IT Confidential: Bad Voodoo: Finding Fraud Spells Jail Time
The fraud app is 'not just data mining, says I.S. Director Fontenot.
Remember Phil White? In the mid-1990s, he was the CEO of Informix, one of several successful midtier relational database companies. White was indicted in 2002 on eight counts of securities, mail, and wire fraud, and last week, after pleading guilty to one count of signing a "materially false" statement with the Securities and Exchange Commission, he was sentenced to jail. Northern District of California Court Judge Charles Breyer sentenced White, 61, to two months in federal prison, a fine of $10,000, two years of supervised release, and 300 hours of community service. White will begin serving his sentence on Aug. 2. The SEC began investigating Informix and White in 1997 for revenue-recognition irregularities; White resigned, and the company was forced to restate revenue and earnings back to 1994. Another Informix officer, Walter Konigseder, who was the company's VP in charge of European operations, was indicted by a federal grand jury in October 2000, for wire and securities fraud. But Konigseder lives in Munich and is a citizen of Germany, and federal prosecutors haven't been able to get him extradited, according to a statement by U.S. Attorney Kevin Ryan. Informix was acquired by IBM in December 2000.
The State of Louisiana's Department of Social Services for the last two months has been employing an anti-fraud system that uses business-intelligence software from Information Builders and geographic-information-system software from ESRI. Duane Fontenot, the department's director of information services, who introduced the system at last week's Information Builders user conference in New Orleans, says it lets the state's 19 social-services investigators map transactional food-stamp data with geographic data about retailers to try to spot fraudulent food-stamp activity. Fraud accounts for about 4% of the $700 million federally funded food-stamp program. Investigators wouldn't provide details, but one possible scenario: The map app can show if a food-stamp recipient is passing up several nearby retailers to transact with a particular out-of-the way retailer, suggesting food-stamp brokering. The app has already proved successful--investigators say one retailer simply gave up and admitted guilt when confronted with the geographical data.
Speaking of Information Builders' user conference last week, rumor has it that attendees were treated to a voodoo dance complete with drums and snake (a very large snake), which the voodoo priestess carried among the crowd at Sunday night's opening reception and dinner. Monday morning's keynote by CEO Gerald Cohen was kicked off by a gospel choir belting out "This Little Light Of Mine." Laissez les bon temps rouler!
I haven't been to a party where there was voodoo and a snake in a long time. Wait--I've never been to a party with a snake. If you don't count my ex-girlfriend. If you have a snake story, or have an industry tip, send it to firstname.lastname@example.org or phone 516-562-5326. If you want to talk about executives going to jail, software revenue recognition, food-stamp fraud, or voodoo, meet me at InformationWeek.com's Listening Post: informationweek.com/forum/johnsoat.
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