September 2003 Topics
Remote dialer scam, Sub rosa,
Watered stock, and XE
 

This article is in the September/October 2003 issue of
The White Paper, the Journal of the Association of Certified Fraud Examiners.
 

Fraud In Other Words: Professional Jargon and Uncensored Street Slang
By Larry C. Adams, CFE, CPA, CIA, CISA
 

Remote Dialer Scam
Fraudsters set up a Web site to trick consumers into paying to access Internet content they advertise as “free” or “no credit card required.” The site offers software, adult content, or kid games. The Web site prompts the user to download a free “viewer” or “dialer” program. Sometimes the download and installation starts automatically without the user’s knowledge or permission, while the site fills the screen with endless pop-ups, trick links, and blind links. Then the dialer disconnects the user’s computer from the Internet and reconnects using a domestic long distance number, an international number, or a 900 number – at rates of $2 to $7 per minute. To find any disclosure of the connection charge, the user has to click several levels of links or scroll through a lengthy user agreement, displayed three lines at a time in a small text box. The user (especially a kid) is not aware of the scam until weeks later when the phone bill arrives with hundreds or thousands of dollars of extra charges. Some consumers leave their computers on all day or night, not realizing they are racking up a bill. The Federal Trade Commission Web site has a list of ideas to avoid remote dialer scams. A legitimate dialer is a small computer program that is used most often to dial a free local telephone number using the modem to access the Internet with the user’s knowledge and approval. In Europe, a 090 dialer is used to connect to the user to value added services, like weather forecasts and directory assistance, and a small fee per call is added to the telephone bill.
“When Your Computer Makes a Call…Without Your Okay,” Federal Trade Commission – Consumer Alert, http://www.ftc.gov/bcp/conline/pubs/alerts/
modmalrt.htm, May 6, 2003.
 

Sub Rosa
Confidential, secret, not for sale. Sub rosa is a Latin phrase for “under the rose.” According to mythology, Venus (Aphrodite) gave the first rose ever created to her son Cupid (Eros). Sometime later, a child named Harpocrates, who was the god of silence, stumbled upon Venus engaged in one of her many love affairs. Cupid quick-wittedly gave a rose to Harpocrates, as a bribe to keep quiet and save his mother’s reputation. Harpocrates enjoyed the rose so much that he promised the confidentiality of conversations taking place under the rose would always be respected. The rose became an emblem of silence. In the 5th century A.D., a rose was suspended from the ceiling of a council chamber, pledging everyone present to complete secrecy. In France and England, a customary rose was hung above a banquet table to remind dinner guests that conversations at the table were not to be repeated elsewhere. In churches, wooden roses were carved over the entrances to confessionals. Roses were molded into the plaster ceilings of drawing rooms where European diplomats gathered, to warn them to protect the secrecy of any matter discussed.
“The History of Roses,” Brisbane Botanics, April 2001, http://www.ourbrisbane.com/
home_garden/gardening/botanic_gardens/
snippets.htm, June 4, 2003.
 

Watered Stock
A stock issue offered to public investors by founders and promoters of a company at a greatly inflated price compared to the book value or cost. This can result in problems of low liquidity, inadequate return on investment, and low market value for investors. Watered stock also describes stock that is issued in exchange for labor, services or property that has a fair valuation that is less than the par value. The term originally was used in the cattle industry, where animals were encouraged to drink water before they were taken to a slaughterhouse and weighed for sale, which ultimately meant more money for the rancher. The New York Stock Exchange delisted the Erie Railroad for several months in 1869 for watered stock. In recent years, investment advisors have warned investors of Citigroup, Microsoft, and Cisco Systems about watered stock caused by risky accounting practices for mergers and pooling.
Jack P. Friedman, Dictionary of Business Terms, Second Edition, Barron’s Educational Series, Inc., Hauppauge, New York, 1994, page 658.
 

XE
XE is a grade on a university transcript assigned for academic dishonesty in a course. The X refers to a footnote explaining the failure was for cheating. The E denotes failure for the purposes of grade point average and determination of academic standing. A student might receive an XE if he violates a Student Academic Integrity Policy and the grade may not be appealed through the grades appeal process. Violations include plagiarism; using a cheat sheet; submitting the same paper for multiple classes; fabricating data on a research project; fabricating quotations and references; submitting papers from commercial research services; acting as a substitute for another person during a test; working with other students during an online exam; or using unauthorized technology during exams such as pagers, cellphones, and laptop computers. To discourage academic dishonesty, some universities require all students to sign affidavits stating they will not cheat. Some require an ethics course for all students or offer a whistle-blower program. A student with an XE is not permitted to represent the university in any extracurricular activity and is not permitted to hold office in any student organization. In addition to XE, harsher sanctions may be imposed against a student who commits fraud, such as suspension or expulsion from the university.
"Student Academic Integrity Policy," Arizona State University, Tempe, Arizona, http://www.asu.edu/studentlife/judicial/
integrity.html, May 6, 2003.
 

ã Copyright 2003 Larry C. Adams.
All rights reserved.

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