Finding NEMO

1. Finding NEMO Non-disclosed Evidence of misconduct & Other Violations Eric W. Miller, Chief Inspector General August 2018 Office of the Chief Inspector General, State of Florida

2. Evidence: • Merriam Webster Dictionary defines “evidence” as “something that furnishes proof.” • Federal Rule of Evidence 402 states, in part, "All relevant evidence is admissible, except as otherwise provided." • Under Chapter 90, Florida Statutes, “All relevant evidence is admissible, except as provided by law.” • Relevant evidence is defined as “evidence tending to prove or disprove a material fact.” Office of the Chief Inspector General, State of Florida

3. Disclosure Noun: the action of making new or secret information known. Office of the Chief Inspector General, State of Florida

4. Employees and Officials are Required to Make Certain Disclosures Office of the Chief Inspector General, State of Florida

5. Example of work-related disclosure required of state employees • Frequently violated • Infrequently enforced • Problematic Office of the Chief Inspector General, State of Florida

6. Identifying Undisclosed Misconduct & Violations Part I: A Sampling of the Violators Office of the Chief Inspector General, State of Florida

7. Sarasota Herald Tribune June 15, 1978 Office of the Chief Inspector General, State of Florida

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11. Travel Expense Fraud

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13. Case Study: K.O. H*** Day training, developmentally disabled services provider/contractor for the Agency for Persons with Disabilities Office of the Chief Inspector General, State of Florida

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15. State employee’s business: Not bad for a second income Office of the Chief Inspector General, State of Florida

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19. Identifying Undisclosed Misconduct & Violations Part II: The Discovery Methods Office of the Chief Inspector General, State of Florida

20. Best Information on Improper Payments, According to the ACFE, Comes From Tips. *Not so with Medicaid-related Improper Payments Office of the Chief Inspector General, State of Florida

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22. According to the ACFE report, the majority of asset misappropriation occurs in the procurement, payment and expense areas. This is where most organizations start monitoring activities. By analyzing transactions in these areas (such as with continuous monitoring systems that are driven by data analysis), it is usually possible to test for a wide range of employee fraud schemes, as well as bribery and conflicts of interest. Office of the Chief Inspector General, State of Florida

23. Search for Fraud • Look for transactions “just under” or almost reaching authorized limits • Look for linked transactions that combined would exceed authorized limits • Compare delivery addresses for goods to employee address database • Pay special attention to consumer items being purchased • Note non-weekday, non-business hour purchase times • Test receipts. Are they valid? Office of the Chief Inspector General, State of Florida

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25. Search for Fraud • Review purchasing card transactions for suspicious merchant codes (Golden Bucks) • Review payroll amounts for excessive overtime • Review payments that extend past date of termination. . . or death • Review EFT transfer records for duplicate destination accounts • Review for invalid numbers (SSNs, DLs, etc.) Office of the Chief Inspector General, State of Florida

26. Find the Apparently Bogus SSN or SSN’s 457-55-5462 586-51-8134 599-23-7165 734-14-9285 851-26-3671 987-65-4320 Office of the Chief Inspector General, State of Florida

27. 457-55-5462 (LifeLock Guy)586-51-8134599-23-7165734-14-9285 (734-749 invalid)851-26-3671 (Any number above 772)987-65-4320 (to 4329 for ads only) Legacy Clues: 223-231 VA 501-502 ND 587-588 MS232-236 WV 503-504 SD 589-595 FL237-246 NC 505-508 NE 596-599 PR Puerto Rico Social Security Administration (SSA) implemented “SSN Randomization” on June 25, 2011 Office of the Chief Inspector General, State of Florida

28. What Should His Number Have Been Based on His Information Provided? Office of the Chief Inspector General, State of Florida

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30. Search for Fraud • Detect customer accounts with exceptional terms (or deliverables) • Crosby • Melton • Detect shipment/return addresses that are the same as an employee’s home address • Detect expenses within previous 365 days related to surplus property • Review audit logs of IT databases that contain protected or marketable data • Review and sampling outbound email w/attachments (don’t do this “real time”) Office of the Chief Inspector General, State of Florida

31. Search for Fraud • Review reports generated by employees without need or authorization • Compare access/entry records to network log-on times • Review printer/copier demands and exceptional times • Sample emails and internal messages Office of the Chief Inspector General, State of Florida

32. Cover up… Write off… Illegal… Failed investment… • Nobody will find out… Grey area… They owe it to me… • Do not volunteer information… Not ethical… Off the books… Backdate… • No inspection… Pull earnings forward… Special fees… Friendly payments.. Top 15 email fraud words and phrases Office of the Chief Inspector General, State of Florida

33. not comfortable… want no part of… don’t leave a trail… make the number… common phrases in email conversations indicating employees are under pressure Office of the Chief Inspector General, State of Florida

34. Other Means of Detection • Surveying employees’ attitudes and their knowledge of vulnerabilities • Implementing, maintaining, and promptly responding to an internal “hotline” • Monitoring absenteeism, disruptive behavior, customer service complaints, and financial distress • Establishing and maintaining close relationships with law enforcement • Utilizing, managing, and protecting confidential sources • Utilize data analytics Office of the Chief Inspector General, State of Florida

35. Identifying Undisclosed Misconduct & Violations Part III: Limitations of Data Analytics Office of the Chief Inspector General, State of Florida

36. Data Analytics Yes, it’s fraud. No fraud here. Office of the Chief Inspector General, State of Florida

37. Companies want to avoid fraud. They also want to avoid false positives. In total, around 33 million adults in the United States are wrongly blocked each year from completing a purchase with a credit card. The total of these blocked sales amounts to $118 billion, while the cost of real card fraud only amounts to $9 billion. This shows false positives cost businesses more than the actual fraud.” Office of the Chief Inspector General, State of Florida

38. Eric W. Miller 400 S. Monroe Street The capitol Tallahassee, 32399 850-717-9264 Office of the Chief Inspector General, State of Florida

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