Jim Gee, Director of Counter Fraud Services at PKF, chooses his ‘worst of 2010’.
Even more reports of fraud hit the headlines during 2010, with 318,420 reports compared to 292,799 in 2009. The reports describe an astonishing variety of various big and small-time scams. In the background, work has continued to recover Bernard Madoff’s stolen billions, but many new cases have shown a similar level of deceit and deviousness. Equally, the backwash of the recession continued to be apparent with legal cases involving some of the biggest investment banks in the world. 2010 was the year when the financial cost of fraud became much clearer with global research showing average losses of 4.6%.
Choosing the worst frauds of the year – or the ‘bottom ten’ – is always a difficult task, because there is no shortage of competition! It involves balancing the value of the fraud and deviousness, and the economic damage done. Sometimes fraud can be enormous, sometimes strange, sometimes wicked and sometimes just plain embarrassing.
In the time honoured fashion they are presented in reverse order:
10. FATHER ANTOINE VIDEAU
A French priest who drove a Ferrari, lived with a mistress and had 28 bank accounts was jailed for fraud. Father Antoine Videau amassed a fortune equivalent to £2 million over 20 years by stealing donations to the church and rent from church property. He even siphoned off £500,000 from the estate of an archbishop after he was made executor of the senior churchman’s will. He fleeced nuns by renting out their convent for private events and spent church funds on a "pilgrimage" to Las Vegas. Father Videau, 64, received a three-year prison sentence in Corsica for crimes that led to him being known as the ‘Playboy Padre’. 1
9. EMMA GOLIGHTLY AKA EMMA CHARLTON
Holly Golightly made her living beguiling gentlemen with her vivaciousness so they would part with their dollars, but Emma Golightly wangled cash by telling her paramours that she had terminal cancer. She also claimed to be the editor of Vogue – carrying a miniature dog to add to the illusion – and a millionaire running a chain of photographic studios. In fact she was a conwoman who spent £250,000 on holidays, chauffeur-driven cars and restaurants. She was prosecuted and jailed for three years. 2
8. THE FAMILY OF THE ‘ONE OF THE OLDEST MEN IN THE WORLD’
Japan has long boasted of having many of the oldest people in the world, but that was before the police found a body of a man, thought to be one of Japan’s oldest at 111 years, mummified in his bed, dead for more than three decades. His daughter, 81, hid his death to continue collecting his monthly pension payments. A woman, who would have been the oldest woman in the world at 125, is also missing, and probably has been for a long time. When Tokyo city officials tried to visit her at her registered address, they discovered that the site had been turned into a city park – in 1981. To date the authorities have been unable to find more than 281 Japanese who had been listed in the records as 100 years old or older. 3
7. SPANISH PIG FARMERS
Spanish ham inspectors put 17 tonnes of pig meat into quarantine as they cracked down on a massive fraud involving Spanish hams that – purportedly – come from the haunches of free-range pigs that feast daily on acorns. Authorities in southern Andalucia said that, to provide the quantity of Iberico hames that now hang from supermarket and delicatessen meat counters, the region would have to double the number of locally bred, acorn-fed pigs. Prices can rise as high as £1,300 for a single pata negra ham.
6. UNKNOWN HOLIDAY FRAUDSTERS
A family lost their summer holiday and were left with a £4,150 bill after falling victim to a cruel villa scam. The Martin family lost the money that they paid for a villa holiday with friends near St, Tropez, in southern France. They fell victim to an increasingly common fraud – where criminals hijack the details of overseas villas, or use fake details, to dupe thousands of pounds from unsuspecting holidaymakers. Families are then left exposed to a legal grey area that means they rarely get their money back. The properties may exist, but the fraudster has no right to rent them out, or they might have simply invented a villa. 4
5. LI YI, A TAOIST MONK
One of China’s most famous monks, who counts some of the country’s most senior figures among his followers, went on the run after being exposed as a fraud. Chinese government officials said that “Supreme master” Li Yi, a 41-year old Taoist monk, had faked a long list of improbable super powers. Mr Li had claimed that he could sit cross-legged under water for more than two hours because of his Taoist abilities and that he could withstand 220 volts of electricity circulating throughout his body. Mr Li used his fame to sell health and philosophy programmes to his 30,000 followers at the Shaolong Taoist Temple near Chongqing which cost up to 9,000 yuan (£900) a week. 5
4. DENNIS AND BIANCA MCGINLEY
This ruthless couple terrorised almost £2 million out of vulnerable families by claiming that they were linked to the IRA. Travellers Dennis McGinley and wife Bianca spent the money on plush caravans and a fleet of luxury cars. The biggest loser was a North Yorkshire farmer who was defrauded out of £1 million and a father and son who lost £800,000. Two companies were stripped of their assets and closed down and victims were forced to travel around the UK making payments to McGinley. McGinley was jailed for eight years and his wife for three and a half years after they admitted conspiracy to defraud. 6
3. UNKNOWN ROGUE TRADER FRAUDSTERS
A sustained and merciless fraud was perpetrated against a 94-year old woman who was conned out of more than £176,000 by a series of rogue traders. Police said that the pensioner was duped into parting with staggering sums of money by a succession of fraudsters from September last year to June this year. An appeal has now been issued to help trace those responsible but due to the frailty of the victim, she has been unable to give police descriptions of the suspects. 7
2. OWEN CRUMLISH, LEO LARKIN AND TWO OTHERS
A pensioner starved himself to death after a gang of cowboy builders fleeced him of £7.000 – to replace a single roof tile. Cyril Jenkins, 88, was quoted £250 by four men who pulled up outside his house in a van. But after he agreed to the price the conmen drove him to the bank where he withdrew £3,000 and later £4,000 of his life savings. The former businessman was so shocked by the swindle that he stopped eating and lost five and a half stone. He died in hospital weighing just seven stone, too weak to fight off a heart problem. Two members of the gang, Owen Crumlish, 29 and Leo Larkin, 35, have been jailed for nine months at Bristol Crown Court. 8
1. PIER PAOLO BREGA MASSONE AND SEVEN OTHER ITALIAN DOCTORS
Eight Italian doctors performed unnecessary surgery in an attempt to defraud the Italian health service. The operations included unwarranted mastectomies and the unnecessary removal of a lung from a patient with pneumonia. Pier Paolo Brega Massone, the head surgeon at Milan’s Santa Rita clinic, was sentenced to 15 months. He oversaw 80 such operations. An anonymous tip-off lead to wiretaps which caught the doctors talking about earning more from more invasive surgery.
Prosecutors stated that at least five patients died after operations that were too risky for their condition. The frauds cost the health service £2.2 million. 9
Fraud is possible in any area. This press release highlights some of the worst examples from 2010.
More generally, fraud is a significant financial cost to any organisation and causes serious economic damage. The bad news is that two thirds of organisations lose between 3 and 9 per cent of their expenditure to fraud; the good news is that this can be reduced by up to 40pc within 12 months.
Follow Jim Gee on Twitter: http://www.twitter.com/counterfraud
