Edition 1.1. - January 2024

Welcome to our first newsletter ~

We are honored to provide much needed strategic analytical support to the world of private investigations. After 9/11, the United States Government realized how important strategic analysis was to understanding threats and, in response, drastically increased the number of intelligence personnel to support investigators. It's time you have that same support.

Our mission is to provide you with valuable insight on how the cases you work relate to the national landscape through informative and entertaining articles. We hope you enjoy our inaugural newsletter as we apply our FBI training and experience to the Focused Private Intelligence™ newsletter.

In your corner,

Melody Bruns

Founder of PivotPoint Consulting | Former FBI Intelligence Analyst

In this Newsletter (Issue #1 - January 2024)

• Sextortion: How perpetrators are coercing minor victims and what to consider when working these cases
• Embezzlement: If an organization is operational long enough, eventually an employee will commit fraud
• The Sports Memorabilia Market: Bad actors are scheming to obtain potential clients' prized sports possessions

Let's talk about Sextortion... Talk with us about Sextortion

Sexual extortion – also referred to as “sextortion” – is a crime that occurs when someone threatens to distribute sexually explicit material in exchange for additional sexual imagery (traditional sextortion) or money (financial sextortion). In early 2023, the FBI issued a national public safety alert regarding an “explosion in incidents of children and teens being coerced,” and in 2022 more than a dozen sextortion victims reportedly died by suicide. The National Center for Missing and Exploited Children (NCMEC) reported their CyberTipline received more than 32 million reports of suspected child sexual exploitation in 2022. The number of young victims impacted is likely to be much larger than reported because many do not report the incidents due to fear or embarrassment.

How are perpetrators contacting and coercing their minor victims? In many reported cases of sextortion, the first contact is made through social media or gaming platforms. The perpetrator usually poses as someone other than themselves under a fake name, builds rapport with the victim, obtains sexually explicit content, and then threatens to share their content on the internet or with members of the victims’ network. The perpetrators sometimes even threaten killing themselves or family members of the victim if additional images are not delivered. Perpetrators have also been known to get sexually explicit content from their victims by remotely activating webcam or recording devices, hacking into social media accounts, or compromising the victim’s e-mail account. When demanding financial compensation, the perpetrators frequently direct their victims to send them money via gift cards, cryptocurrency, or peer-to-peer payment applications.

• Beginning in 2022, Texas-based Andrew Venegas stole nude photos and videos from more than a thousand victims, including minors, throughout the United States, according to local news articles 1 and 2. Venegas stole nude images/videos from Snapchat and TikTok accounts he did not have authorization to access. He then used a fake identity to communicate with his victims and threatened them to send him more material or he would share the content, even claiming he would stop if they sent a couple more images. A cryptocurrency account suspected of being used by Venegas accepted payment via cryptocurrency from at least one victim and bitcoin from an online undercover law enforcement officer. A fake name assessed to be Venegas advertised his content to other individuals online, shared explicit images on the encrypted messaging application Telegram, and advertised prices for pornography on the dark web. Venegas was indicted in July 2023.

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• According to a DOJ press release from September 2023, Tennessee-based Caleb Jordan met minor victims online through a video-gaming platform. He told the victims that people were coming to “get them” and threatened to kill or sexually assault their parents unless they created videos of themselves engaging in sexual activity. The minors created almost 400 sexually explicit videos, and some depicted the victims crying or in distress. Jordan then attempted to sell the videos over an encrypted internet chatting application. In September 2023, Jordan was sentenced to 27 years in prison followed by a lifetime of supervised release.

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• According to a DOJ press release from May 2023, Canadian-based Muhammad Luqman Rana used the online messaging chat sites Omegle and Tinychat to target adult and minor victims living in the United States and Canada to produce sexually explicit images. From approximately 2014 through 2016, he surreptitiously captured a couple of the minor victims changing in their bedrooms after they left their webcam on accidentally after chatting with him. He then forced his victims to produce and send additional sexually explicit images and videos via both live transmission and to his email account threatening he would publicly post the videos if they did not comply. In May 2023, Rana was sentenced to 32 years in prison.

What should you consider when working on a sexual extortion case involving minors? If you are working for a client wherein a minor was the victim of sexual extortion, we recommend you and/or your client share the information you have with your law enforcement partners. Our government partners have different tools and can help with bringing criminal charges in addition to any civil charges your client may be looking to pursue. They can also assist if the perpetrator is outside of the US, as they did with Rana (above) who was extradited to the United States in January 2022 after being arrested in Canada on a provisional arrest warrant. Sextortion is a borderless crime, and interstate extortion happens. Additionally, it is likely the perpetrator has victimized others, and law enforcement can help identify other potential victims.

If you are working on an extortion case involving a minor – or if you uncover this activity through your investigation – be aware that the perpetrators of these crimes frequently switch the communications platforms and payment applications they and their victims utilize. If you are able to obtain records related to one account, that may not be the totality of the illicit activity between the perpetrator and your victim. Going forward, it is likely perpetrators will utilize AI platforms to 1) identify future potential victims, and/or 2) create AI-generated explicit images and use that material to entice other victims to share elicit material.

Be aware of your state’s policies. While sextortion of minors is a federal crime, different states regulate extortion differently. We are based in Texas. If you are too and working these matters, you may find this resource helpful on David’s Law, which addresses Texas’ definition of bullying, sexting laws involving minors, revenge porn law, sextortion laws, and child pornography law. Like everything, legislation is constantly changing, and you may need to reconsult your states’ policies on the matter as your investigation progresses. For example, in 2023, the Governor of South Carolina signed Gavin’s law which criminalized sextortion as a felony offense in the state. Elevating these crimes to felonies gives law enforcement the ability to now cross state lines to track alleged perpetrators.

What other resources are there regarding the sexual exploitation of minors? Project Safe Childhood – which the Department of Justice launched in May 2006 ­– is a nationwide initiative to combat child sexual exploitation and abuse. See here for more information about Project Safe Childhood and criminal activity related to this initiative. The NCMEC is the nation’s largest child protection organization leading the fight to protect children, and additional resources can be found on their website. NCMEC also created Take It Down, a tool to help remove online nude, partially nude, or sexually explicit photos and videos taken before you were 18 years old.

~ Written by M. Bruns, former FBI Intelligence Analyst (18 years)

Embezzlement 101 Connect with us about Embezzlement

Embezzlement 101. In general, embezzlement occurs when someone entrusted with money or assets purposely takes money or assets from a company without consent for their personal gain. The property is first in lawful possession of the embezzler, but then the individual who it was entrusted to fraudulently or unlawfully appropriates it. The Association of Certified Fraud Examiners (ACFE) uses the term occupational fraud to refer to frauds committed by individuals against the organization that employes them and claimed “occupational fraud is very likely the most costly and most common form of financial crime in the world” in their ACFE 2022 Report to the Nations.

Size does not matter. Employees steal from their employer, regardless of how large or small the organization is or how many people they employee. Charitable organizations and family businesses are also victims of this crime, making it more salacious given their closer relationship with the mission and leadership of these organizations. On average, small businesses with fewer than 100 employees have a median loss of $150,000, companies with more than 10,000 employees have a median loss of $138,000, and non-profits organizations have a median loss of $60,000, according to the ACFE 2022 Report to the Nations. Perpetrators across the board are fairly consistent in their tactics, using their positions to alter financial statements and records, create false documents, and make up new employees (who knew you could expand your company’s employee count out of thin air?).

• In December 2022, a 74-year-old Texas woman pled guilty to embezzling at least $29 million over the course of a decade from her employer, a charitable foundation and several other companies run by a Dallas family, according to a DOJ press release. Barbara Chalmers admitted she abused her position as bookkeeper for the family’s companies and her signatory authority over the companies’ bank accounts and fraudulently wrote at least 175 checks to herself before she deposited them into her personal accounts. To conceal the fraud, she provided false paperwork to tax preparers misstating the year-end cash-on-hand numbers for the accounts from which she was embezzling. She used more than $25 million of the stolen money to fund a construction business for which she was the president.

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• According to a DOJ press release from October 2023, Alisha Richardson falsified records at the Chicago-area nursing home in which she worked, which caused the nursing home to generate paychecks to individuals who never worked at the facility (so-called “ghost” employees). Some “ghost” employees cashed the checks and shared the proceeds with Richardson. On some occasions, Richardson forged endorsement signatures for the individuals and deposited the paychecks into her own bank accounts. As a result of the scheme, the nursing home paid out over $100,000 for work that was never performed.

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• According to a local news article, Preston Allen Fredrich pled guilty in August 2022 to embezzling millions of dollars from his employer, a family-owned company located in north Houston that sold and re-fitted large trucks. Fredrich was the lead salesman and stole from the company by submitting fake and fraudulent invoices and then collecting the payments for himself. This activity occurred between 2018 and 2021. According to a DOJ press release from September 2023, “he began his scheme by asking clients to send invoices directly to him, as opposed to the company. He then sent these invoices to the company with inflated expenses or unwanted upgrades, pocketing the difference for himself.”

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• Employee Steven Marquez embezzled more than $700,000 from his employer, an Austin-based property management company, while serving as head of its bank reconciliation team, according to a DOJ press release from September 2023. To conceal the activities, which took place over the course of seven years, Marquez altered his employer’s corporate bank statement by deleting his transfers. He also made it appear as if the statements reconciled with company records.

Do numbers lie? They can! Especially if someone makes them up. The top four of five preferred methods by fraudsters involve altering or creating false documents.

Fruitcake Fraudsters…no, this isn’t a name we call the people who defraud their employers. Collin Street Bakery, known for its yummy fruitcakes, has been the subject of multiple true crime podcasts detailing the embezzlement scheme by an employee of theirs. For almost a decade, the Texas bakery’s bookkeeper stole nearly $17 million from the company. (That’s about 459,459 fruitcakes!)

Does embezzlement excite you? Embezzlement is exciting! Well…it can be if you’re on the investigating side of the case. Consider offering your services to attorneys who prosecute these cases, network with – or conduct due diligence for – professional business organizations, and liaison with Certified Fraud Examiners. We also recommend that you offer your services to business owners if they notice:

• Missing financial documents
• Vendors that are not being paid
• Customers claiming they already paid a bill but are billed again
• Payment issues
• Odd financial transactions
• Disappearing cash/assets
• Shrinking profits

When fielding inquiries about embezzlement cases, you can let your potential clients know the following findings courtesy of the ACEF... (Remember this information was gathered based on ACEF’s review of 2,110 cases of occupational fraud world-wide – not just in the United States – investigated between January 2020 and September 2021):

• The median duration of fraud – the typical time between when a fraud begins and when it is detected – is 12 months.
• The ability to quickly detect fraud is crucial.
• The majority of frauds (58%) are committed by two or more perpetrators acting in collusion.
• Billing schemes are the most common form of asset misappropriation and cause the highest median loss.
• Background checks are an important tool!
  • Did you know??? 43% of victim organizations did not run a background check on the perpetrator prior to hiring. Of the background checks that were run, 21% revealed previous red flags and the individuals were hired anyways.

“If an organization is operational long enough, eventually an employee will commit fraud.” – ACFE 2022 Report to the Nations. Embezzlement schemes can and should be reported to law enforcement, which would hopefully help identify repeat offenders and prevent them from conducting similar activity elsewhere. However, 42% of the cases in ACFE’s 2022 study were not reported to law enforcement.

~ Written by M. Bruns, former FBI Intelligence Analyst (18 years)

The Sports Memorabilia Market Let us help you find missing Sport Memorabilia

Have you ever gone to a sporting event and kept your ticket, bought a trading card (with bubble gum in the packet!), or had your baseball signed by a famous player? All of us may be holding on to some form of sports memorabilia. Sports memorabilia prices have increased substantially in the last few years according to findings by Market Decipher, a market research and consultancy firm involved in provision of market reports, as of June 2022. This is in part due to the increasing wealth of baby boomers, the presence of millennials in the market, and the rising interest from foreign buyers. Game-used items such as balls and jerseys are specifically in demand, and baseball trading cards held a remarkable market share in 2021.

Additionally, auction sites like eBay and Auction of Champions are contributing to help transform sports collectibles and memorabilia into a more than $200 billion-dollar industry, according to Market Decipher’s findings. From 2022 to 2023, the core sports memorabilia market – excluding NFTs and cards (see chart below) – was estimated at $12.2 billion in 2021 and is expected to grow at a rate of 15.6%.

How are bad actors scheming to obtain sports memorabilia? Sports memorabilia is sold in a variety of brick-and-mortar and online outlets. In some cases, perpetrators misrepresented the memorabilia and sold it as authentic when it was not. In other cases, perpetrators point-blank stole the items from brick-and-mortar venues, melted them down into gold, and sold them for their value.

• According to an online news outlet, in California in March 2023, a truck smashed into the front of a high-end collectible store, taking tens of thousands of dollars of merchandise. The owners of the “Kaptain Fish Collectibles” store said the three robbers stole loads of pricey items, including Kobe Bryant-signed basketball shoes and dozens of ultra rare trading cards, and it appeared the robbers knew what to grab and what items may be hard to trace.

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• As of March 2023, New Yorker Mayo Gilbert McNeil was charged with conspiracy to commit wire fraud in connection with a scheme involving counterfeit sports trading cards, according to a DOJ press release. Between April 2015 and July 2019, McNeil conspired with others to sell and trade sports trading cards – including a 1986 Fleer Michael Jordan rookie cards – with victims he found via the Internet and through online selling platforms. McNeil misrepresented that the sports trading cards he was offering were graded by a professional authentication company when, in reality, the trading cards were not authentic. The defendant defrauded his victims of over $800,000 in cash and of authentic sports trading cards that were traded for the counterfeit goods.

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• In February 2023, law enforcement seized $15 Million worth of counterfeit sports merchandise from Kirk’s Collectibles, according to the South Carolina Secretary of State’s Office. They seized items including counterfeit Super Bowl rings and championship rings from the National Basketball Association (NBA), Major League Baseball (MLB), the National Hockey League (NHL), and the National Collegiate Athletic Association (NCAA). Several rings and other items bearing the logos of Clemson University and the University of South Carolina were also seized.

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• In June 2023, a federal grand jury indicted four men in Pennsylvania for conspiracy to commit theft of major artwork and sports memorabilia, according to a DOJ press release. After stealing the items, the conspirators transported the stolen goods back to another location – which was often one of the men’s residence’s – and melted the memorabilia down into easily transportable metal discs or bars. The conspirators sold the raw metal to other individuals in the New York City area for hundreds or thousands of dollars, but significantly less than the stolen items would be worth at fair market value.

Score a Home Run with Clients. Owners of brick-and-mortar and online memorabilia shops are positioned to lose important business profits if bad actors scam them of high-ticket sports memorabilia, or they may have information on your client’s missing goods. Recouping those losses is your way of making a home run with these clients! Additionally, online auctions such as eBay.com and Craigslist.com are some sites where perpetrators attempt to steal home base and sell stolen memorabilia right from under your client’s nose. Finding a way to strike them out before they round the bases and score profits from stolen goods will set you apart and put you in the big leagues with clients.

~ Written by L. Montana, retired FBI Intelligence Analyst (25 years)

Are you a private investigator looking to approach your cases more strategically this year? Know this...

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