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Update on Fraud / Important Considerations in Hiring Consultants

Update on Fraud / Important Considerations in Hiring Consultants. Presented By: Jim Parker, CPSM, C.P.M. Update on Fraud. Many Universities have been targeted in the past few months in PO fraud scams University of Utah University of Michigan University of Washington UC Riverside

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Update on Fraud / Important Considerations in Hiring Consultants

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  1. Update on Fraud / Important Considerations in Hiring Consultants Presented By: Jim Parker, CPSM, C.P.M.

  2. Update on Fraud • Many Universities have been targeted in the past few months in PO fraud scams • University of Utah • University of Michigan • University of Washington • UC Riverside • UC Berkley • UNLV • Many Others • University of Utah fraud attempts began in October 2013 • Daily – most attempts have been against suppliers that the U. does no business with (less than 10%) – last week we received 4-5 companies a day calling/contacting us • Fraud appears to be primarily from “offshore” scammers

  3. Fraud is Internet based with some verbal contact • Tactics • Email for Quote pretending to be U. of Utah • Leave “801” based phone number • Leave phony email ending in “edu-com” or similar • Actual names of real buyers • Follow up with phony P.O. Number • Call/contact to set up new accounts with suppliers • Targets are in the U.S. and other countries • Some attempts have been successful • Common Traits of scammers • Bad English – both written and verbal • Ship to is different from legitimate order location • Order in unusually large quantities – easily sellable items

  4. What we are doing at the U: • Working with our Legal Office • Working with local and other law enforcement • Working with company fraud departments • Working with IT Security professionals to locate IP addresses • Shutting down illegitimate websites/emails • Until a company is defrauded, legal remedies are somewhat limited • Alerting suppliers via our website: http://fbs.admin.utah.edu/download/purchasing/Notice_to_Suppliers.pdf

  5. Example Mr. Siegler: Thank you for alerting us to this situation.  As you suspected, this request is fraudulent.  We have been informed by several suppliers of similar falsified procurement attempts recently.  During the process of sharing details with authorities, we’ve been informed that these fraudulent attempts are originating out of the country, thereby limiting an expedited resolution.  We have added an alert to our website informing suppliers of these attempts ( http://fbs.admin.utah.edu/download/purchasing/Notice_to_Suppliers.pdf). Thank you for your assistance. Jeffrey M. Johnson | Associate Director University of Utah | Purchasing Department 1901 E. South Campus Drive, Room 151 | Salt Lake City, UT  84112 P:  801-581-6621 | F:  801-581-8609 | jjohnson@purchasing.utah.edu Send questions using our Ask Us feature on www.purchasing.utah.edu From: Johny [mailto:johny@huffmansecurity.com] Sent: Tuesday, January 14, 2014 7:34 AMTo: James ParkerCc: Jeff JohnsonSubject: FW: Price request...CCTV Camera and Digital video recorder Mr. Parker, We have received a request for goods to be purchased on a PO basis from one of your Buying Staff. (see below) I have noticed some discrepancies in the email address and need to verify that this is indeed a legitimate request? Best Regards, Johny Siegler Huffman Security Co. 1312 Lonedell Road Arnold Mo. 63010 Phone 636-282-7233 Fax 636-296-0844 www.huffmansecurity.com

  6. From: Michael Smith [mailto:msmith@purchasingutah-edu.com] Sent: Tuesday, January 14, 2014 1:04 AMTo: JohnySubject: Re: Price request...CCTV Camera and Digital video recorder Hello Johny,Thanks, I received the quote, please advice total cost for below quantity needed..Indoor 700 Line CCD 3.6mm w/65 foot IR Black / Any Brand $ 195.00 X 96 UNITS16 CHANNEL DVR WITH 1 TB HDD / Any Brand $701.25  X 6 UNITSWD10JPVX WD Blue 1TB 5400 RPM SATA 6GBPS 2.5 Hard Drive $106.25 X 48 UNITSSeagate 3.5" 1TB ST1000DM003 Barracuda 7200 SATAIII 6Gb/s $85.00  X 48 UNITSThis equipment needed in our CHS Division satellite Campus as soon as possible.Also advice if we are able to work with line of credit (Net Term) for this order await your reply in othere to forward Purchase Order ( PO ).Thank you,Michael SmithUniversity of UtahUSPS Mailing Address:1901 E. S. Campus Dr. Room 151Salt Lake City, UT 84112-9351 P:801-742-8461 On Mon, Jan 13, 2014 at 5:09 PM, Johny <johny@huffmansecurity.com> wrote: Michael,Please see the pricing below:- Indoor 700 Line CCD 3.6mm w/65 foot IR Black / Any Brand $ 195.00 each thisis a Clinton Brand 700TVL 33IR LED 2.8-12mm lens 12/24 voltage- 16 CHANNEL DVR WITH 1 TB HDD / Any Brand $701.25 this is a Clinton StandAlone Linux based unit 16 channel with 1TB Hard Drive- WD10JPVX WD Blue 1TB 5400 RPM SATA 6GBPS 2.5 Hard Drive $106.25Seagate 3.5" 1TB ST1000DM003 Barracuda 7200 SATAIII 6Gb/s $85.00- This does not include any shipping cost to you, I estimate shipping be lessthan $50.00.Let me know if you have any questions.Best Regards,Johny SieglerHuffman Security Co.1312 Lonedell RoadArnold Mo. 63010Phone 636-282-7233Fax 636-296-0844www.huffmansecurity.com

  7. -----Original Message-----From: Rex Huffman [mailto:rex@huffmansecurity.com]Sent: Thursday, January 09, 2014 7:36 AMTo: Johny SieglerCc: Angie BehrensSubject: FW: Price request...CCTV Camera and Digital video recorderJohny,Not sure if the below is legit or not but please respond with decent pricesand let's seeRex Huffman-----Original Message-----From: Michael Smith [mailto:msmith@purchasingutah-edu.com]Sent: Thursday, January 09, 2014 2:15 AMTo: tolufson@prowire.usSubject: Price request...CCTV Camera and Digital video recorderAttention  Sales,Advice price for the below items:- Indoor 700 Line CCD 3.6mm w/65 foot IR Black / Any Brand- 16 CHANNEL DVR WITH 1 TB HDD / Any Brand- WD10JPVX WD Blue 1TB 5400 RPM SATA 6GBPS 2.5 Hard Drive- Seagate 3.5" 1TB ST1000DM003 Barracuda 7200 SATAIII 6Gb/sThank you,Michael SmithUniversity of UtahUSPS Mailing Address:1901 E. S. Campus Dr. Room 151 Salt Lake City, UT84112-9351 P:801-742-8461

  8. Possible Violations of Utah Law • (1)    Communications Fraud 76-10-1801 (any person who has devised any scheme or artifice to defraud another or to obtain from another money, property, or anything of value by means of false or fraudulent pretenses, representations, promises, or material omissions, and who communicates directly or indirectly with any person by any means for the purpose of executing or concealing the scheme or artifice is guilty of (d) a second degree felony when the value of the property, money, or thing obtained or sought to be obtained is or exceeds $5,000. • (2)    Use of registered mark without consent 76-10-1007 (he has unlawfully used the University of Utah’s mark) • (3)    Violation of unfair trade practices 76-10-1009 (derivative of 1007)

  9. Hiring Consultants • What needs to be considered?? • Competition or Sole Source • IRS – Independent Contractor issues • Cost Reasonableness • Contracts • Changes in Consultant personnel midstream • Exceeding Budget • Exceeding Timeframe • Defining Scope of Work and Deliverables

  10. Hiring Consultants • What needs to be considered?? • Fit with organization • Insurance / contract terms • Worker’s Comp. Preparing Statements of Work (SOW) • Establish clear, attainable, measurable goals • Schedule Milestones • Confirm rate/billing/terms • Establish communication protocol

  11. Experiences • Pitfalls to avoid • Open ended contracts • Undefined scope • Controls and oversight by owner required • Beware - acting on behalf of Consultant rather than owner • Disputes over progress/compensation • Costs associated with Consultant Travel/Meals/Lodging • Disputes over who owns the final product

  12. Ideas for the Best Deal • Get Requestor buy-in on needing to provide a detailed scope of work and not to exceed costs and defined outcomes/expectations • Competition should be used if possible • Require requestor review and follow through • Carefully check references for similar work • Find out as much as you can about the individuals involved – include change of consultant with prior approval by buyer • Have a contract template as part of the RFP • Ensure that progress meetings and/or reports are generated regularly

  13. Other Ideas/Experiences • Selection and recruitment of Consultants is one of the more difficult types of purchase • Legal Counsel /Risk Management should be involved in review and drafting of contracts • Communicate performance problems early and in Writing • Have a strategy for ending contract early if necessary – avoid dependency if possible

  14. Questions??

  15. Are you Stressed??? This might have something to do with it…..

  16. Congratulations – You made the Top 15 ! http://money.cnn.com/gallery/pf/jobs/2013/03/07/jobs-stress-pay/15.html

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