back to article IT boss 'set up fake companies to charge his employers $2.4m'

A former lead systems engineer with a US software development company has been accused of laundering $2.4m (£1.8m) in an IT consulting scheme. The office of the Texas Attorney General has filed 11 counts of fraud and money laundering against Albert Shih-Der Chang, who worked at One Technologies, a Dallas-based firm that …

  1. onefastskater

    Hum?!

    Where there is money there is mischief.

    1. adnim
      Angel

      Re: Hum?!

      Not always, some of us are honest.

      My last employer was an multinational American corporation. And despite having full access to everything on the server, desktops and portables, including T+A, payroll systems, BACS etc. I am still a poor man financially. Integrity wise, something I value over money, I am quids in.

      A divine being I ain't. I just set my own standards and adhere to them, in spite of the temptations.

      1. Adam 1

        Re: Hum?!

        Be honest now. You just couldn't remember the adnim password.

        Ah, my coat, thanks.

        1. Anonymous Coward
          Anonymous Coward

          Re: Hum?!

          It sounds like the person in this story was only doing what you're average MP does. Oh, not quite, he wasn't employing any family members and hadn't put a claim in to get his moat cleaned. Apparently he's got a lot to learn.

          1. Mark 85 Silver badge

            Re: Hum?!

            Oh, not quite, he wasn't employing any family members and hadn't put a claim in to get his moat cleaned

            Well.. as far as I know, there's next to zero moats in Texas*. If he had one, that might be a tip-off that things are not on the up and up...

            *There might be a few around certain well-off oil types.

      2. Jediben

        Re: Hum?!

        Segregation of duties is over-rated anyway.

  2. Anonymous Coward
    Anonymous Coward

    Meh - when it comes to fraud, everything is bigger in Africa...

    Doing business in Zim is always fun...

    https://www.newsday.co.zw/2016/06/21/mandiwanzira-4m-netone-scandal

    1. Anonymous Coward
      Anonymous Coward

      Re: Meh - when it comes to fraud, everything is bigger in Africa...

      >Meh - when it comes to fraud, everything is bigger in Africa...

      Does it count as fraud if the rule of law is more a suggestion? Zim also has an unemployment rate over like 90%. But for the grace ...

    2. gotes

      Re: Meh - when it comes to fraud, everything is bigger in Africa...

      Now, this may or may not be true, but according to my mother, who spent her younger years Africa, in many African languages the closest translation for "corruption" is "opportunity".

    3. Allan George Dyer Silver badge

      Re: Meh - when it comes to fraud, everything is bigger in Malaysia...

      1MDB case: $700M allegedly into Mr Najib's personal bank accounts

      http://www.bbc.com/news/world-asia-33447456

  3. elDog

    We need to get some more universal names to avoid appearances...

    "Albert Shih-Der Chang". Surely only two (or two-pint-five) dimensional.

    Albert, Shih of Change, Lord of Srith, Mukhdar of Venia, Baron of Buznes, von Ribben-und-Troppen, Haili Salassian and Lioness of Jude, Puffin Extraordinaire avec Buttonieres de Gloire.

  4. allthecoolshortnamesweretaken

    What, no charges regarding not paying taxes? Or hasn't the IRS had a go at the guy yet?

    1. Anonymous Coward
      Anonymous Coward

      Maybe he paid all taxes due on the money.

      If he did, I wonder if the court can order the IRS to return it?

      1. kain preacher

        No it's income. In the US you required to pay taxes on all income even if it's illegal income. If the income is illegal you are not allowed any deductions.

  5. Ole Juul

    All in the family

    Chang, who worked at One Technologies, a Dallas-based firm that develops credit-monitoring apps

    I take it his credit was good.

  6. Anonymous Coward
    Anonymous Coward

    Homework

    The money was only resting in his account.

  7. keithpeter Silver badge
    Windows

    Consultancy...

    I can understand the hardware aspect - your accounts show purchase of certain equipment which never gets added to the capital items register as it does not actually exist. Sooner or later someone will notice. I accept that small items might slip under the radar there.

    Consultancy: sounds like the accused was able to authorise payment for consultants and act as the reporting manager for those consultants. I can see that activity by consultants could be faked. Actually I'm wondering why the accused didn't simply hire an out of work character actor to wear a suit and turn up with a nice Moleskine notebook and sit in meetings and make notes and sign a time sheet. Knock up a bit of a report at home that simply agrees with actions he decided to take anyway and then there you are - consultancy services supplied.

    Disclaimer: I work in public sector. Ordering a packet of tracing paper or a box of pens is so heavily audited that I don't bother and just go down the £1 shop. In most places isn't there a need to have purchase orders countersigned by a more senior manager?

    1. Anonymous Coward
      Anonymous Coward

      Re: Consultancy...

      physical goods are easy:

      • We need 32GB RAM
      • Local supplier has that for £100
      • Your "cousins" IT re-seller business with only one customer has it for £250...
      in fact, I'm not sure that's even illegal, I mean, highly unethical, but not sure if it would class as being illegal...

      Now scale that up in items and over a few years, items are in the companies inventory and any housekeeping will identify them there, maybe an overly zealous bean counter may rap you on the knuckles for not finding the best price and doesn't believe your retort of better customer service / more generous returns service etc... so you spin down that "preferred supplier" and spin up another.

      Hell, you could even talk colleagues into using them and mitigate your own exposure..

      Also, consultant services should be offsite meetings, where travel and beer money sustenance expenses are included..

      Really, I'm surprised at how much he managed to snaffle with such amateur approaches...

      Anon as a I may be Technical Director for a large firm...

      1. jde96

        Re: Consultancy...

        I half-jokingly considered setting up such an enterprise, but only for IT requests I considered to be a total waste of money in the first place. JDE Pointless IT Ltd has a nice ring to it...

      2. Prst. V.Jeltz Silver badge

        Re: Consultancy...

        " I'm not sure that's even illegal"

        I think its standard procedure...

    2. Pascal Monett Silver badge
      Trollface

      Re: why the accused didn't simply hire an out of work character actor

      Hint : it may have something to do with not wanting to bring anyone in on the racket in order to not share the spoils.

      Plus : another person involved is another mouth that might blabber. Tying up loose ends is always a messy job.

      1. Anonymous Coward
        Anonymous Coward

        Re: why the accused didn't simply hire an out of work character actor

        Not bringing people in wittingly, simply offer the company as a referral, saying they're a preferred supplier and give them a discount for first purchase (50% off your usual mark-up)

    3. Flocke Kroes Silver badge

      Re: Consultancy...

      The other way to do hardware:

      Delete a driver. Tell victim he needs a new motherboard, purchase for real, swap in the new one, and send the old one for recycling and re-install the driver. Move the old motherboard from your recycling company to your computer spares company and repeat - this time buying from the 'new' motherboard from yourself.

      In a couple of years, the Brexiters will give us back the tariff rip-off. Pick something with an import tariff, buy some for real abroad and import it from yourself. Collect broken kit that resembles the product and send it back under guaranty to your foreign self. You can then send replacements to yourself without paying the import tariff and undercut the competition.

    4. Adam 1

      Re: Consultancy...

      Well I'm just glad that this type of behaviour is restricted to dodgy people in Texan companies and not political parties on the public teat.

  8. ecofeco Silver badge

    Meh

    Business as usual in Texas.

    1. ecofeco Silver badge

      Re: Meh

      I was too busy to finish my post, so here's the rest:

      The people who do these types of skimming and embezzling are often also the ones who are the office asshole. You know, either the constantly cranky ones or the smiling backstabbers. The constant pressure to maintain the scam and pretenses and misdirection literally eat them up inside. Or they are mad at the world in general and figure they deserve self administered bonuses.

      As for Texas, I've done business there and the amount of business fuckery is so high that the federal budget simply does not allow for the investigation and prosecution of it all. Remember, it's the oil and gas capital of the world. Literally. From trading to engineering to production, Texas is central to the entire worldwide operations in one way or another. With that amount of power and money, how could there not be high fuckery?

      The amount of money wasted by business and government in that state is staggering. Yet they never seem to waste it on the average person.

      So word to the wise: never let any romance of Texas blind you to the dirty reality. You can make money. You can also get screwed hard just as easy. The guy in this article is a very prevalent type.

  9. Doctor Syntax Silver badge

    He set up a chain of accounts to try to avoid detection - and then paid it into his own account?

    1. Preston Munchensonton

      Based on the sums, they would have caught him even without attempting to use his own accounts. Anti-money-laundering regulations are pretty tight. So tight that banks even make their IT folks take the courses. :/

      1. Anonymous Coward
        Anonymous Coward

        Unless you're HSBC of course.

      2. david bates

        I've worked in a few financial institutions, always on test systems, never with access to live data or any sort of budget.

        I've always had to do regular money laundering training as well as bribery and corruption training.

        1. Anonymous IV

          @david bates

          > I've always had to do regular money laundering training as well as bribery and corruption training.

          So you're now a fully-qualified money launderer, briber and corrupter, then?

          I remember a secondary-school teacher friend of mine, looking in The Guradian at an advert whose headline was "Could you put together a Youth Offending Team?"

          His response was, "Yes, quite easily. Give me about 20 minutes..."

        2. TheOtherHobbes

          >I've always had to do regular money laundering training as well as bribery and corruption training.

          Financial institutions, you say? Was that avoiding, or doing?

        3. Sloppy Crapmonster
          Joke

          > I've always had to do regular money laundering training as well as bribery and corruption training.

          But of course -- if you can't do all that, why are you working at a bank?

        4. Anonymous Coward
          Anonymous Coward

          When I did IT for paypal I had to do the same thing. Hey quit laughing at me. In the US they do treat paypal like a bank. They made use take ethics training. I said stop laughing.

        5. Medixstiff

          I sometimes run start-of-day operations when our DBA is off and checking the direct debit file is always sobering.

          On average we receive anywhere from $12 million to $23 million coming in, I still after 6 years here, do the sums in my head as to how long it would take me to earn that type of money.

          Then I console myself with a bacon and egg roll, instead of boring cereal, because after waking up at 4:30AM to get everything sorted by 6:30AM so people don't whinge - even though our SLA is for the systems to be up at 8:00AM - means I deserve it.

  10. chivo243 Silver badge
    Holmes

    Great planning

    He seems to covered most of the bases when it came to racking up the offenses...

    mail fraud

    wire fraud

    embezzlement

    money laundering

    Nicely done ;-}

    1. John Brown (no body) Silver badge

      Re: Great planning

      That seems to be standard practice for the prosecution. Lay as many charges as possible in case some some don't stick (lack of compelling evidence, technical/procedural errors etc) or to frighten the accused into a plea.

  11. HAL-9000
    Pint

    Initiative

    Isn't this thing normally rewarded, well and truly out of the box thinking.

    Me thinks he won't enjoy his new bright orange office attire ...

  12. GrapeBunch

    Perhaps Arrivederci thought he was in Canada, also a large country, where execs can get away with surprisingly much. Though "lead engineer" is a bit of a junior post (in the corp hierarchy) for that kind of gravy.

    1. Robert 22

      You mention Canada. There was a low level official by the name of Paul Champagne in the Canadian Department of National Defence who, over a period of years, collected 10s of millions of dollars by persuading managers to sign off on documentation for mostly imaginary procurement activities. It seems that if anybody asked questions, he would tell them that they involved secret programs that he couldn't talk about.

      I believe he received a 7 year sentence around 2008.

  13. Fatman

    How to (financially) rape a company

    Without getting too detailed here, this is just a lesson on how to defraud an employer.

    BTW - this """lesson""" does not purport to represent what happened at the company mentioned, it is a general description of how this fraud can go unnoticed. (BTSTGTTS)

    Imagine the amount of fraud that occur if a whole bunch of executives were in on the fraud.

    You have your low level 'retail' managers that can divert income from the company (especially if that revenue stream comes in as cash), with them taking a cut (of that cash stream) on its way to the upper level fraudsters.

    Then the fraudsters hit the company on its expenses.

    The fraudsters use accomplices that infiltrate and use legitimate supplier companies to perpetuate the fraud by generating 'phantom invoices'; which purport to provide products and services to the prime target company, but which in fact are just plain bogus.

    These accomplices are situated inside the "phantom" supplier in such a way that they can intercept the incoming payments and direct them to "bogus" bank accounts the accomplice controls, often created with forged documents that provide for the power to open and close bank accounts.

    Another aspect of the fraud involves overbilling the prime target for a legitimate product or service, with that overbilled invoice getting approved and paid for the entire over billed amount. That supplier's records either show a credit memo for the over billing, or the invoice is reduced before posting. The overpayment is refunded to the prime target, but it is deposited into an unauthorized bank account controlled by the fraudsters. From that supplier's perspective - YOU over paid, and we refunded that overpayment. End of discussion. The supplier can point to the check as proof. Unless someone took the time to determine where that check ended up, ...

    One of the easiest ways to induce this fraud is to bill the prime target for "consulting services" by another legitimate company where some more fraudsters are in on the scam, where those payments are directed into unauthorized bank accounts.

    Since the prime target company managers have approval authority for invoices for products and services (many times NOT) performed; and cover by the upper level executives in on the fraud, unraveling this fraud takes a lot of time. Which is why it took so long to discover in this case.

    A very good reason why one should run criminal record checks on anyone who handles cash, or has payment approval authority. Also, a good reason why larger firms should audit their financials at least every two or three years. Six years is way too long. Even spot checking invoices could have led to an earlier discovery of this fraud.

    I only wish there was an appropriate icon for a thief in the night.

  14. Tom 7 Silver badge

    I walked into the office one day only to be locked in an adjacent room

    with the rest of the IT dept. A gleeful psycho and entourage informed us they were waiting for something to happen before they could let us out and disappeared, locking us in again, After a while they came and told us they were waiting for my boss to land from a trip to the US so he could be arrested and then they would let us go, and disappeared quickly. Eventually with some sense came in to apologise and I was able to inform him that I'd spoken to him the night before because I was very suspicious of the above psycho's behaviour which was well out of order - as was our illegal captivity. It was then they realised that he had not come through customs because he had not got on the flight having worked out from my phone call the few hundred thousand he had syphoned off through a spoof company had been sussed.

    Took redundancy not long after - should have sued them for locking me up though.

    1. Anonymous IV
      Joke

      Re: I walked into the office one day only to be locked in an adjacent room

      You make no mention of your arrest and conviction for tipping him off (probably for perverting the course of justice) ! At least you will have had a Redundancy Package enhanced by your former boss...

  15. Anonymous Coward
    Anonymous Coward

    Small potatoes

    You this is a big deal? Try this guy: Former DND employee pleads guilty in $100M fraud scheme.

    Interestingly enough, the guy was universally liked, and highly valued for his ability to work around the bureaucratic red tape. I guess this is why he ended up netting over 100 mil. Working for the military also helped, of course.

  16. Pen-y-gors Silver badge

    I need new glasses

    When I glanced over thois headline I read it as "set up fake companies to charge his EMPLOYEES $2.4M"

    Curious I thought. But it does make you think...how would you go about it?

    1. Shades

      Re: I need new glasses

      You could try asking the UK's Tories: BBC News: Student nurses and midwives protest over grants cut

      If the changes go ahead it would mean nursing students would, in the long run, pay to work. Unlike regular students nursing students have to work in clinical placements for 50% of the year, doing the exact same jobs as fully qualified nurses (and often being used as dogs-bodies, doing crap they shouldn't be doing and/or other people don't want to do). This means that, again unlike regular students, they have no time to take additional work to provide themselves with some extra income. If bursaries are replaced with loans, which have to eventually be paid back, it means that, essentially, they have paid to work in hospitals for 50% of their training period.

      1. Anonymous Coward
        Anonymous Coward

        Re: I need new glasses

        Sounds like your going to run out of competent nurses in UK soon... How about this then: In Finland, unemployed people can be forced to work for their unemployment benefits. OK, you receive benefits, it’s only fair to work a bit for the money you get and your mental health stays better than if you just stayed home every day. Fair, right?

        Not so fast. First, you’ll only get 9 € for a day’s work. Doesn’t sound that good anymore. Second, ”unemployed” people have been found working in regular jobs, like in production lines. What happens is that a municipality effectively rents unemployed people to companies for pennies. It starts to look pretty much if not slavery, but at least forced labour.

        The hole fucking scheme is an unholy chinera of communism and capitalism. It demeans work, exploits people, falsifies unemployment statistics, distorts competition, sustains unprofitable business and makes companies fat and lazy. Job well done!

  17. Hans Neeson-Bumpsadese

    Six years?!

    How come it took so long to detect this? I would have thought that the company's auditors should have picked up on this sooner.

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