RICHMOND FRAUD EXAMINERS

LA Mortgage Probe

The top federal prosecutor in Los Angeles indicated last week that charges will be filed in the coming months in a sweeping investigation of banks and subprime lenders for their role in the nation's mortgage crisis.

"I think we are going to see some fairly dramatic results in the near future," U.S. Attorney Thomas O'Brien told The Associated Press. "There are people who have made many millions of dollars preying on unsuspecting people. That's wrong. That's fraud in a tremendous amount."

A grand jury is investigating at least three mortgage lenders ? Countrywide Financial Corp., New Century Financial Corp. and IndyMac Bancorp Inc. Prosecutors are looking at whether mortgage fraud and other white-collar crimes were committed.

O'Brien has just finished his first year overseeing the Central District of California, seven counties that became the heart of the nation's real-estate boom and bust. The area is home to many lending firms, including some which lured homeowners into taking out exotic loans with cheap teaser rates that mushroomed after a set time.

Thirty-four lawyers currently are looking at mortgage fraud and other white-collar crimes, now one of O'Brien's top priorities.

The government is pursuing a "surgical approach" in its investigations and hopes to streamline its prosecutions by seeking indictments with only a few counts, instead of spending several years seeking additional charges.

"We offer them three or four counts," O'Brien said. "We would get the same sentence and we plead them out and we move on to another crook."

O'Brien, 49, said his prosecutors are working closely with the Securities and Exchange Commission as well as other federal agencies in ongoing cases. He recently met with Rosalind Tyson, the SEC's regional director in Los Angeles.

"I said, 'Give me your Top 10 list. Your Top 10 list should probably coordinate pretty closely with mine,'" O'Brien said. "We sit down and share information we are allowed to share."

Rebecca Lonergan, a former federal prosecutor and a law professor at the University of Southern California, said investigations have shown mortgage fraud to be rampant in the lending business during the housing boom. She recalled one case in which a maid claimed on her loan application that she made $11,000 a month.

These companies "would just sign off on applications no matter how ludicrous the information was," said Lonergan, who worked at the U.S. attorney's office for 18 years.

She said it's unlikely that any alleged misconduct was limited to the lower ranks in the lending institutions.

"Was it just individual loan officers who knew about this?" Lonergan said. "It seems to me unlikely, considering the scope of foreclosures going on right now."

She added, however, that investigators will have a difficult time trying to prove company executives knew what was going on.

Bank of America Corp. bought Countrywide in a deal approved by the lender's shareholders in June. Rick Simon, a Countrywide spokesman, did not immediately return a call seeking comment.

New Century sought Chapter 11 bankruptcy protection in April last year. It had been the nation's second-largest originator of subprime loans.

IndyMac is now being controlled by federal regulators after it failed in July.

FBI Fraud Cases

WASHINGTON — The Federal Bureau of Investigation is struggling to find enough agents and resources to investigate criminal wrongdoing tied to the country’s economic crisis, according to current and former bureau officials.

The bureau slashed its criminal investigative work force to expand its national security role after the Sept. 11 attacks, shifting more than 1,800 agents, or nearly one-third of all agents in criminal programs, to terrorism and intelligence duties. Current and former officials say the cutbacks have left the bureau seriously exposed in investigating areas like white-collar crime, which has taken on urgent importance in recent weeks because of the nation’s economic woes.

The pressure on the F.B.I. has recently increased with the disclosure of criminal investigations into some of the largest players in the financial collapse, including Fannie Mae and Freddie Mac. The F.B.I. is planning to double the number of agents working financial crimes by reassigning several hundred agents amid a mood of national alarm. But some people inside and out of the Justice Department wonder where the agents will come from and whether they will be enough.

So depleted are the ranks of the F.B.I.’s white-collar investigators that executives in the private sector say they have had difficulty attracting the bureau’s attention in cases involving possible frauds of millions of dollars.

Since 2004, F.B.I. officials have warned that mortgage fraud posed a looming threat, and the bureau has repeatedly asked the Bush administration for more money to replenish the ranks of agents handling nonterrorism investigations, according to records and interviews. But each year, the requests have been denied, with no new agents approved for financial crimes, as policy makers focused on counterterrorism.

According to previously undisclosed internal F.B.I. data, the cutbacks have been particularly severe in staffing for investigations into white-collar crimes like mortgage fraud, with a loss of 625 agents, or 36 percent of its 2001 levels.

Over all, the number of criminal cases that the F.B.I. has brought to federal prosecutors — including a wide range of crimes like drug trafficking and violent crime — dropped 26 percent in the last seven years, going from 11,029 cases to 8,187, Justice Department data showed.

“Clearly, we have felt the effects of moving resources from criminal investigations to national security,” said John Miller, an assistant director at the F.B.I. “In white-collar crime, while we initiated fewer cases over all, we targeted the areas where we could have the biggest impact. We focused on multimillion-dollar corporate fraud, where we could make arrests but also recover money for the fraud victims.”

But Justice Department data, which include cases from other agencies, like the Secret Service and Postal Service, illustrate the impact. Prosecutions of frauds against financial institutions dropped 48 percent from 2000 to 2007, insurance fraud cases plummeted 75 percent, and securities fraud cases dropped 17 percent.

Statistics from a research group at Syracuse University, the Transactional Records Access Clearinghouse, using somewhat different methodology and looking only at the F.B.I., show an even steeper decline of nearly 50 percent in overall white-collar crime prosecutions in the same period.

In addition to the investigations into Fannie Mae and Freddie Mac, the F.B.I. is carrying out investigations of American International Group and Lehman Brothers, and it has opened more than 1,500 other mortgage-related investigations. Some F.B.I. officials worry privately that the trillion-dollar federal bailout of the financial industry may itself become a problem because it contains inadequate controls to deter fraud.

No one has suggested that a quicker response would have averted the mortgage meltdown, but some officials said a faster reaction might have deterred more of the early schemes that seized on loose federal lending regulations.

“They were very late to the game,” Representative Zoe Lofgren, a California Democrat who has quarreled with the F.B.I. over its financing priorities, said of the bureau’s response to the mortgage crisis. “They were not on top of this, and they’re just now starting to really do something.”

Republicans and Democrats in Congress are pushing for a more aggressive response by the F.B.I. Representatives Mark S. Kirk, an Illinois Republican who sits on the House appropriations committee, and Chris P. Carney, a Pennsylvania Democrat, called on Congress to triple the F.B.I.’s financing for financial crimes investigations.

“To fix our system and prevent a repeat of the events we now see,” they wrote in a letter this month to Robert S. Mueller III, the F.B.I. director, “we have got to set an example by bringing the full might of federal law enforcement against the people who illegally profited or destroyed companies at the expense of our country.”

In public, Mr. Mueller has said that the bureau is doing more with less, when it comes to criminal prosecutions. And Justice Department officials have repeatedly asserted the administration’s commitment to fight violent and white-collar crime even as they have not provided the bureau additional resources.

But current and former officials say Mr. Mueller has lost a behind-the-scenes battle with the Justice Department and the Office of Management and Budget to replenish the criminal ranks.

Interviews and internal records show that F.B.I. officials realized the growing danger posed by financial fraud in the housing market beginning in 2003 and 2004 but were rebuffed by the Justice Department and the budget office in their efforts to acquire more resources.

“The administration’s top priority since the 9/11 attacks has been counterterrorism,” Peter Carr, a Justice Department spokesman, said. “In part, that’s reflected by a significant investment of resources at the F.B.I. to answer the call from Congress and the American public to become a domestic intelligence agency in addition to a law enforcement agency.”

From 2001 to 2007, the F.B.I. sought an increase of more than 1,100 agents for criminal investigations apart from national security. Instead, it suffered a decrease of 132 agents, according to internal F.B.I. figures obtained by The New York Times. During these years, the bureau asked for an increase of $800 million, but received only $50 million more. In the 2007 budget cycle, the F.B.I. obtained money for a total of one new agent for criminal investigations.

In 2004, one senior F.B.I. official, Chris Swecker, warned publicly that a flood of fraudulent mortgage deals had the potential to become “an epidemic.” Yet the next year, as public warnings about fraud in the subprime lending markets began to approach their height, the F.B.I. had the equivalent of only 15 full-time agents devoted to mortgage fraud out of a total of some 13,000 agents in the bureau.

That number has grown to 177 agents, who have opened 1,522 cases. But the staffing level is still hundreds of agents below the levels seen in the 1980s during the savings and loan crisis.

F.B.I. officials said they had had no choice but to make the cuts in the criminal division, which they said were necessary to expand the bureau’s national security effort, particularly in the wake of criticism of the bureau’s performance in failing to detect the Sept. 11 plot.

In white-collar crime, they said the bureau has given up only lower-level cases of marginal significance that might have never been prosecuted anyway. They say they have focused the available criminal resources on public corruption and other difficult crime issues in which the F.B.I. can make a unique contribution.

“We only had a finite number of white-collar crime agents available to address the threat that mortgage fraud posed,” said Joseph Ford, who retired from the F.B.I. this year and once served as its chief financial officer.

The Justice Department is relying more than ever on the state and local authorities to pick up the slack through joint task forces. And private investigators say that companies victimized by fraud are turning to them in increasing numbers because they are unable to attract much attention from the F.B.I. anymore.

In some instances, private investigative and accounting firms are now collecting evidence, taking witness statements and even testifying before grand juries, in effect preparing courtroom-ready prosecutions they can take to the F.B.I. or local authorities.

“Anytime you bring to the F.B.I. a case that is thoroughly investigated and reduce the amount of work for investigators, the likelihood is that they will take the case and present it for prosecution,” said Alton Sizemore, a former F.B.I. agent who is a fraud examiner for Forensic Strategic Solutions in Birmingham, Ala.

One American company facing extortion demands last year from a computer hacker used private investigators from the Kroll firm to do much of the legwork in the case as the F.B.I. monitored and directed the situation behind the scenes, said Daniel Karson, executive managing director for Kroll. The private investigators even went undercover and set up a sting operation that led them to Germany, where the authorities made an arrest.

Mr. Karson said the F.B.I. no longer had the resources to take on such lower-level cases by itself. “When you come in with a garden variety, plain vanilla crime, you may have to stand in the queue,” he said.

Some critics question whether the shift indicates not just a lack of resources, but a lack of interest by the Bush administration.

After the collapse of Enron in 2002, the Justice Department moved aggressively against corporate fraud — too aggressively, in the view of some people within the administration. It set up a national task force to tackle the problem, garnered hundreds of convictions at companies like WorldCom, Adelphia and Enron, and forced the closure of Arthur Andersen, the accounting firm, for its role in the Enron collapse.

But several former law enforcement officials said in interviews that senior administration officials, particularly at the White House and the Treasury Department, had made clear to them that they were concerned the Justice Department and the F.B.I. were taking an antibusiness attitude that could chill corporate risk taking.

Justice Department officials said political pressures had never influenced the way prosecutors approached corporate cases. But the department’s approach has become noticeably more tempered in the last several years.

This spring and summer, as public concerns about the subprime mortgage crisis were growing, Attorney General Michael B. Mukasey rejected repeated calls for the creation of a national task force like the one used after the Enron collapse. The attorney general likened the problem to “white-collar street-crime” that could best be handled by individual United States attorneys’ offices.

In the last four years, the Justice Department has scored fewer of the big-name prosecutions that marked President Bush’s first term in office. Even when investigations have pointed to corporate wrongdoing, the Justice Department has agreed, in dozens of cases in the last four years, to “deferred prosecutions" that allowed companies to pay fines in order to avoid criminal prosecution.

Paul J. McNulty, who served as deputy attorney general under Alberto R. Gonzales, said the complexity of white-collar investigations and the shortage of investigators had driven a decline in high-profile cases.

“There’s no question that the department has been stretched thin when it comes to resources generally, and that has affected white-collar enforcement in a variety of areas,” Mr. McNulty said in an interview.

“What happened is that the first years after the Enron collapse, there were some very high profile, noticeable cases — the low-hanging fruit — that gave Justice the opportunity to rack up some very big wins,” he said. “Those cases played themselves out and it became tougher to find those big cases.”

Bank Fraud from Computer Intrusions on the Rise

U.S. financial institutions reported a sizable increase last year in the number of computer intrusions that led to online bank account takeovers and stolen funds, according to data obtained by Security Fix. The data also suggest such incidents are becoming far more costly for banks, businesses and consumers alike.

The unusually detailed information comes from a non-public report assembled by the Federal Deposit Insurance Corporation, the federal entity that oversees and insures more than 9,000 U.S. financial institutions. The statistics were gathered as part of a routine quarterly survey called the Technology Incident Report, which examines so-called suspicious activity reports (SARs). In this case, SARs that were filed in the 2nd Quarter of 2007. SARs are federally mandated write-ups that banks are required to file anytime they spot a suspicious or fraudulent transaction that amounts to $5,000 or more.

A copy of the report was provided by a trusted source who asked to remain anonymous. An FDIC spokesperson could not be immediately reached for comment.

While the number of reported computer intrusion-related SARs (536) paled in comparison to the leading SARs categories - mortgage loan fraud (12,554) and check fraud (17,558) - the FDIC said financial crime aided by computer intrusions is growing at a rapid pace. Further, it noted that the mean (average) loss per SAR from computer intrusions was roughly $29,630 -- almost triple the estimated loss per SAR during the same time period in 2006 ($10,536).

According to George Manning, the author of the book "Financial Investigation and Forensics," federal banking statutes define computer intrusion for the purposes of SAR reporting as one or more of the following activities:

1) Gaining access to a computer system of a financial institution to steal, procure, or otherwise affect funds of the institution or the institution's customers;

2) Attempting to remove, steal, procure or otherwise affect critical information of the institution including customer account information;

3) Activities that damage, disable or otherwise affect critical systems of the institution.

Manning notes in his book that for the purposes of this reporting requirement, computer intrusion does not mean attempted intrusions of Web sites or other non-critical information systems of the institution that provide no access to institution or customer financial or other critical information.

Anyway, back to the interesting bits: The report indicates that in most cases, banks are at a loss to say exactly how cyber crooks are stealing the funds. The report indicates that the 80 percent of the computer intrusions were classified as "unknown unauthorized access - online banking," and that "unknown unauthorized access to online banking has risen from 10 to 63 percent in the past year."

Still, the FDIC indicates that a large share of the unknown losses most likely resulted from malicious data-stealing programs surreptitiously installed on customer PCs by cyber crooks. The FDIC wrote that "in several significant cases where the source of the computer intrusions was identified suggest that Trojan horses and key logging software infecting the customers' computers might also be responsible for a large portion of the unknown unauthorized access to online bank accounts."

Indeed, one of many confidential case studies in the report told the plight of a U.S. business that lost $188,000 in July 2007 after an employee infected a company computer with a password-stealing Trojan horse program. The malicious program arrived as an attachment in an e-mail purported to have been sent by the Better Business Bureau. In this "spear phishing," campaign, the company and the recipient were both named in the body of the e-mail, and the recipient was urged to open the attachment to view a complaint lodged against the company.

Security Fix has written about this series of attacks spoofing the BBB, as well as a similarly successful spear phishing malware attacks that spoofed the Federal Trade Commission.

Of those computer intrusion-related SARs that were identified, online bill payment applications were most frequently targeted by cyber thieves, the FDIC found. However, unauthorized access to wire transfers and automated clearinghouse (ACH) payments caused the most losses to financial institutions in the computer intrusion category, mainly because ACH and wire transfers give the banks less time to detect and recover from unauthorized access.

Another case study cites an unnamed financial institution that had 14 customer account takeovers as a result of spyware infestations that recorded keystrokes on customer PCs, stolen credentials that allowed the crooks to initiate a series of fraudulent ACH transfers out of the victims' corporate accounts into accounts set up and controlled by the attackers. All told, in the six months between October 2006 and April 2007, the attackers managed to steal $289,000 from the 14 victims.

Avivah Litan, a financial fraud analyst with Gartner Inc., said unauthorized wire transfers disproportionately impact small to medium sized businesses that may be using online banking but do not have the same stringent financial controls in place at many larger corporations.

"It's interesting to hear them at least privately admitting that the ACH and wire transfer system is really broken, and that there are a lot of new Trojans targeting the banks now," Litan said. "That's very much in line with everything I'm seeing." (Security Fix has covered ACH fraud in previous posts. See this piece from last May for more perspective on Litan's quote here).

Litan said small to mid-sized businesses that bank online typically are allowed to transfer relatively large amounts with ease, though they have far fewer protections than consumer accounts when fraudulent transactions are at stake. In fact, most companies have just two business days to report fraudulent or unauthorized transfers in order to have a decent chance at getting the charges reversed. In contrast, consumers generally are allowed up to 60 days to report such activity, Litan said.

Another aspect of this report should be closely noted: If the number of SARs related to computer intrusions seems low, remember that banks are required to file SARs only when the amount exceeds $5,000. As such, most the data included in this FDIC report probably comes as a result of fraud perpetrated against businesses, not consumers.

According to a Gartner study of 4,500 adult consumers for the year ending Aug. 2007, the average loss to consumers from online fraud was around $1,500 per victim on average, well below the SARs reporting threshold. To better round out the consumer side of things, consider that Gartner's study found that 2.2% -- or an estimated 3.85 million adults -- said they were a victim of 'abuse of an existing checking or savings account, where a thief transferred money out of your account." Of this population: about 1.1 million had the fraud occur within the 12 months prior to August 2007.

I've chosen not to post a copy of the FDIC report here because it includes some general but potentially sensitive information related to ongoing law enforcement investigations into several recent and costly cyber fraud incidents. However, I'd argue that absent the case study data, there is absolutely no reason this aggregate data should not be made public on a regular basis. But of course any regular reader of this blog is already familiar with my views on this subject.

Some other data points from the report: Regarding data breaches by businesses, governments and other organizations in general, the FDIC writes:

- The number of consumer records breached doubled compared to prior quarters, which will impact ID theft, account takeovers, and account application fraud in the future. Fewer retailer payment card data breaches during the quarter caused lower losses to financial institutions. Retailers are resisting payment card industry (PCI) data security standards, which could lead to lower compliance, additional breaches, and more counterfeit card losses absorbed by card-issuing institutions.

- The level of identity theft reports by financial institutions was high, but the growth rate has slowed. This trend may change in the future because of a large spike in the number of consumer records compromised and reported in the media during the quarter.

With respect to credit and debit card fraud, as well as ID theft cases, the report notes:

-Credit card fraud and counterfeit card reports increased slightly. Losses from counterfeit cards, which were extremely high during the 1st quarter, subsided during the current quarter

Justice Deparment Records Reveal Importance of Whistle-Blowers

Whistle-blowers helped authorities recover at least $9.3 billion from health care providers accused of defrauding states and the federal government, according to an analysis of Justice Department records.

The department ramped up efforts in the 1990s to combat health care fraud by using private citizens with inside knowledge of wrongdoing. They now initiate more than 90 percent of the department's lawsuits focusing on health care fraud.

Whistle-blowers start cases by filing a sealed complaint in federal court. The department investigates the allegation and can intervene, assuming the lead role in the lawsuit. Whistle-blowers then get between 15 percent and 25 percent of the amount recovered.

Of the $9.3 billion recovered between 1996 and 2005, whistle-blowers got more than $1 billion, say analysts, writing for the Annals of Internal Medicine.

The analysts' findings are conservative.

Information was only available for about three-quarters of the 379 cases reviewed. Second, some of the largest recoveries have taken place after the period reviewed.

For example, the study doesn't include the single largest settlement, worth $920 million, which came against Tenet Healthcare Corp., one of the nation's largest hospital chains, in 2006.

Still, the study highlights some important trends in health care fraud.

While the number of claims pursued has dropped in recent years, recovery amounts have soared because of a late addition to the cast of defendants — pharmaceutical manufacturers. Recoveries jumped from about $10 million a case in 2002 to $50 million by 2005.

Drug makers are required to sell products to state Medicaid programs at the "best price" offered in the private marketplace. But the companies may artificially inflate the price, according to the report.

Another common scheme is to market drugs for uses not approved by the Food and Drug Administration.

The report's authors, Aaron S. Kesselheim of Brigham and Women's Hospital in Boston, and David M. Studdert of the University of Melbourne in Australia, said data on hundreds of whistle-blower lawsuits should be researched to identify what type of allegations turn out to be legitimate and lead to recoveries so that the department can fast-track such cases. Reports indicate the department rejects about three-quarters of the cases it gets.

The law was recently changed to require larger health care companies to educate employees about protections for whistle-blowers. Some lawmakers also want to expand the class of people who can file whistle-blower suits, such as government employees, which the business community has opposed.

The study indicates the current system is effective in generating significant recoveries for the government, said Matthew Webb, a senior vice president at the U.S. Chamber of Commerce Institute for Legal Reform.

"Some have said the law needs significant changes to make the cases actually stick," Webb said. "If their definition of 'not sticking' is $9.3 billion, I'd hate to see what their definition of sticking is."

Officials representing the trade group for prescription drug manufacturers declined to comment on the Justice Department's greater focus on their members, but said the companies devote significant resources to internal compliance programs that complement the government's efforts to prevent misconduct.

Greed and Stress at Schiek's

Employees working the floor of Schiek's, the self-described gentleman's club in downtown Minneapolis, believed free-spending Nathan John Mueller was a lottery winner, to the tune of $93 million. But the only score won by Mueller was a four-year deceit that allowed him to divert a whopping $8.5 million from his employer into his own pockets.

Mueller's may be the highest-profile insider embezzlement case charged this summer by the U.S. attorney's office in Minneapolis, but it is not the only one. And that raises questions of whether the sagging economy has led to a rise in financial crimes.

On the surface, the answer is a qualified yes. Hard economic times can lead some people to take otherwise unwarranted risks.

Financial crime prosecutions by the U.S. attorney's office in Minnesota were up 12 percent last year to 94 cases, up from 82 in 2006. So far this year, financial crimes account for about 35 cases and 47 defendants, according to Jeff Paulsen, the office's chief criminal prosecutor.

But greed doesn't always track with the Dow Jones industrial average.

"There's greed in good times, there's greed in bad times. It'll never go away," said former U.S. Attorney David Lillehaug, who now practices law at Fredrikson & Byron.

Financial stress often underlies embezzlements. There could be a job loss in the family, or an addiction to be fed. Often, the pilfering starts small but grows as the perpetrator gains confidence with the con.

In June, a federal grand jury in Minneapolis handed down four embezzling-related indictments. The thefts ranged from $149,000 to $259,000, an average of nearly $204,000 per theft.

That may or may not represent the total losses. Prosecutors generally charge only the crimes they can prove. And even when they can prove more, they usually charge a subset, knowing that more convictions won't necessarily result in longer prison terms.

The victims in the June cases were two banks, an insurance company and a marketing company. The crimes were committed by an operations officer, an assistant manager of sales, an insurance agent and a director of finance. All have pleaded guilty.

According to a report by the Association of Certified Fraud Examiners, organizations victimized by employee fraud lost a median of $175,000, nearly one-third of that committed in the accounting department. Fraud by top executives, who are in a position to circumvent financial controls, resulted in a median loss of $853,000.

The report also found that most employees involved in the theft of company funds had no previous criminal convictions.

Most cases start small

"People don't start off saying, 'I'm going to rob my employer.' They start off saying, 'I just need a bridge loan,'" said B. Todd Jones, U.S. attorney for Minnesota from 1998 to 2001. "It's not uncommon for it to be a longtime, trusted employee," said Jones, who now works as a white-collar defense attorney at Robins, Kaplan, Miller and Ciresi.

Craig Siiro, a forensic accountant in the Minneapolis office of Virchow, Krause & Co., said most employee frauds occur in a "triangle."

"First, there's financial pressure. Then there's opportunity. And third, there's rationalization: 'I'm just borrowing the money,' or, 'They owe it to me,'" Siiro said.

Siiro said most cases of employee fraud start small and then grow as the perpetrator gets bolder and more confident with his scheme. On average, according to Siiro, embezzlement and fraud schemes last 18 months to two years before they are detected.

But there are no precise profiles of would-be embezzlers. Co-workers often remain fooled until the scheme comes crashing down.

"There are warning flags," Siiro said. "The house they bought, the vacation they took, the cars they drove. The people you least expect can be committing the fraud."

Mueller, 34, pleaded guilty to mail fraud Aug. 15 in U.S. District Court in St. Paul. He faces as much as 20 years in prison, plus fines and restitution.

According to Mueller's indictment, the Eden Prairie resident used his position as accounting manager for ING Reinsurance Corp., a division of ING Group, to intermittently channel company funds into personal accounts through an elaborate check-routing scheme.

Mueller then used his ill-gotten gains to pay bills, live lavishly, drive fancy cars, gamble ferociously in Las Vegas and provide employees at Schiek's with eye-popping tips and expensive gifts until he slipped and got caught last year.

A woman from Centerville, Minn., said in a court document that Mueller gave her $70,000 over two years. Another, from Brooklyn Park, said he gave her $304,000 to buy her home, as well as tens of thousands of dollars in jewelry and cash. A certified public accountant, he even did her taxes for two years.

One of his gambling buddies was Richard Haenisch, whom Mueller met at the Palms Casino in Las Vegas.

"Whenever Nathan Mueller was planning on coming to Vegas, he would ask me [to] join him and his friends so that we may [sic] party and gamble together," Haenisch wrote in a letter to District Court Judge Patrick Schlitz listing some loans Mueller provided. "I always enjoyed his free spirit and kindness, he would always pay for everyone, whether for dinner, tables at clubs, shows, fights or even at the blackjack tables."

Siiro knows the type.

"People want to keep their lifestyle. But they don't do it [embezzle] just once. They do it once, wait awhile, and do it again," Siiro said. "Once you cross the line, you cross the line."

November - December 2008 Lecture

 For our new members and  those of you who are unfamiliar with the way the virtual meetings work...at each virtual meeting, a password protected lecture is made available for downloading and reading.  The password was e-mailed you  with the meeting announcement.  To be able to open the lecture, you must have the Adobe Acrobat Reader installed on your computer.  If you don't have Adobe, you can download it for free at http://www.adobe.com/.  Chapter members  whose annual dues are current may receive credit for all twelve hours of CPE (2 hours for each of six annual meetings).   Invited guests who are not members of the Chapter but who have received a meeting announcement may download and receive credit for two lectures per year for a total of 4 CPE.   Guests who decide to join the Chapter may receive the entire 12 hours by paying the annual Chapter dues of $15.00. 

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If you are a CFE or other professional interested in fraud investigation and prevention, we urge you to join our Chapter.  If you decide to do so you can join on line by clicking here.  Follow the directions on the form.  

• Members and invited guests should read the lecture material, then click on the link to the answers page below.  Answer the questions on the page and then submit the form by clicking on the button at the bottom of the page.   Don't forget to click on the submit button or we will not be able to receive your answers.

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