1. Computer Crime and Computer Fraud
Computer crime means a crime involving computer resources, including using a computer to commit a crime.
Computer fraud means using computer resources to defraud .
EECS David Chan

2. Examples of Crime Targeted at Computer Resources
Hacking.
Deliberate virus spreading.
Theft of information, software or hardware.
Theft of computer resource usage.
Denial of computer services by means of malicious software or messages.
Message interception.
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3. Examples of Crime Committed with Computers
Scams
Phishing
Defamation of character.
Disseminating hate propaganda.
Threats
Developing, holding or spreading child pornography.
Ransomeware
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4. Phishing
Using to entice recipients to give out banking information.
It is going around in the world.
It is a form of identity theft, the sender purports to be from a bank, with intent to defraud.
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5. Spear Phishing
Spear phishing is an spoofing fraud attempt that targets a specific organization, seeking unauthorized access to confidential data. Spear phishing attempts are not typically initiated by "random hackers" but are more likely to be conducted by perpetrators out for financial gain, trade secrets or military information.
EECS David Chan

6. Ransomware
The Locky virus, a new ransomware the encrypts users’ files and demands payments to decrypt them, made an impressive debut in February, locking files in 60,000 computers in Germany and the United States.
Anti-virus software can prevent most of such viruses but cannot save your files once infected.
David Chan, Nov 2016

7. Computer Fraud Using a computer to defraud.
Fraud is an intentional act to deceive or mislead, convert assets to one’s own benefit, or make intentional false statements or misrepresentations often accompanied by omission, manipulation of documents or collusion.
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8. Elements of Fraud A perpetrator lacking integrity or ethics
Motivation to commit fraud
Opportunity to commit and conceal fraud
False representation to a substantial degree
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9. Elements of Fraud Factor to induce a victim or accomplice to act
Intent to defraud
Injury or loss sustained
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10. Computer Fraud
The fraud provisions of the Criminal Code have been used to prosecute people who used computers to commit frauds.
The Internet is increasingly used to perpetrate fraud because of its reach and the impulse responses of Web surfers.
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11. Examples of Computer Fraud
Manipulating systems or causing glitches to “smooth” quarterly earnings
Employee selling of customer lists to competitors
Fictitious insurance policies to defraud insurers and reinsurers
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12. Internet Fraud
A scheme that uses one or more components of the Internet - such as chat rooms, , message boards, or Web sites - to present fraudulent solicitations to prospective victims, to conduct fraudulent transactions, or to transmit the proceeds of fraud to financial institutions or others connected with the scheme.
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13. Major types of Internet Fraud
Auction or sales inducing the victim to send money or give out credit card numbers for promised goods
Business opportunity
Work-at-home program
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14. Major Types of Internet Fraud
Investment scheme
Stock market manipulation by spreading fictitious news about public companies
Identity theft
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15. Equity Funding
A classic case of computer fraud and crime - a billion dollar bubble
Officers and employees of the company set up 64,000 fake insurance policies and sold them to reinsurers.
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16. Equity Funding
To come up with the premium payments which the reinsurers expected to receive, the perpetrators generated more fake policies and sold them to the same and other reinsurers.
The fraud snowballed for 12 years.
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17. Equity Funding
The fraud was revealed by a disgruntled employee who had been fired.
The case involved massive collusion.
The computer made it easy to generate the fake policies, which accounted for 70% of the issued policies over a 10-year period.
EECS David Chan

18. Barings Bank
Nick Leeson, a rogue trader, concealed trading losses that led to the Bank’s demise.
He used the account code “8888” to set up accounts containing secret transactions. Computers and management trust based on chemistry and seniority helped him hide these transactions.
EECS David Chan

19. Societe Generale Fraud
Societe Generale said that a trader who evaded all its controls to bet $73.5 billion -- more than the French bank's market worth -- on European markets hacked computers and "combined several fraudulent methods" to cover his tracks.
Kerviel, 31, and a former programmer, carried out unauthorized trades that resulted in 4.9 billion euros ($7.1 billion) in losses.
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20. Societe Generale Fraud
Even before his massive alleged fraud came to light, Kerviel had apparently triggered 75 alarms at Societe Generale -- France's second-largest bank -- with his trading, but not to a degree that led managers to investigate further.
But Kerviel explained away the red flags as trading mistakes.
EECS David Chan

21. Societe Generale Fraud
Since those bets greatly exceeded the amount of capital he was allowed to put at risk, Kerviel entered fictitious and offsetting trades in Societe Generale's computer system that appeared to minimize the odds of big losses, the bank said. The trades were purposely chosen to avoid detection because they did not require cash contributions and were not subject to margin calls, which would require putting up more money if the fictitious bet soured.
EECS David Chan

22. Societe Generale Fraud
Societe Generale said Kerviel misappropriated other people's computer access codes, falsified documents and employed other methods to cover his tracks -- helped by his previous years of experience when he worked in other offices at the bank that monitor traders.
EECS David Chan

23. Societe Generale Fraud
Kerviel's downfall started in the days before Friday, Jan. 18, when Societe Generale tightened lending restrictions on one of its customers, an unnamed large bank. He had apparently used that bank's name for one or more of his fictitious trades.
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24. Controls Against Computer Crime and Fraud
Segregation of duties
Management and independent review
Restricted access
Code of business conduct
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25. Controls Against Computer Crime and Fraud
Intrusion detection and prevention systems
Encryption
Security education
Analytical review
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26. Controls Against Computer Crime and Fraud
System monitoring
Security check on new hires and contractors
An established process for whistle blowing and investigation
Exemplifying management culture
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27. Controls Against Computer Crime and Fraud
Lock laptops when not attended to
Scheduled refreshment of web sites from the backup version to nullify even minor changes by hackers such as changing a key word in the user agreement or a rate
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28. During a Fraud Investigation
Touch base with management immediately when suspecting a fraud has occurred (consider management independence)
Use encrypted or out-of-band communication
EECS David Chan

29. During a Fraud Investigation
Document everything including time spent
Take screen shots where possible
Preserve the chain of evidence
Store records securely
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30. During a Fraud Investigation
Involve a minimum number of people
Proceed only with senior management request.
Ask concise and open questions
Be a patient listener
Involve law department
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31. During a Fraud Investigation
Use forensic tools like Encase to image hard disk remotely or onsite while preserving integrity.
Avoiding shutting down suspect computers using the OS as doing so may compromise audit/crime trail.
Use forensic data analysis software.
Backup evidence and store it securely and safely from environmental damage.
Scan electronic evidence for virus.
EECS David Chan

32. During a Fraud Investigation
Backup evidence and store it securely and safely from environmental damage.
Scan electronic evidence for virus.
Use Discovery Accelerator to analyze deleted and archived .
EECS David Chan

33. During a Fraud Investigation
Keep management informed
Maintain arms-length relationships with management and people being investigated or interviewed.
Continuously assess the need to involve the police
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34. Conclusion Computer crime and computer fraud on the rise
Organizations should have chief ethic officers
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35. Review Questions What computer crimes can result from identity theft?
What internal controls can organizations implement to prevent system alteration?
What are some system controls that can prevent or detect disbursement fraud? .
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36. MC Question Which address is most useful in a forensic investigation?
A. IP
B. MAC
C. URL D.
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37. MC Question
If a forensic investigator inspects a computer containing a critical file that is known to be highly encrypted but currently opened, what should the auditor do?
a. Pull the plug on the computer.
b. Perform an orderly shutdown on the computer.
c. Make an immediate shadow volume copy of the entire hard drive.
d. Browse the open file.
EECS David Chan

38. MC Question
Which software tool can undo the effect of applying disk wiping?
A. Encase
B. Password cracker
C. Firewall
D. Discovery Accelerator
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39. MC Question What computer crime does a firewall mitigate against?
A. Hacking
B. Identity theft
C. Virus spreading
D. ATM skimming
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40. MC Question
Which of the following techniques or tools is most useful to detect a bank loan fraud
committed by a branch manager?
A. Benford analysis
B. Firewall
C. Segregation of duties
D. Discovery Accelerator
EECS David Chan