Noncryptographic Security Issues - Codes: The Guide to Secrecy from Ancient to Modern Times - page 378

magneticstrips. However, this is only one small facet of the total fraud industry.
Let us have a look at some of the others.
1 Accounting Fraud : By now anyone living on the planet who has access to
news media, knows about the Enron accounting scandal, which brought
down one of the big-five auditors, Arthur Anderson, 10.6 along with it.
In its wake, Worldcom filed for bankruptcy protection in July of 2002,
the largest ever corporate insolvency. They engaged in “creative account-
ing”, meaning that they employed unorthodox means of stating assets,
income, and liabilities. When used to describe misrepresentation of actual
income, profits, and so on, creative accounting refers to fraud, for which
the aforementioned firms were convicted. Computer data files were “cre-
atively altered” to deceive the shareholders into thinking they were far
more profitable than they were in fact. In 2002, this resulted in a major
market downturn (see [158] and [266]).
2. Advance Fee Fraud : We alluded to this when we discussed privacy issues
on page 376. The scam originated in Nigeria, so is often called the Nigeria
scam and, consequently, sometimes also the 419 scam , after the pertinent
section of the Nigerian criminal code. However, now individuals in many
Third World countries actually engage in this type of fraud. Although
there are other methods, the most common is now e-mail (this author gets
several such letters per week, for instance), which usually says something
of the following sort. Some person, Aroujo, say, claiming to be an oHcial,
usually in some government department, will suggest that, in order to
purchase real estate in the country of the intended victim, say, Alice, a
transfer of funds from a Nigerian bank account must have an “overseas
agent”, Alice. Alternatively, Aroujo might tell Alice he has millions of
dollars to “discreetly” transfer abroad. In any case, Aroujo tells Alice
that her bank account is required to establish the funds in her country,
and for her assistance, she will be richly rewarded. If Alice agrees, then
there will be a delay and Aroujo will tell Alice that in order to effect
the transfer, she needs to have a Nigerian bank account with a six-figure
amount in it. If Alice does this, there will be more delays all the while
keeping alive the assurance of the impending transfer. Sometimes more
money is requested from Alice to cover such things as bribes for other
government oHcials. In some cases, the most gullible will be invited to
Nigeria to meet the government oHcials and are held there for ransom.
The advance fee fraud is actually a subset of a more general confidence
game, 10.7 called the Spanish prisoner . This dates to the seventeenth cen-
tury when con artists would convince the mark that there is a prisoner
(of noble birth with vast wealth), in Spain being held under a fictitious
10.6 E-mail records uncovered the document-shredding coverup at the firm.
10.7 A confidence game , or simply a con is a fraudulent scheme where a person is persuaded
to buy useless property, goods, or services, or to part with their money for a phony scheme.
The victim, in this case, is usually called the mark . If there is an accomplice to the con artist,
the name given is shill , a person whose role is to encourage the mark.