White-Collar Crime Becomes No. 1 Security Concern as Fraud, Embezzlement Far Outpace Bank Robberies
Fraust, Bart, American Banker
White-Collar Crime Becomes No. 1 Security Concern As Fraud, Embezzlement Far Outpace Bank Robberies
For every dollar stolen from banks through the front door, $18.30 goes out the back door via fraud and embezzlement.
That's how Oliver B. Revell, the executive assistant director of the Federal Bureau of Investigation, described the burgeoning problem of white-collar crime at banks to about 300 bank security experts attending the recent security conference of the Bank Administration Institute.
According to Mr. Revell, the FBI's No. 3 administrator, banks lost $842 million in 1985 as a result of fraud and embezzlement. In contrast, losses from bank robberies totaled $46 million last year. The amount of the average white-collar crime was $177,000, v. $7,780 for the average bank robbery.
Of course, he said, frauds and armed robberies cannot be compared totally in dollars-and-cents terms. Mr. Revell told how two FBI agents were killed last month in Miami while attempting to apprehend bank robbers.
However, it was concern about white-collar crime that dominated most of the sessions.
Ironically, the meeting took place in Orlando, where, just the week before, the State of Florida closed Florida Center Bank amid widespread allegations of fraud. The events leading to the bank's failure are the subject of an investigation by federal law-enforcement officials.
Florida Center is not an isolated case. The Federal Deposit Insurance Corp. and the General Accounting Office have maintained that fraud is a cause of at least one-half of all bank failures.
Bank insiders are responsible for about 80% of the losses related to bank fraud, bank security experts say. And the insiders usually do not in any way resemble the stereotypical hardened criminal.
This point was brought home in a videotape shown at the convention entitled "Embezzlement: The Thieves Within,' produced by the Institute for Financial Crime Prevention, a research firm based in Austin, Tex. The institute's founder and chairman, Joseph T. Wells, is a former special agent of the FBI.
Mr. Wells, now a private investigator in Austin, told of the time, as a rookie G-man, he was sent to investigate a bank embezzlement. Expecting a hardened criminal, Mr. Wells instead found a rather ordinary individual.
In the 20-minute video, three convicted bank embezzlers--not actors --discuss
in interviews how their lives were ruined by their actions. Included are a young man who began stealing from his bank in order to pay a telephone bill, a young woman who embezzled money from her bank to avoid financial fights with her husband, and a bank vice president who found that his salary did not support his lifestyle.
"Managers do it, clerks do it, presidents do it,' Mr. Wells said.
Among the classic signs of embezzlement, according to the private investigator, include the individual who is:
Living far beyond his or her means.
Known to be having emotional, marital, or financial problems.
Given too much authority.
From the Life goes to TV department, the video was narrated by Efrem Zimbalist Jr., the former star of the 1960s television show, "The FBI.' Mr. Zimbalist, now the director of public information for the Institute for Financial Crime Prevention, attended the convention and often was seen surrounded by bank security directors, many of whom were former FBI agents.
Richard Brown, director of the International Intelligence Network in Houston, told bankers attending his session how they could prevent loan fraud through careful use of public records. Mr. Brown's firm has assisted the FBI, the Drug Enforcement Agency, the Internal Revenue Service, and other federal agencies in investigations. …