Maldem Investigations - Private Investigations agency in Ottawa



Organized criminal groups are getting increasingly involved in automotive financing fraud due to its lucrative nature and ease of execution. However, by their definition, organized groups always have structures of well-established and time-tested contacts, procedures, and infrastructure that are not easily replaced; meaning that they have patterns and common elements that can be tracked, studied, and analyzed.

Once identified, those persistent elements (such as shell companies, references, or contact numbers) can be used by the dealerships to recognize red flags and signs of fraudulent credit applications, thus allowing them to take appropriate measures to protect themselves, limit any potential losses, and if the fraud already took place, recover some of the vehicles to cut down their loses even further.

Such measures can only be implemented after a solid analysis of fraudulent occurrences was conducted, and good information was identified, retrieved, and made accessible to the dealership staff for consultation.

The analysis

Data analysis is a time-consuming but crucial process since it will serve as the foundation for any further actions that will be undertaken. The quality of the initial analysis will have a significant impact on the direction and the success of an investigation, as well as on any other fraud prevention measures that will be implemented as the result of such analysis.

To conduct a successful study, data will have to be gathered from several fraud occurrences to identify common elements and determine patterns. This, unfortunately, means that the dealerships have to fall victim to several frauds before sufficient information becomes available to be analyzed (albeit it won’t take long for a large enough sample to be collected due to the increase in fraud activities at car dealerships).

What to look for

While the names of the individuals will most likely be different on every credit application (there are of course exceptions, especially when a group conducts several frauds simultaneously and uses the same names, or slight variations of, within a short period, before they start showing on credit reports), it is very likely that the phone numbers, names and contact information of references or co-signers, employers and related companies, will be reused from previous fraudulent applications on at least some occasions.

Similarly, the format of the cover letters and the financial statements, general appearance of the documents, text structure, writing style, grammar, and even typos, are also common reoccurrences since the criminal groups see no reason to change those templates (as it takes more effort to produce a quality forgery and a convincing copy) unless they were compromised or used too many times.

The client’s contact information and reference documents are not the only elements of the fraud scheme that can be studied; the days and times when the person first made contact with the sales staff, showed up to the dealership, and filled out a credit application, as well as which salesperson was involved with the process, can all be important insights into how the group operates.

Note on employees

When the same employee is involved in all, or the majority, of the fraudulent occurrences, it may be for two reasons:

The first, and the most obvious one, is that they are part of the scheme and are voluntarily facilitating fraudulent transactions. This highlights the importance of carefully selecting the employees and not only conducting background checks on them but also character investigations in order to reduce potential risks related to inappropriate behavior, contacts, and acquaintances.

The second reason is that the employee is not vigilant and/or does not know what signs of fraud to look for. Such employees can miss important clues such as inconsistent signatures, slightly misspelled names on documents and identification cards, nervous behavior, vague and inconsistent answers that can, and should, be identified and treated as signals to proceed with extra caution.

Once a weak employee is identified by a criminal group, he or she is more likely to be the point of contact for the majority of transactions (as it reduces the risks for the group), thus explaining why a lot of losses appear to be linked to a particular staff member. A situation such as this should be addressed by setting up fraud awareness programs and having information material that can be quickly referred to by the employees when they need to.

What to do will all this information

Having the ability to quickly refer to information gathered from previous frauds can save dealerships from being hit numerous times by the same group. Very often, it is the lack of employee vigilance, combined with the lack of reference documents that allow criminal groups to successfully conduct multiple frauds at the same location.

In many cases, a simple glance at previously known names, phone numbers, addresses, etc. could have prevented dealerships from losing another vehicle; provided of course, that such information was available and accessible for consultation in the first place. This highlights the importance of not only setting up efficient ways of gathering and analyzing the information but also having efficient ways of storing and disseminating it.

All the names, phone numbers, companies, and addresses that were used during previous fraudulent transactions should be kept, at the very least, on a simple Excel spreadsheet. This “Blacklist” should be readily available for the dealership staff to consult at moment’s notice as soon as they have any doubts about a new client.

Quick reference material is not the only use for such information. The reoccurring names, phone numbers, addresses, and companies can be investigated further to identify ties between different entities, which in turn can lead to the middle (and eventually, to the top) elements of the organizational structure of the group.

Not only identifying those elements will facilitate further fraud prevention measures, but it will also allow for good information and evidence to be presented to law enforcement agencies who will be more interested in initiating a fraud investigation that involves an organized group rather than waste their limited resources investigating a single isolated fraud incident.

The importance of documenting everything properly

High-quality reference material for the employees and solid evidence for law enforcement is only possible if the whole process of gathering information, analyzing it, and following up on the leads is well documented and presented in a clear manner. Keeping good records and reports is also crucial for an effective investigation that will help move the case forward and provide additional evidence of fraud and red flags to look out for in the future.

From the internal usage perspective, having documents and databases that are clear and easy to use for the employees, is important in order to ensure that they will be consulted when needed. Overcomplicated systems that provide no clear answer within a reasonable time frame will most likely be ignored or deem (rightfully so) unsuitable to be used during a sale situation when answers are needed quickly.

From the law enforcement perspective, or if any legal civil action is planned in the future, having confusing and incomplete information, and presenting evidence that was improperly collected and stored, will guarantee that, no matter how good this evidence is, it will be rejected by the courts; thus making it harder, if not impossible to get any results and recover any losses.

A final word on analysis

An analysis is a tool that, if properly executed, can prevent future frauds and provide solid leads that, in turn, can be investigated further and help with the recovery of the vehicles that were illegally obtained by the fraudsters. However, for an analysis to be effective, it has to be constantly fed with new data, as its strength lies within the size of the sample from which the information is gathered.

The most important point to remember is that no matter how big the sample size is, or how deep and detailed the analytical process was, the information gathered from this activity should be used. A spreadsheet or a database filled with information is useless if no one is looking at it.

Private Investigators with experience in conducting fraud investigations and analysis can offer valuable advice to car dealerships who need to set up effective solutions to mitigate fraud-related risks, implement efficient safety protocols and find the information they need to protect their businesses.