THE ANALYST
Futurum Risk
A leader in risk, business intelligence & investigations across Asia Pacific.
Welcome to The Analyst
A monthly newsletter from Futurum Asia!
Our newsletter is an opportunity to keep you informed on the latest research, news, and tips and tricks in the investigative world. This issue explores employee background checks and the importance of knowing your staff!
In this month’s edition we are covering these Key Topics:
A Message from Michaela
Michaela Stembridge is the Lead Research Analyst at Futurum Asia, leveraging her background as a former practicing attorney in South Africa specialising in Class Action and Civil Litigation. Her expertise spans meticulous legal analysis and strategic insights
“Because I come from a legal background, I take my position of trust and my duties to my clients very seriously. I now get to enjoy working with law firms in a consulting capacity on a variety of issues, ranging from matters of service to complex international fraud.”
Former Apple Employee Sentenced for $17 Million Fraud Scheme
Dhirendra Prasad, a former Apple employee, has been sentenced to three years in prison and ordered to pay over $19 million in restitution for defrauding the company. Prasad, who worked as a buyer in Apple's global service supply chain from 2008 to 2018, orchestrated a series of mail and wire fraud schemes that resulted in significant financial losses for the tech giant.
Prasad's fraudulent activities began in 2011, when he started accepting kickbacks, stealing parts, inflating invoices, and billing Apple for goods never delivered. By leveraging his insider knowledge of Apple's fraud detection techniques, Prasad managed to avoid detection for years. His schemes involved conspiring with the owners of two vendor companies, who have also been charged in separate cases.
The severity of this case underscores the need for robust fraud detection and prevention measures within corporations. At Futurum Asia, we specialise in investigating and mitigating such risks. Our approach combines advanced forensic techniques with deep industry knowledge to uncover and address fraudulent activities effectively.
How Futurum Asia Would Have Handled the Case:
1. Know your Staff - Employee Screening:?Conducting background checks at the onboarding phase and continual employee screening to monitor for suspicious flags.
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2. Enhanced Monitoring and Auditing:?We would have implemented continuous monitoring and auditing of transactions, especially those handled by individuals with significant discretionary power like Prasad. This would include random audits and cross-verification of vendor invoices against actual deliveries.
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3. Advanced Fraud Detection Algorithms: Utilising machine learning and AI, we would deploy algorithms designed to detect anomalies and patterns indicative of fraud. This proactive approach helps identify suspicious activities early, reducing potential losses.
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4. Vendor Due Diligence: Rigorous background checks and ongoing assessments of vendors are crucial. We ensure that all vendors meet strict compliance and ethical standards, minimising the risk of collusion and fraud.
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5. Insider Threat Programs: Establishing programs to monitor and mitigate risks from insider threats is essential. Training employees to recognise and report suspicious behaviour can also serve as a valuable deterrent.
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6. Collaboration with Law Enforcement: Our detailed investigations and evidence collection support legal proceedings, enhancing the chances of successful prosecution.
In Prasad's case, a combination of these strategies would likely have detected his fraudulent activities much earlier, preventing significant financial losses for Apple. The lessons from this incident highlight the importance of robust internal controls and the value of expert fraud investigation services like those provided by Futurum Asia.
72% of departing employees have admitted to taking company data.
Case Study: The Case of Mr. X - When Background Checks Matter Most
A chilling true story from Futurum Intelligence
Every day, Futurum analysts are conducting detailed employee background checks, helping our clients to safeguard their companies and employees from potential risks.
This year, a seemingly straightforward request from a new UK-based client, let’s call them International Company Limited (ICL), turned into one of our most captivating investigations.
What made this case interesting wasn’t that ICL wanted an employee background check, but they wanted one on an employee that had already resigned…
The Unsettling Past of Mr. X
Mr. X, as we'll call him, had recently left ICL after a three-year stint. His tenure, however, wasn't without its problems. Initially friendly, Mr. X's behaviour took a concerning turn a few months into his employment.
Mr X was emailing and calling his colleagues at all hours of the day and night. Often asking inappropriate questions and sharing graphic content.
Although his behaviour was reported and halted, the harassment soon resumed, but this time from anonymous emails. Mr. X denied involvement, and his work performance remained outwardly acceptable. So nothing changed for a time.
But as these things tend to do, the situation escalated. The emails grew more frequent and graphic. Employees at ICL, living a real-life version of Baby Reindeer, were bombarded with hundreds of messages daily.
Mr. X's in-person behaviour also became intimidating, as he tried to pressure colleagues to spend more time with him outside of work. Thank goodness, no one did.
Concerned and frustrated, ICL initiated an investigation into the source of the emails. However, before it could reach a conclusion, Mr. X conveniently left, saying that he was going to start his own business in the same industry.
Futurum Steps In: Unveiling the Truth
Despite Mr. X's departure, the emails persisted, prompting ICL to seek professional help to get to the bottom of this disruption. Futurum was approached and we got on the case straight away.
With Mr X’s details on hand (emails, phone numbers, and a picture) our analysts constructed a comprehensive profile, uncovering inconsistencies from the start.
Mr. X's “new company” website contained all kinds of false information, boasting fabricated testimonials and client lists mirroring ICL's exact clients. Additionally, Mr. X's online presence was strangely limited, and showed signs of deliberate attempts to scrub personal information from the internet.
But as we pieced together the puzzle, a disturbing picture emerged. Through facial recognition software, we discovered a mugshot of Mr X in a local UK newspaper. Mr. X's company photo, compared to an archived image from the publication website, revealed a shocking truth: Mr. X wasn't who he claimed to be.
Mr. X Unmasked: A Convicted Criminal
Further investigation exposed the real identity behind Mr X – who we’ll call Mr. Y. Court records and media reports painted a chilling picture.
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Mr. Y, born and raised in Birmingham, with a mother who passed away in mid-2023, had a documented history of stalking, harassment, and violence.
Even his prior employment at an accountancy firm, mentioned on his CV, showed that he had multiple aliases. The evidence was undeniable: Mr. Y was a convicted criminal, not Mr. X.
A Breach in Security: The Insider Threat
ICL, unknowingly, had employed a convicted criminal for three years. This posed a significant insider threat, putting employee safety and well-being at risk. ?
Mr. Y's harassment campaign wasted company resources, eroded employee morale, and triggered internal investigations.
For ICL, a company with over 300 employees across five locations, serving hundreds of global clients, the impact was significant.
The Importance of Comprehensive Background Checks
This case underscores the critical role of thorough background checks for employees. They're not mere formalities, but crucial investments in operational security and risk mitigation.
The cost of a bad hire far outweighs a basic background check. It can translate into employee safety risks, reputational damage, and substantial financial losses.
Partnering with a reputable background screening company like Futurum ensures in-depth analysis that goes beyond superficial checks. Our team meticulously scrutinises candidate information to detect concerns and irregularities like those displayed by Mr. X.
Don't let your company become another case study. Ensure your employees are adequately screened before welcoming them into your workspace.
Tips and Tricks:
10 Ways to Prevent Employee Theft and Fraud
Employee theft and fraud are significant issues for small business owners. Here are ten practical tips to help protect your business:
1. Know Your Employees:
- Look out for signs like sudden work devotion, high lifestyles beyond their salary, and objections to financial changes.
- Conduct background checks and reference checks, especially for those handling money.
2. Supervise Closely:
- Ensure regular supervision and have multiple eyes on financial matters.
- Lax supervision leads to higher theft rates.
3. Use Purchase Orders:
- Separate payment, receipt, and preparation tasks among different people.
- Use pre-numbered purchase orders and verify incoming orders.
4. Control Cash Receipts:
- Utilise pre-numbered sales slips and perform weekly audits.
- Have someone other than the sales clerk balance receipts.
5. Conduct Informal Audits:
- Perform unannounced internal audits and an annual external audit.
6. Install Computer Security Measures:
- Restrict access to systems, change entry codes regularly, and ensure security procedures are followed.
7. Track Business Checks:
- Use pre-numbered checks, fill them out in permanent ink, and produce checks through financial software.
- Secure blank checks and signature machines.
8. Manage Inventory with Security Systems:
- Separate receiving, storekeeping, and shipping duties.
- Conduct annual inventories with personnel not responsible for inventory records.
9. Monitor Accounts Receivable:
- Separate mail-opening and posting duties.
- Record checks and cash properly and use "deposit only" stamps.
10. Provide a Reporting Channel:
- Create a discreet way for employees to report theft or fraud by co-workers.
- Ensure it’s done in a way that doesn’t signal distrust.
Bonus Tip: If you suspect a problem, be cautious with accusations. Investigate thoroughly and consider legal counsel for complex issues.
This is by no means an exhaustive list, or even at Futurum Asia do we state we can find all of these. Protecting your business from theft and fraud requires vigilance and proactive measures. Implement these tips to safeguard your assets and maintain a trustworthy work environment.
Get in touch with us.
Have burning questions or eager to explore further? Don't hesitate to reach out to us! Whether you're curious about our latest insights or seeking personalised guidance, we're here to assist you every step of the way. Send us your inquiries or schedule a consultation with Futurum Asia.
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