Let me admit one thing up front—I am a computer Neanderthal. As a matter of fact, when I graduated from college nearly four decades ago, these electronic wonders (that now manage nearly every aspect of our lives) had not even found their way into business school curricula.

My, how times have changed. But one thing that has stayed the same is the definition of fraud, which has been a part of our lexicon for eons. Simply put, it is an intentional false statement used to deprive an innocent victim of money or property. What is completely new is how people are now victimized. In other words, it is the same song but with a different verse.

Before the advent of mail, it was usually necessary for the fraudster to deliver a spiel to the potential victim face-to-face. When letters came in to existence, the crook only had to invest in a postage stamp to remotely defraud the victim. Not now. Anyone with a computer can deliver faceless phony pitches to millions of people almost instantaneously over the Internet—at little or no cost. Moreover, without proper security (as if there were really such a thing), thieves can tap into bank accounts, credit cards and most of the world's cash.

Although former U.S. Vice President Al Gore has taken great pains to discredit the rumor, many people actually still believe that he "invented" the Internet. The truth is that it began in 1969 as an experiment between the University of California at Los Angeles and Stanford Research International. In 1974, the term Internet was used for the first time. But the network didn't really take hold until 1988— when it was opened to commercial interests. By now, nearly 2 billion computers are connected worldwide, a number that continues to grow rapidly.

There are few inventions in history that have brought so much benefit to mankind. Conversely, the Internet is increasingly being used for evil. Cyber attacks in various forms are now commonplace. We've listed the typical schemes in the front of this book with a graphic we have dubbed the "Internet Fraud Tree." A glossary of computer-related terms is also included at the end of the book.

No good data exists on the number of Internet crimes but according to most experts, they are growing in number and sophistication. And as with other criminal activity, efforts to control Internet fraud always seem to lag behind; crooks try hard to be ahead of the game.

This is not unique to Internet crimes. Airport security gained importance after repeated attempts were made by terrorists to hijack and/or destroy planes and passengers. Physical screening became the norm but it was not (and is not) foolproof. Richard Reid, the so-called "shoe bomber," was one step above— pun intended — prevention measures of the time when he walked aboard an airplane with explosives concealed in the heel of his shoe. Now, every man, woman and child must remove their shoes to have them x-rayed before boarding a commercial aircraft. And then came the "underwear bomber," who unsuccessfully attempted to blow up a plane. This serves to illustrate that those who are determined to commit crimes will likely try to find a method that works.

With Internet fraud prevention, there isn't (and likely won't be) nirvana. Just as soon as the good guys think they've developed the perfect solution, the bad guys will prove them wrong. That leaves us with learning from the past so we will recognize the Internet fraud scams that have occurred and take appropriate measures. Put another way, education is the best fraud prevention tool.

As you will see in the following pages, Internet fraud is not committed by electronic machines but rather by the people using them. However, computers are a vital aspect of the miscreants' schemes and our efforts to catch them. If we are able to identify who is behind the keyboard, bringing them to justice most frequently involves traditional investigative methods — victim and witness interviews, methodically gathering evidence, undercover operations and confrontation of the suspect.

This is the arena where I am not a Neanderthal. For those of you who may not have kept track, I am entering my fourth decade in the anti-fraud field. I've conducted thousands of investigations. And although each has been different, they are also much the same in the approach to solve them.

First, an allegation is made. It is then evaluated to see if the facts, if they are proven, would constitute fraud. Assuming so, there begins the methodical process of gathering the evidence. In almost all situations, the documentary proof is gathered first. Next the investigation moves in a manner similar to rings on a tree trunk, beginning on the outside with interviewing witnesses who are the least culpable and working inward, toward the suspect or suspects.

People with limited experience in conducting investigations are likely to skip directly from the initial allegation to a confrontation with the sus-pect(s), omitting the crucial middle steps. The problem with this approach should be obvious: With no evidence to prove otherwise, the fraudster is likely to deny involvement. The pinnacle of an investigation is to conclude with a legally binding admission of guilt. Although many cases are made in court without a confession, getting one is the goal.

In this book, you will see many and varied examples of how Internet fraud is uncovered and investigated. Most cases were resolved, but not every one. Some fraudsters confessed; others stonewalled. Many were convicted while some escaped justice. Of those adjudged guilty, punishment was adequate for some; others received a slap on the wrist. But that is the lot of the criminal justice system—you can't win 'em all.

The cases to follow were written by members of the Association of Certified Fraud Examiners, the world's largest anti-fraud organization. These authors are in the trenches every day across the globe fighting fraud in an uphill battle. Were it not for them, the climb would be even steeper. The stories you will read were carefully selected. To protect privacy, key names have been changed.

Thanks first goes to those who have given of themselves and their time to provide these compelling stories for Internet Fraud Casebook: The World Wide Web of Deceit. Ms. Laura Hymes of the ACFE research staff deserves special recognition for her job as the book's project manager and for her superb editing skills. Were it not for Ms. Hymes, it is unlikely this work would be in print. Thanks also go to John Gill, head of the research department and to Ms. Andi McNeal, his second-in-command. And I'd be remiss if I didn't thank personally Jeanette LeVie, my trusty assistant of 19 years, who has been indispensible to me; and to James D. Ratley, the ACFE's president and my friend of a quarter-century.

If you investigate Internet fraud, are responsible for its early detection or prevention, if you educate others or if you simply have an interest in this fascinating topic, you will find much valuable information between these covers. Although I don't have a crystal ball, I'm going to make an almost sure-fire prediction. As use of the Internet grows, so will the problem of fraud.

Joseph T. Wells, CFE, CPA

Founder and Chairman

Association of Certified Fraud Examiners

Austin, Texas, USA

April, 2010