Rob Douglas: Lessons from our largest bank heist
Like many folks in the valley, I wear more than one hat when it comes to scratching out a living. In fact, penning this column is a tiny fraction of my work. Given the Alpine Bank heist, I’ll change hats and draw on my full-time career to offer some thoughts to local businesses and consumers.
First, some background.
In addition to a stint as a talk show host, I was a Washington, D.C., private detective for the better part of two decades.
During the ’80s, most of my cases were homicides and other crimes of violence. By the late ’80s and ’90s, my caseload graduated to local and national political corruption investigations along with two Islamic terrorism cases – the hijacking of a Jordanian airliner with Americans on board out of Beirut, Lebanon, and the truck bombing of the Khobar Towers U.S. military housing complex in Dhahran, Saudi Arabia, that killed 19 Americans.
In 1998, my career took an unexpected twist. I stumbled into investigating the widespread use of social engineering by identity thieves and illicit information brokers to steal customer funds and account information from banks. For example, one of the most common methods used by thieves to defeat bank customer authentication procedures is to impersonate account holders while on the phone with bank employees.
After a TV news report during which I demonstrated how all bank accounts were at risk, I was asked to testify before Congress and reveal what my investigation uncovered. That testimony led to a section of the Gramm-Leach-Bliley Act – a law bankers now deal with every day – outlawing the use of “pretext” methods designed to deceive bankers into revealing customer account information.
Following the passage of the GLB Act, I assisted the Federal Trade Commission with a sting operation to prosecute information thieves stealing customer information from banks and participated in several more congressional investigations of illicit information brokers and identity thieves – including a 2006 investigation that turned up, among others, a Colorado state representative who since has left office.
Those combined experiences led to several years as an outside consultant for the American Bankers Association on issues of identity theft and financial fraud and, eventually, to my current work as an information security consultant and editor of http://www.insideIDtheft.info.
So, with that far-too-long recital of my professional journey as a backdrop, I’d like to share a few observations and suggestions arising out of the misfortunes experienced by Alpine Bank and six of the bank’s customers.
This week, as reported by the Steamboat Today, former employee Pamela Jean Williams “pleaded guilty to felony theft and forgery charges for her role in embezzling about $1.3 million from the Steamboat Springs branch of Alpine Bank and some of its account holders.” Williams’ co-conspirator, former employee Terri Dawn Moody Fatka, pleaded guilty earlier this year for her role in stealing the money.
The Alpine Bank caper is thought to be the biggest theft in the history of Routt County. In previous reporting, it was revealed that “Fatka said she and Williams handpicked people who kept poor track of their accounts and stole the funds a little at a time, using forged advice of charge slips.” Alpine Bank has completely reimbursed the customers who had their accounts pilfered.
Tragically, the inexcusable criminal acts of Williams and Fatka highlight the two most common mistakes made by all businesses and consumers when it comes to defending against financial fraud. Far too often, business owners fail to understand that the greatest threats come from within. Equally frequently, consumers fail to regularly review and monitor their financial and nonfinancial customer accounts.
All businesses need to accept the sober reality that employee theft accounts for the greatest percentage of losses in almost all industries. Business operators need to work within a framework of trust but verify. Adequate procedures must be in place to protect the business, customers and co-workers from employees who seek to exploit procedural weaknesses.
Consumers need to be cognizant that there are ever-increasing threats to their personal information and money, from small-time crooks such as Williams and Fatka right up to international organized criminals trolling for easy prey. Every study shows that consumers who regularly and personally monitor their customer accounts are less likely to be victimized and, if victimized, are the most likely to catch the problem before it grows.
From time to time in future columns, I’ll change hats and offer additional practices businesses and consumers can use in the battle against criminals. But for now, remember to protect against employee theft and regularly review your accounts.
To reach Rob Douglas, e-mail Rob.Douglas@Comcast.net
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