Investigations in Cases of Fraud

In Germany, fraudsters have stolen more than €110 million from companies through a development of the infamous “grandparent scam”, namely the so-called “boss scam” (also known as “CEO fraud”, “fake president” or “managing director scam”), following a sharp rise towards the end of 2015. In this scheme, criminals contact, for example, an employee in the accounting department, impersonate senior company managers or board members and demand urgent money transfers allegedly required to secure the company’s continued existence and safeguard jobs. Due in particular to the urgency, the feeling of being put under pressure and obedience towards supposed superiors, affected employees feel obliged to transfer large sums to foreign accounts. Since 2013, the Bundeskriminalamt has recorded a total of 250 cases of this kind, although the number of unreported cases is likely to be significantly higher. Even though money was successfully diverted in “only” 68 cases, the total fraud amount illustrates the impact of individual incidents: companies can suffer lasting damage and, in the worst case, be ruined.

Our detective agency in Münster advises particular caution in medium-sized and large enterprises, as these—due to broader hierarchies and higher staff numbers—are more frequently targeted by the boss scam than small, family-run businesses where everyone knows each other.

Latest Case Not Even Included in the Figures: €40 Million Swindled from LEONI AG in Nuremberg

While previously affected companies faced losses ranging from €1 to €18 million, the recent case involving automotive supplier LEONI AG set a grim new record: €40 million were stolen by fraudsters who gained employees’ trust using forged documents and identities, thereby arranging transfers to accounts abroad. So far, it is unknown who is behind the scheme; however, the Bundeskriminalamt suspects that in many cases the perpetrators are not individuals but organised large-scale gangs, if not even a global network. By assuring contacted employees that the company’s future is at stake, they create a situation that appears unavoidable and without alternative, prompting staff to transfer funds without consulting direct superiors or colleagues. According to the Bundeskriminalamt, North Rhine-Westphalia, with €31 million in losses, is the most affected federal state—hardly surprising given the strong economic power of metropolitan regions such as the Rhineland and the Ruhr area, as well as the corporate structure of the Münsterland, where our Münster-based corporate investigators are deployed to clarify not only such cases.

Due to the professionalism of the fraud organisations involved, caution is required even for smaller transfer amounts. Fraudsters not only purchase false identities and supporting documents from third-party providers, but also acquire fake email accounts and bank accounts and occasionally even use call centres to place the fraudulent calls. As a result, the principal actors remain unidentified while appearing credible thanks to the professionalism of call-centre staff. Our corporate investigators in Münster therefore also warn against transactions initiated by telephone, even if this is common practice within the company concerned. Of the €31 million fraudulently obtained in North Rhine-Westphalia, €20 million were fortunately frozen before being transferred abroad, sparing some affected companies losses in the millions. Nevertheless, the figures and the gullibility of accounting staff are alarming.

Worldwide Damage from the Boss Scam Estimated at Around $3.1 Billion (€2.8 Billion)

Considering estimates published by the Federal Bureau of Investigation regarding total global losses from the managing director scam—$3.1 billion (approximately €2.8 billion)—the €110 million stolen in Germany appears comparatively moderate in view of the country’s strong economy. Nevertheless, any company employing more than just a few staff members who know each other personally must be aware that, whether large or medium-sized, whether operating locally, regionally, nationally or internationally, it can fall victim to this relatively new type of fraud at any time. Particularly in light of increasing digitalisation of data and corporate processes and the drive to reduce staff numbers, our corporate detective agency in Münster repeatedly points out the associated risks relating to the boss scam: if the “boss” is always connected only by telephone or Skype and never personally introduces himself to the accounting department or appears there, it should not come as a surprise if administrative staff authorise transactions solely on the basis of a phone call.

If an employee is sworn to absolute secrecy for alleged “internal company security reasons”, it may take months before such fraud is even discovered. By then, attempts to freeze or recover the funds are often unsuccessful; the damage is done, the money long since vanished into an offshore numbered account, and the company faces disaster. The sooner investigators such as our private detectives in Münster are engaged, the sooner—working together with our IT forensics and IT security department—identities, IP addresses, account histories and similar data can be examined, ideally leading to a positive outcome. However, if the fraud only comes to light weeks or months after the offence, success is unlikely, as in most cases all accounts have already been emptied within the week of the transfer, prepaid mobile phones can no longer be traced and relevant email accounts have been deleted. Swift action and the immediate involvement of the Bundeskriminalamt as well as our Münster detectives (+49 251 7009 0014) are therefore essential if damage is to be limited and the chances of identifying those involved are to be preserved.

Security Concepts, Employee Training, Optimisation of IT Structures

If you wish to protect yourself and your company from fraudulent attacks such as CEO fraud, contact our private detective agency in Münster for an initial consultation regarding possible measures within your organisation. Whether preventive steps such as developing efficient security concepts or conducting employee training to raise awareness of corporate fraud schemes and outline appropriate responses to suspicious calls, or account investigations and surveillance following an incident of fraud—our Westphalian corporate investigators are available to you personally and confidentially at any time for a free consultation. Contact us by telephone or by email at kontakt@kurtz-detektei-muenster.de.