Reformed Con Man Wows Agency Accountants with Anti-Fraud Tips

Frank Abagnale is best known for being portrayed by actor Leonardo DiCaprio in the 2002 Steven Spielberg film “Catch Me If You Can.”

But the one-time forger, check-bouncer and workplace infiltrator who left prison to share his expertise with the FBI is also a motivational speaker and cybersecurity adviser.

On Tuesday, he delivered harsh criticisms of the government’s responses to cyber threats as he shared tips for confronting America’s $1 trillion white-collar fraud problem at an Internal Control and Fraud Prevention Training conference staged by the Association of Government Accountants.

“If I tell a corporate CEO that he has a loophole in security, he will close it by the next morning,” Abagnale said. “But in the government, nothing ever gets done—it’s sad because the government should lead.”

He ticked off stark numbers--$100 billion annually in Medicare and Medicare fraud, $3 billion in food stamp fraud, $7.7 billion in unemployment insurance fraud, $5.8 billion in identity theft fraud against the Internal Revenue Service, and $16 billion in abuse of the earned income tax credit. “The IRS issues 1,100 refunds to the same address in Lithuania, and there’s no software to catch this?” he asked.

“At the FBI Academy, we say follow the money,” Abagnale said, adding that the major criminal fraudsters are not American but Chinese, Russian and Eastern European. “The fraud comes back to the United States in drugs, human trafficking and child porn,” he said. “If you put in the requisite technology and cut the fraud down by even by 25 percent, that would be $1 billion for use in providing for homeless, schools, roads and housing.”

When the breach of personnel data at the Office of Personnel Management was disclosed in June, Abagnale said he knew right away that the original estimate of 4 million current and former federal employees victimized was low by a multiple of four or five. (The figure turned out to be 21.5 million.)  “We’ll know it was the Chinese if no one uses the data for five or eight years,” he said, arguing that the most sophisticated identity thieves “warehouse” the data and “sell it off in bits” rather than rushing it out when investigators are looking for it. When the South Carolina Revenue Department was hacked in 2012, Gov. Nikki Haley offered victimized taxpayers one year of credit monitoring, Abagnale said. He contacted her and said one year is worthless.

Abagnale prepped his CPA-heavy audience with his dramatic personal story, how he ran away at 16 to escape his parents’ sudden divorce. Wandering in New York City seeking survival, he lied about age, doctored a driver’s license and began bouncing checks. He tracked down the manufacturer of Pan Am airline pilots’ uniforms so he could impersonate an employee, eventually flying a million miles in cockpits (of competing airlines, under a pre-deregulation agreement) to 26 countries.

Abagnale then moved to Atlanta and impersonated a pediatrician, and was finally imprisoned in France and Sweden for writing bad checks. After four additional years in a prison in Petersburg, Va., the FBI offered him parole if he would switch to the bureau’s side.

The ex-con married and raised his three kids in Tulsa, commuting to Washington (he and his wife now live in Charleston, S.C.) He has written five books and works on retainer for such clients as Intuit, Experion and Lexis-Nexis, he told Government Executive.

“I had little to do with the Spielberg film,” Abagnale told the audience, nor can he receive any profits from the subsequent book, play and TV show based on his life. He has declined for 40 years to take a federal salary and has turned down three pardons. “I’ve never believed a slip of paper will excuse my actions,” he said.

The fraud-combatting methods he shared with the audience included a “wonderful tool the government offers in the 1099 [tax] form. If someone steals $50,000, it’s taxable income, you can get a tax write-off, which also tells the IRS, and you get satisfaction that the IRS has the power to go after them,” he said. “The threat of a 1099 is 10 times greater than if I threaten to send them to jail.”

Every company and agency has the obligation to keep controls against fraud, he said. Every man, woman and child pays $500 a year for white-collar crimes in the form of higher prices. “We live in a society that doesn’t teach about ethics and character at home in schools,” Abagnale said. “We have raised an entire generation with a lack of character in their make-up,” he added, citing surveys of high school kids who agree it’s okay to cheat, to plagiarize, to hack. In government, “We gave them the opportunity, we allowed it to occur. It is easily prevented,” he said.

In his own lifestyle, Abagnale avoids social media, writes few checks, and avoids debit cards (credit cards are much safer, he said). He discourages people from posting on Facebook such information as when and where they were born, or straight head-shot photos easily grabbed for use in a fake I.D.  “What we send to the cloud can be retrieved from the cloud,” he said. “It’s disastrous for analytics. We give so much away then wonder why we’re victimized.”

Through slides, Abagnale showed how he found—in just 15 seconds online-- the Social Security number, home address, even parking space of former top officials such as Gen. Colin Powell and former CIA director Porter Goss—the latter through a lucky guess in checking land purchase records in Florida.

He warned that office copiers nowadays have hard drives that can be downloaded by criminals who purchase the discarded machines. And he showed how he steered the Selective Service System away from using open postcards for people registering for the draft, which displayed their Social Security numbers and other vital data for any postal employee to see.

Shredders, Abagnale said, are all the same price but only one type is safe. Straight shredders and cross-hair shredders leave pieces of paper that can be reassembled in minutes. Only a Micro Cut Shredder actually destroys the documents, he cautioned.

Abagnale’s slides illustrated how today’s forgers of checks—still the preferred payment method for 75 percent of business transactions—use Scotch tape to lift text off of laser-printed checks before substituting higher numbers and new payees. He warned of chemical alterations of checks, and anti-counterfeit check paper available at any office supplies stores. Corporations, he warned, should never give their check routing numbers to strange callers who say they want to wire money, nor should they reproduce their CFO’s signature in an annual report.

Giving out his email address at abaganale.com, Abagnale said he gets regular emails suggesting he is a genius.  “If I’d been brilliant or a genius, I wouldn’t have had to break the law,” he said. Describing how he cried himself to sleep until age 19, never went to a prom or high school football game or had a relationship with someone his own age, the recovered con man said, “This is a great country -- everyone gets a second chance.”