Update on Fraud / Important

Considerations in Hiring Consultants

Presented By:Jim Parker, CPSM, C.P.M.

Many Universities have been targeted in the past few months in PO fraud scams◦ University of Utah◦ University of Michigan◦ University of Washington◦ UC Riverside◦ UC Berkley◦ UNLV ◦ Many Others

University of Utah fraud attempts began in October 2013 Daily – most attempts have been against suppliers that the

U. does no business with (less than 10%) – last week we received 4-5 companies a day calling/contacting us

Fraud appears to be primarily from “offshore” scammers

Update on Fraud

Fraud is Internet based with some verbal contact◦ Tactics

Email for Quote pretending to be U. of Utah Leave “801” based phone number Leave phony email ending in “edu-com” or similar Actual names of real buyers Follow up with phony P.O. Number Call/contact to set up new accounts with suppliers

Targets are in the U.S. and other countries Some attempts have been successful Common Traits of scammers

Bad English – both written and verbal Ship to is different from legitimate order location Order in unusually large quantities – easily sellable

items

What we are doing at the U:

◦ Working with our Legal Office◦ Working with local and other law enforcement◦ Working with company fraud departments◦ Working with IT Security professionals to locate IP

addresses◦ Shutting down illegitimate websites/emails◦ Until a company is defrauded, legal remedies are

somewhat limited◦ Alerting suppliers via our website:

http://fbs.admin.utah.edu/download/purchasing/Notice_to_Suppliers.pdf

Mr. Siegler: Thank you for alerting us to this situation.  As you suspected, this request is fraudulent.  We have been informed by several suppliers of

similar falsified procurement attempts recently.  During the process of sharing details with authorities, we’ve been informed that these fraudulent attempts are originating out of the country, thereby limiting an expedited resolution.  We have added an alert to our website informing suppliers of these attempts ( http://fbs.admin.utah.edu/download/purchasing/Notice_to_Suppliers.pdf ).

 Thank you for your assistance.Jeffrey M. Johnson | Associate DirectorUniversity of Utah | Purchasing Department1901 E. South Campus Drive, Room 151 | Salt Lake City, UT  84112P:  801-581-6621 | F:  801-581-8609 | jjohnson@purchasing.utah.edu Send questions using our Ask Us feature on www.purchasing.utah.edu From: Johny [mailto:johny@huffmansecurity.com]

Sent: Tuesday, January 14, 2014 7:34 AMTo: James ParkerCc: Jeff JohnsonSubject: FW: Price request...CCTV Camera and Digital video recorder

 Mr. Parker, We have received a request for goods to be purchased on a PO basis from one of your Buying Staff. (see below)I have noticed some discrepancies in the email address and need to verify that this is indeed a legitimate request? Best Regards, Johny SieglerHuffman Security Co.1312 Lonedell RoadArnold Mo. 63010Phone 636-282-7233Fax 636-296-0844www.huffmansecurity.com 

Example

From: Michael Smith [mailto:msmith@purchasingutah-edu.com] Sent: Tuesday, January 14, 2014 1:04 AMTo: JohnySubject: Re: Price request...CCTV Camera and Digital video recorder

 Hello Johny,

Thanks, I received the quote, please advice total cost for below quantity needed..Indoor 700 Line CCD 3.6mm w/65 foot IR Black / Any Brand $ 195.00 X 96 UNITS16 CHANNEL DVR WITH 1 TB HDD / Any Brand $701.25  X 6 UNITSWD10JPVX WD Blue 1TB 5400 RPM SATA 6GBPS 2.5 Hard Drive $106.25 X 48 UNITSSeagate 3.5" 1TB ST1000DM003 Barracuda 7200 SATAIII 6Gb/s $85.00  X 48 UNITS This equipment needed in our CHS Division satellite Campus as soon as possible.

Also advice if we are able to work with line of credit (Net Term) for this order await your reply in othere to forward Purchase Order ( PO ).

Thank you,Michael Smith

University of UtahUSPS Mailing Address:1901 E. S. Campus Dr. Room 151Salt Lake City, UT 84112-9351 P:801-742-8461

 On Mon, Jan 13, 2014 at 5:09 PM, Johny <johny@huffmansecurity.com> wrote:Michael,

Please see the pricing below:- Indoor 700 Line CCD 3.6mm w/65 foot IR Black / Any Brand $ 195.00 each thisis a Clinton Brand 700TVL 33IR LED 2.8-12mm lens 12/24 voltage- 16 CHANNEL DVR WITH 1 TB HDD / Any Brand $701.25 this is a Clinton StandAlone Linux based unit 16 channel with 1TB Hard Drive- WD10JPVX WD Blue 1TB 5400 RPM SATA 6GBPS 2.5 Hard Drive $106.25Seagate 3.5" 1TB ST1000DM003 Barracuda 7200 SATAIII 6Gb/s $85.00- This does not include any shipping cost to you, I estimate shipping be lessthan $50.00.

Let me know if you have any questions.

Best Regards,

Johny SieglerHuffman Security Co.1312 Lonedell RoadArnold Mo. 63010Phone 636-282-7233Fax 636-296-0844www.huffmansecurity.com

-----Original Message-----From: Rex Huffman [mailto:rex@huffmansecurity.com]Sent: Thursday, January 09, 2014 7:36 AMTo: Johny SieglerCc: Angie BehrensSubject: FW: Price request...CCTV Camera and Digital video recorder

Johny,

Not sure if the below is legit or not but please respond with decent pricesand let's see

Rex Huffman

-----Original Message-----From: Michael Smith [mailto:msmith@purchasingutah-edu.com]Sent: Thursday, January 09, 2014 2:15 AMTo: tolufson@prowire.usSubject: Price request...CCTV Camera and Digital video recorder

Attention  Sales,

Advice price for the below items:

- Indoor 700 Line CCD 3.6mm w/65 foot IR Black / Any Brand- 16 CHANNEL DVR WITH 1 TB HDD / Any Brand- WD10JPVX WD Blue 1TB 5400 RPM SATA 6GBPS 2.5 Hard Drive- Seagate 3.5" 1TB ST1000DM003 Barracuda 7200 SATAIII 6Gb/s

Thank you,Michael Smith

University of UtahUSPS Mailing Address:1901 E. S. Campus Dr. Room 151 Salt Lake City, UT84112-9351 P:801-742-8461

 

(1)    Communications Fraud 76-10-1801 (any person who has devised any scheme or artifice to defraud another or to obtain from another money, property, or anything of value by means of false or fraudulent pretenses, representations, promises, or material omissions, and who communicates directly or indirectly with any person by any means for the purpose of executing or concealing the scheme or artifice is guilty of (d) a second degree felony when the value of the property, money, or thing obtained or sought to be obtained is or exceeds $5,000.

(2)    Use of registered mark without consent 76-10-1007 (he has unlawfully used the University of Utah’s mark)

(3)    Violation of unfair trade practices 76-10-1009 (derivative of 1007)

Possible Violations of Utah Law

What needs to be considered??◦Competition or Sole Source◦IRS – Independent Contractor issues◦Cost Reasonableness◦Contracts◦Changes in Consultant personnel

midstream◦Exceeding Budget◦Exceeding Timeframe◦Defining Scope of Work and Deliverables

Hiring Consultants

What needs to be considered??◦Fit with organization◦Insurance / contract terms◦Worker’s Comp.Preparing Statements of Work (SOW)◦Establish clear, attainable, measurable

goals◦Schedule Milestones◦Confirm rate/billing/terms◦Establish communication protocol

Hiring Consultants

Pitfalls to avoid◦Open ended contracts◦Undefined scope◦Controls and oversight by owner required◦Beware - acting on behalf of Consultant

rather than owner◦Disputes over progress/compensation◦Costs associated with Consultant

Travel/Meals/Lodging◦Disputes over who owns the final product

Experiences

Get Requestor buy-in on needing to provide a detailed scope of work and not to exceed costs and defined outcomes/expectations

Competition should be used if possible Require requestor review and follow through Carefully check references for similar work Find out as much as you can about the individuals

involved – include change of consultant with prior approval by buyer

Have a contract template as part of the RFP Ensure that progress meetings and/or reports are

generated regularly

Ideas for the Best Deal

Selection and recruitment of Consultants is one of the more difficult types of purchase

Legal Counsel /Risk Management should be involved in review and drafting of contracts

Communicate performance problems early and in Writing

Have a strategy for ending contract early if necessary – avoid dependency if possible

Other Ideas/Experiences

Questions??

This might have something to do with it…..

Are you Stressed???

Congratulations – You made the Top 15 !

http://money.cnn.com/gallery/pf/jobs/2013/03/07/jobs-stress-pay/15.html