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Breaking News in the Industry: September 12, 2016

UK fraud agency charges three in $349 million Tesco accounting probe

Britain’s Serious Fraud Office has charged three former senior Tesco executives with fraud in its investigation into accounting practices at the country’s biggest supermarket chain. A 250 million pound ($333 million) overstatement of Tesco’s first-half profits in August 2014, due to booking deals with suppliers too early, led to the suspension of eight senior members of staff in the following months.

When Tesco revealed the overstatement, which was later raised to 263 million pounds ($349 million US), it plunged the firm into the worst crisis in its near 100-year history and led to a 4 billion pound drop in the company’s stock market value.

Carl Rogberg, Christopher Bush and John Scouler have been charged with one count of fraud by abuse of position and one count of false accounting, the SFO said in a statement on Friday, giving no further details of the charges. Bush, who was managing director of Tesco UK, Rogberg, who was finance director UK and Scouler, who was UK food commercial director have been asked to appear at a London court on Sept 22, the SFO said.

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Under SFO rules, if Tesco cooperates with the ongoing inquiry, can show it has put measures in place to prevent any further wrongdoing and agrees to terms, it could qualify for a suspended prosecution, or deferred prosecution agreement (DPA). The Tesco probe is seen as a key case for the SFO, an agency established to deal with the most serious and complex fraud cases

Tesco agreed to pay $12 million in November 2015 to settle a U.S. lawsuit brought by holders of the company’s American depository receipts, alleging breaches of federal securities laws in connection with the overstatement of commercial income. The Financial Reporting Council (FRC), which polices accountants, is still investigating accountants PwC into how the firm audited Tesco’s accounts in the run up to the scandal. PwC declined to comment. [Source: The Economic Times]


Suspects tied to $300K credit-card scheme at Walmart, Sam’s Club, FBI says

While investigating a disorderly-person complaint, sheriff’s deputies wound up arresting suspects linked to $300,000 in fraud at Walmart and Sam’s Club stores, the FBI said. The suspects, Cuban citizens living in Miami, bought $40,000 in merchandise using stolen credit-card account numbers, FBI special agent Timothy Wetherbee wrote in a criminal complaint filed in U.S. District Court in Grand Rapids, Michigan.

Named in the complaint are Lixandra Matos and Daniel Perez, both Cuban citizens admitted to the U.S. under parole, and Alexander Santiesteban-Criado and Yume Martinez-Orta, Cuban citizens and lawful U.S. permanent residents, court records said. Perez and Matos are suspected of having ties with a $300,000 fraud scheme in Texas in which gift cards, or stored-value cards, are re-encoded with stolen account numbers to make fraudulent purchases at retailers such as Walmart and Sam’s Club.

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Deputies, responding to a report of a disorderly person, contacted Matos and Perez at a Motel 6. Police were told that two others with Matos and Perez were in a nearby room. Both confirmed they had traveled to Grand Rapids from Miami with Matos and Perez. Deputy Steve Ophoff asked Matos about packaging he observed in a trash can for seven $200 stored-value cards. She said they were bought as gifts for a baby shower. After he obtained consent to search the room, including bags and luggage, Ophoff found a credit-card reader/writer device in a suitcase. He also found a laptop, typically used with credit-card readers to encode stolen credit-card information onto blank or exhausted cards.

Sheriff’s detective John Degroot determined that seven cards in Matos’ wallet had fraudulent credit-card information on them. The account numbers and names did not match anyone at the scene. Multiple cards with compromised data were found in the other room. Police determined that the cloned cards had been used at area Sam’s Club stores, and said all four suspects were shown on surveillance video at the stores. The group used 87 account numbers under the names of Perez and two others, possibly fictitious, to make $40,167 in purchases, the FBI said. [Source: Michigan Live]


Wells Fargo fraudulent account scandal

Wells Fargo will be returning millions of dollars in fees, collected on credit card and bank accounts customers knew nothing about. The bank fired 5,000 employees who federal investigators say opened up fake accounts to meet sales goals.

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Fake accounts were set up using customer information without their knowledge. Regular maintenance fees even overdraft fees were charged to those fake credit card and bank accounts. Wells Fargo employees are also accused of transferring funds authorized accounts to fund the fake ones. So customers were paying for accounts they didn’t know about.

“They created the worst kind of culture you can create in a corporation…where they created incentives to exercise bad behavior,” Stewart Welch of the Welch Group said. He said he is outraged that Wells Fargo knew about employees opening bogus accounts as far back as 2011. Welch said the $185 million fine won’t hurt Wells Fargo’s bottom line.

The company issued the following statement:

Wells Fargo reached these agreements consistent with our commitment to customers and in the interest of putting this matter behind us. Wells Fargo is committed to putting our customers’ interests first 100 percent of the time, and we regret and take responsibility for any instances where customers may have received a product that they did not request.

It is unclear right now how this scheme could impact customers, but experts say you should check your credit report on a regular basis. Customers can go to to view a credit report once per year for free from each of the major credit bureaus: Experian, TransUnion and Equifax. “If an account had been opened in your name that you did not authorize, then it would show up on this report,” said David Smitherman, President, CEO Better Business Bureau Central Alabama. “And that’s so critical for all of the things we typically talk about in terms of identity theft and people opening accounts in your name. In this particular case, it was your own bank.”

Approximately $2.6 million has been refunded to customers as a result of this investigation and the company is already working to prevent this from happening again. [Source: ABC News]


Mobile account ID theft epidemic, how to secure your phone on Verizon, AT&T, T-Mobile or Sprint

When you lose your phone or it gets stolen nowadays, there is a lot more at stake than a few hundred bucks for the device itself. Your mobile account is not only linked with most of your personal info, but also with your mobile payment logins, and your digital identities in general. A new security report points out that it’s precisely those mobile accounts now that are the target of identity thieves, for all sorts of reasons.

Industry associations and carriers themselves are coming up with methods like two-factor authentication and others, to combat this phenomenon. Here’s what the FTC advises you to do, in order to prevent easy mobile account hijacking:

AT&T offers a feature they refer to as “extra security.” Once activated, any interaction with AT&T, whether online, via phone, or in a retail store will require that you provide your passcode. You can use your AT&T online account or the myAT&T app on your mobile phone to turn on extra security (link is external). Note, that when you login online with your passcode, you may be presented with the option to not be asked for it again. Do not accept this option or you will disable extra security.

Sprint asks customers to set a PIN and security questions when they establish service with Sprint, so no additional steps are needed to use this feature.

T-Mobile allows their customers to establish a customer care password on their accounts (link is external). Once established, customers are required to provide this password when contacting T-Mobile by phone. To establish such a password, customers can call T-Mobile customer service or visit a T-Mobile retail store.

Verizon allows their customers to set an account PIN. Customers can do this by editing their profile in their online account, calling customer service, or visiting a Verizon retail store. This PIN provides additional security for telephone transactions and certain other transactions.

Using this extra password or PIN is a good idea and should help reduce your risk of mobile account takeovers. However, it does not offer complete protection, so make sure you remain alert for phishing attacks, protect your financial account information, and examine your mobile phone and credit card bills carefully every month for signs of fraud. If your phone stops receiving a signal and says “emergency calls only” or “no network,” even after you restart your phone, contact your mobile carrier to see whether your account has been hijacked. [Source: Phone Arena]


McDonald’s employee, others charged in card skimming case

Newly unsealed court documents reveal how detectives were able to track down a McDonald’s employee who allegedly stole around 100 credit card numbers while working the drive-thru. Police say Makeisha Roberts, the McDonald’s employee, and Quentin Deshawn Creamer worked together to steal customers’ information and make fake credit cards they used to go shopping at area stores. Both now face multiple charges for fraud and theft.

Detectives were able to get surveillance video showing Roberts using a handheld skimming device as she rang customers up at the drive-thru window. They also obtained security footage that showed Roberts, Creamer and Damien Smith shopping at area stores using credit cards with other people’s information.

According to the probable cause, Roberts admitted to skimming an estimated 100 credit cards. She also said Creamer gave her the skimming device. Court documents go on to say Roberts would give the stolen information to Creamer, who would then create fake credit cards and pay Roberts cash. Police say Roberts told them she would use the fake credit cards to buy products and gift cards to sell.

Roberts, Creamer and Smith allegedly spent more than $6,000 on strangers’ credit cards. Purchases were made at jewelry stores, Meijer, H&M and more. [Source: CBS News]


New documents detail killing of suspected shoplifter

Rebecca Baggett told detectives she saw three people running through the parking lot at Wal-Mart just after 3 the morning of Feb. 7.

“The lady caught up with him, jumped on his back, he fell to the ground and she was punching him in the head, closed fists, um, the gentleman never punched back, he was holding his hands over his head, fell to the ground, got back up, the lady was still punching him, fell back down again, and that’s when the third man with the limp came and put his, um, knee in his back,” Baggett, a nurse at Lakeland Regional Health, told Lakeland police during an interview.

Authorities say that the third man, Randall Tomko, a loss prevention worker, and Crucelis Nunez, a customer service manager at Wal-Mart, killed Kenneth Wisham with help from Nathan Higgins. Higgins is accused of holding Wisham by the ankles, and pushing his legs up against his buttocks. Higgins’ lawyer, Rusty Franklin, has said Higgins played a minor role in the death of Wisham.

Charged with manslaughter, the three are out of the Polk County Jail on bail. Nunez, Tomko and Higgins no longer work at Wal-Mart, Erica Jones, a spokeswoman with the company, said in an email. The State Attorney’s Office recently released hundreds of pages of documents in the case, which includes interviews from Lakeland Police Department detectives with the defendants, witnesses and the medical examiner’s report. [Source: The Ledger]

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