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Larry C. Adams, CPA
Phoenix, Arizona USA
Certified Public Accountant
Certified Fraud Examiner
E-mail
fraudwritr@aol.com
Telephone (602) 995-8008
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November 2002 Topics
Canard, mismatch letter, code v letter,
edcor, educational
correspondence,
parable of the mule traders, and steganography
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This article is in the November/December
2002 issue of
The White Paper, the Journal of the Association of
Certified Fraud Examiners.
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Fraud In Other Words:
Professional Jargon and Uncensored Street Slang
By Larry C. Adams, CFE, CPA, CIA, CISA
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Canard
 A deliberately false report, story or
rumor. A lie, a hoax or an exaggerated account. Canard is the French word for
duck. Since the 17th century, the French have used a saying, “Vendre
un canard à moitié,” which means to half-sell a duck. A person cannot half-sell
anything, let alone a duck flying in the sky. When he says he has half-sold a
duck, he is trying to swindle, deceive, or make a fool of the person to whom he
is talking.
Charles Earle Funk, Thereby Hangs a
Tale: Stories of Curious Word Origins, Harper & Row Publishers, New York, 1950,
page 57.
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Mismatch Letter (Code V Letter,
edcor, Educational Correspondence)
In 1993, the Social Security
Administration (SSA) began sending letters to large employers to notify them
when 10% or more of their employee names and Social Security Numbers (SSN) on
the employers’ W-2 reports (Wage and Tax Statements) did not match the SSA’s
database. During 1999, W-2 reports with mismatch errors were submitted by
780,000 employers. In 2002, the SSA increased their scrutiny and started sending
mismatch letters to every employer when one or more mismatches occurs. The SSA
also sends mismatch letters to employees if their reported address is different.
Between 1937 and 1999, the SSA received 212 million unmatched payments with a
total value of $262 billion and posted them into suspense accounts, which are
not associated with any worker. Responses to the mismatch letters help the SSA
to reconcile the suspense accounts and repost the payments to the correct
individual earnings records. Mismatch letters help employers to identify
mistakes, to check for fraudulent identification, and to discover Social
Security Numbers that were never issued. Mismatch letters also help the
Immigration and Naturalization Service (INS) identify individuals who do not
have authorization to work in the United States. Employers reporting wages to
the SSA with an Individual Taxpayer Identification Number (ITIN), instead of a
Social Security Number, is strong evidence of unauthorized work status. ITINs
begin with the number 9. The September 11th hijackers were able to open 35
American bank accounts with fake Social Security Numbers.
J. Ira Burkemper, “The ’Mismatch
Letter’ is in the Mail: The Social Security Administration Ramps Up Its Warnings
to Employers”, http://www.entertheusa.com/publications/
mismatch_letter.html,
July 22, 2002.
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Parable of the Mule Traders
 A parable is a short allegorical
story designed to convey some truth or moral lesson. The Parable of the Mule
Traders is a simple story about disclosure ethics.
Farmer Conner was facing serious financial problems. He needed a mule to help
him with his crops. He purchased a mule for $100 from a farmer in the next
county, Farmer Wright, who agreed to deliver the mule the next day.
However, the next morning when he drove up, Farmer Wright confessed, “I’m
sorry. I have some bad news for you. The mule died last night!”
Farmer Conner shrugged his shoulders and said, “Well then, just give me my
money back.”
“I can’t do that today,” replied Wright. “I spent it already. I can return
your money next month, if that’s OK.”
Conner pondered and then suggested, “Never mind, just leave the dead mule
here.”
As Farmer Wright unloaded the carcass, he scratched his head and wondered,
“What are you going to do with a dead mule?”
“I’m going to raffle it off,” Conner admitted boldly.
Wright interjected, “You can’t raffle off a dead mule!”
To which Farmer Conner explained, “Sure I can. I just won’t tell anyone that
the mule is dead.” Wright shook his head in disbelief and drove away.
It was a month before the two farmers met up again at another livestock show.
Farmer Wright inquired, “Whatever happened to that dead mule you bought?”
Conner grinned widely, “I raffled it off just like I said I would. I sold 500
tickets at $2 each and made a profit of $898.”
Puzzled by the events, Farmer Wright asked, “Didn’t anyone complain?”
Farmer Conner conceded, “Sure, just the guy who won. So I gave him back his
$2.”
Robert Gray, “Enron Explained” e-mail,
Phoenix, Arizona, July 12, 2002.
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Steganography
Covered writing. Steganography is the
practice of embedding secret messages in other messages in a way that prevents
an observer from learning that anything unusual is taking place. Today,
steganographers use special computer software that embeds a set of files and
hides the messages within digital photographs or normal text. Often the embedded
files are encrypted. ASCII format messages can be hidden in the extra white
space at the end of each line of a text file or e-mail message. Video, audio,
JPEG, and GIF images can be embedded in the unused bits of another photo image.
Eighteen steganographic programs are available on the Internet, and some are
free. Steganography is a common tool used by terrorists to hide maps, photos,
and instructions of their activities. For insider trading and industrial
espionage, employees have embedded confidential blueprints and financial records
in photos posted on company Websites for their outside conspirators to retrieve.
Steganalysis is the computer forensic task of detecting and possibly disabling
steganographic information. The Greek historian Herodotus described how one of
his cunning countrymen sent a secret message warning of an invasion by scrawling
on the wood underneath a wax tablet. To the casual observer, the tablet appeared
blank. Another message was tattooed on a shaved messenger’s head, who then let
his hair grow back, and shaved it again when he reached his contact point.
Clive Cussler with Paul Kemprecos,
Fire Ice, G.P. Putnam’s Sons, New York, 2002, pages 343 and 389.
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Larry C. Adams, CFE, CPA, CIA,
CISA, is an audit consultant
and author in Phoenix, Arizona. He is a member of The White Paper Editorial
Review Board. Send your word suggestions to his e-mail address:
fraudwritr@aol.com.
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ã
Copyright 2000 Larry C. Adams. All rights reserved.
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