by a company on its account with that bank. When a check is presented for payment, it’s matched against the list. If the account number, check number and dollar amount don’t match the list, the check isn’t paid.

“Most banks offer this service, but if yours doesn’t, find one that does,” he suggested. “It takes the risk out of writing checks.”

Abagnale summed up an overall strategy against fraud this way: “When protecting yourself against fraud, your first line of defense isn’t going to be the government or the police or even your bank,” he said. “It’s you. Use a little common sense, and take care of yourself.”

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