Financial fraud is a widespread issue that continues to evolve and wreak havoc on individuals, companies, and the overall economy. America alone has a staggering number—a record $10 billion to scams in 2023, up from $9 billion in 2022. While the sheer volume of financial fraud remains consistent, the sophistication and reach of these schemes have grown exponentially, making it a pressing issue that demands attention. To shed light on this alarming trend, retired FBI Special Agent, IRS-CID Special Agent, Certified Fraud Examiner (CFE), and founder of forensic accounting firm, MPM Consulting, Mike McCall brings his decades of expertise to the forefront. Through a series of case studies, he offers a unique perspective on how fraudulent schemes are executed and, more importantly, how they can be uncovered.
One of Mike's most eye-opening cases involved investigating suspicious financial activity among high-rollers at U.S. casinos. Under federal law, casinos must report all cash transactions exceeding $10,000 to the government, a measure designed to curb money laundering. Yet, these regulations also make casinos fertile ground for identifying those who spend far beyond their apparent means. Mike recalls a particularly complex case involving a woman who lost nearly $10 million over two years, despite being officially listed as unemployed. He shares, "It wasn't just about her gambling losses; it was about the question that hovered over it—where was all this money coming from?"
After a series of discreet interviews and surveillance, Mike unraveled the source: the woman's ex-husband had given her an $11 million settlement during a bitter divorce, along with a substantial monthly alimony. What began as a straightforward inquiry into financial sources turned into a twisted narrative of revenge.
The psychology of financial behavior can often be just as complex as the numbers themselves, Mike notes. While this particular case did not involve criminal activity, it served as a chilling reminder of the extremes people go to when emotional motives intertwine with financial power.
While high-roller casino investigations showcase financial excess, another form of fraud preys on vulnerability—like the gift card scams, a hallmark of elder fraud schemes. Gift card scams often involve fraudsters posing as government officials, law enforcement, or even loved ones to trick unsuspecting victims into buying large amounts of gift cards. The anonymity and inability to trace gift cards make them a perfect tool for scammers, who can quickly redeem and transfer funds even before the fraud is detected.
As a volunteer at the American Association of Retired People (AARP) Fraud Watch Hotline, Mike has witnessed firsthand the various fraud schemes that are carried out. "One of the most important things that I emphasize when speaking to victims is that gift cards are for gifts only. No government agency, no legitimate business, and certainly no law enforcement will ever ask you to settle debts or pay fines through gift cards," he stresses.
The scams are insidious in their psychological manipulation. The forensic accountant expert recounts numerous cases where victims received frantic calls claiming that their loved ones had been in a car accident and needed money for legal fees, or that they owed back taxes and would be arrested if they didn't comply immediately. Driven by fear and confusion, victims rush to purchase thousands of dollars worth of gift cards, never realizing that they are being bamboozled until it's too late.
Even AARP reports that older Americans are losing billions each year to many scams, with gift card fraud representing a significant portion of these losses. Despite extensive public awareness campaigns, the sophistication of these schemes continues to evolve, making it ever more difficult for even the savviest individuals to protect themselves.
While casinos and gift card schemes garner headlines, Mike is quick to point out that nonprofit fraud is an equally serious problem—and one that's often overlooked, with 13 cents to every dollar donated being routed to fraud. "It is a huge loss for organizations that are supposed to be doing good," Mike notes. The issue, he explains, stems largely from poor financial oversight and a lack of segregation of duties within these organizations.
"Imagine a small church where one person is responsible for collecting donations, counting the donations, recording them, and depositing the funds," Mike says. "If that person has a gambling problem, financial stress, or simply a lack of a moral compass, it's incredibly easy to skim off a portion of the cash without anyone noticing. That's why you need checks and balances—someone to count the money, someone else to record it, and yet another person to deposit it."
Mike compares the above scenario to FBI drug busts he conducted earlier in his career. "If we found a stash of cash during a search, it was almost as concerning as finding a loaded gun," he says. "We'd never count it alone because cash is tempting, even to honest people. You always want a second set of eyes. The same principle should apply to non-profits, but often, it doesn't."
This expert, who has over 35 years of white-collar investigative experience, recalls the first case assigned while working at the FBI as a Co-Case Special Agent—a healthcare fraud whistleblower suit. Eight current/former employees and competitors filed 'Qui Tam' claims against a large medical provider, alleging systematic and purposeful overbilling for services. The whistleblowers claimed senior management approved the systematic overbilling of services, but the provider denied it. After four years of investigation and proof, the medical provider paid a $486 million fine and seven indictments for false statements made to the U.S. Government and insurance companies. He has also encountered cases such as the one where a CFO—who had committed suicide—was also responsible for committing fraud in his company, and his devastated widowed wife was not even aware of this.
Despite his many successful cases, this investigator is candid about the uphill battle facing those in his field. "Financial fraud is always evolving," he says. "As soon as we shut down one scheme, another pops up. It's whack-a-mole with millions of dollars at stake." Yet, he remains committed to his work at MPM Consulting, helping attorneys and businesses navigate the complexities of financial investigations and safeguard their assets.
"Fraud is like a disease. If you don't catch it early, it spreads and becomes harder to contain. That is why the more people who know, the tougher it is for these criminals to operate in the shadows." - Mike McCall
