STRATEGIC REMEDIES FOR FRAUD VICTIMS

1. Early Warning Signs… And Resources STRATEGIC REMEDIES FOR FRAUD VICTIMS BACKGROUNDINTELLIGENCE, INC. 213/243-0707 www.backgroundintelligence.com • Orrick, Herrington& Sutcliffe • 213/612-2204 • www.orrick.com

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5. “...not by the hand of Pablo Picasso.”

8. Department OF Justice

9. OPTIONS FOR FRAUD VICTIMS

10. TOP BIGGEST COLLEGE SCAMS OF ALL-TIME • Email harvesting scam • Financial aid scam • Student aid heist • Textbook Scam • Website Hackers • U.S. News College Rankings Manipulation • Fake college enrollment • Terrorist Visas through fake college enrollment • Unqualified admissions for privilege • Student loan scandal

11. WHO ARE THE SCAMMERS? Based on Top Biggest College Scams • Former and current students • College presidents, university officials, trustees, director of admissions, and other administrators • International gangs • Politicians • Financial aid and lending institutions • Other, including grandmothers and multi-generational swindles

12. CURRENT TRENDS • Organized fraud rings and financial aid fraudsters target • University of Phoenix: 850 potential fraud schemes reported to federal authorities since 2009 (prosecution rate: approximately 25%)

13. WHAT TO DO ABOUT “RED FLAGS” Depends on: • Type of fraud or loss • Who is involved • Evidence • Corroboration from others Get facts: • Before making a major decision • Before reacting to a situation

14. IMMEDIATE STEPS • Follow your institution’s protocol and published Policies and Procedures Manual • Contact legal counsel (attorney-client privilege) • Get facts: fully investigate the incident with the assistance of independent professionals THEN…you can start to make intelligent decisions

15. INVESTIGATIVE TOOLS • Interviews • Proprietary databases* • Public records • Internet and social networking sites • Surveillance, dumpster diving, undercover

16. TYPES OF INVESTIGATIVE SUPPORT AVAILABLE TO FRAUD VICTIMS • Verifying identities • Finding assets • Defining complex business structures and personal interrelationships • Identifying potential “bad guys” or people in cahoots with the bad buys • Clarifying anomalies • Identifying potential witnesses • Obtaining documentation and independent verification for self-reported “facts”

17. NATURE OF FRAUD • Most fraud and white collar crime goes unreported • Only 8% of cases reach proper authorities • MEANING: they’re out there to do it again (Source: National Public Survey on White Collar Crime)

18. COMPLEXITY OF THE RISK • Critical to understand: • The nature and extent of the fraud • The individual(s) involved • Domestic or international

19. Reasons not to make a referral

20. Where to make the referral?

21. COORDINATED EFFORT REQUIRED • No panacea for dealing with fraud • Lengthy, dedicated, persistent effort • Leadership and coordination required

22. ACTIVE…ON-GOING CYBERCRIME CASE Fraud took place: June 2011 • PRO-ACTIVE STEPS TAKEN • PROBLEMS • Unknown identity of the fraudster(s) • Unknown nature of the scam • Identifying other victims • Unknown potential sources of remuneration, due to all of the above

23. SAMPLE RESPONSE…EMAIL FROM FBI AGENT Tuesday, December 13, 2011 “Olivia, Per my office’s investigative supervisors, this case doesn’t meet our guidelines or the guidelines for the U.S. Attorney’s Office. If you get more victims and a higher dollar loss, please let us know.” Special Agent Los Angeles Field Office

24. INTERNET FRAUD RING INDICTED

25. Mitigating Liability

26. SELF-POLICING STRATEGIES BEING USED BY COLLEGES • Community Colleges are adopting pro-active strategies • Challenges to financial aid applicants

27. TYPICAL REACTIONS • Disbelief… • Whistleblowers and victims are always placed in a challenging position • Victims are embarrassed at being duped MOSTLY…WANT TO AVOID BAD PRESS

28. PRESENTED BY: Olivia Robinson BACKGROUNDINTELLIGENCE, INC. 213/243-0707 www.backgroundintelligence.com Mark Mermelstein • Orrick, Herrington& Sutcliffe • 213/612-2204 • www.orrick.com