CASE STUDIES

Case Study 1

May 13, 1988, a Friday that will be remembered by a

major Chicago bank. Embezzlers nearly escaped with

$69 million! Arnand Moore, who was released after

serving four years of his 11-year sentence for a

$180,000 fraud, decided it was time to put his fingers

in something a little bigger and better. He instigated a

$68.7 million fraud plan. Naming himself as Chairman,

he assembled Herschel Bailey, Otis Wilson,

Neal Jackson, Leonard Strickland, and Ronald Carson

to complete the formation of his board. Most importantly,

the board was able to convince an employee of

the Chicago bank to provide their in. The caper

required one month of planning in a small hotel in

Chicago and took all of 64 minutes to complete.

The bank employee had worked for the Chicago

bank for eight years, and he was employed in the

banks wire transfer section, which dispatches

multimillion-dollar sums around the world via computers

and phone lines. Some of the banks largest customers

send funds from their accounts directly to

creditors and suppliers. For electronic transfers, most

banks require that a bank employee call back another

executive at the customers offices to reconfirm the

order, using various code numbers. All such calls are

automatically taped. The crooked employee participated

in these deposits and confirmations, and he had access

to all the code numbers and names of appropriate

executives with whom to communicate.

The boards targets were Merrill Lynch, United

Airlines, and Brown-Forman Distillers. A few members

of the gang set up phony bank accounts in Vienna

under the false names of Lord Investments, Walter

Newman, and GTL Industries. At 8:30 a.m., a gang

member posing as a Merrill Lynch executive called the

bank to arrange a transfer of $24 million to the account

of Lord Investments and was assisted by one of the

crooked employees unsuspecting co-workers. In accordance

with the banks practice of confirming the transfers

with a second executive of the company, the

employee stepped in and called another supposed

Merrill Lynch executive who was actually Bailey, his

partner in crime. Baileys unfaltering, convincing voice

was recorded automatically on the tape machine, and

the crooked employee wired the funds to Vienna via

the New York City bank. The same procedure followed

at 9:02 and 9:34 a.m. with phony calls on behalf of

United Airlines and Brown-Forman. The funds were

initially sent to Citibank and Chase Manhattan Bank,

respectively.

On Monday, May 16, the plot was uncovered. The

Chairman and his Board were discovered by neither

effort on the part of the Chicago bank nor any

investigative authority. Although bank leaders do not

like to admit just how close the culprits came to getting

away with it, investigators were amazed at how

far the scheme proceeded before being exposed. Had

the men been a little less greedy, say possibly $40 million,

or if they had chosen accounts that were a little

less active, they may have been touring the world to

this day! The plot was discovered because the transfers

overdrew the balances in two of the accounts, and

when the companies were contacted to explain the

NSF transactions, they knew nothing about the

transfers.

Officer, Chief Financial Officer and all professionals

worldwide serving in a finance, accounting, treasury,

tax or investor relations role at ABC Enterprises, Inc.

(ABC). ABC expects all of its employees to act in

accordance with the highest standards of personal

and professional integrity in all aspects of their activities.

ABC therefore has existing Codes of Ethics and

Business Conduct applicable to all directors, officers

and employees of ABC. In addition to the Codes of

Ethics and Business Conduct, the CEO, CFO and all

other financial professionals are subject to the following

additional specific policies: As the Chief Executive

Officer, Chief Financial Officer, or other financial

professional, I agree to:

a. Engage in and promote honest and ethical conduct,

including the ethical handling of actual or

apparent conflicts of interest between personal

and professional relationships;

b. Avoid conflicts of interest and to disclose to the

General Counsel any material transaction or

relationship that reasonably could be expected

to give rise to such a conflict;

c. Take all reasonable measures to protect the

confidentiality of non-public information

about ABC or its subsidiaries and their customers

obtained or created in connection with my

activities and to prevent the unauthorized disclosure

of such information unless required by

applicable law or regulation or legal or regulatory

process;

d. Produce full, fair, accurate, timely, and understandable

disclosure in reports and documents

that ABC or its subsidiaries files with, or submits

to, the Securities and Exchange Commission and

other regulators and in other public communications

made by ABC or its subsidiaries;

e. Comply in all material respects with applicable

governmental laws, rules, and regulations, as well

as the rules and regulations of the New York Stock

Exchange and other appropriate private and public

regulatory agencies; and

f. Promptly report any possible violation of this

Code of Ethics to the General Counsel or any

of the parties or through any of the channels

described in ABCs Whistleblower Policy.