Counterfeiting has been around since ancient times, but these days it’s a whole different ballgame. The scope of the problem is bigger than ever, the consequences are more serious, and the crooks have some seriously high-tech tools at their disposal.
Counterfeit money is a big deal as it can mess with a whole country’s economy, and that’s not good news for anyone. It also gives a boost to shady underground operations, and even worse, it can fund organized crime and terrorist groups. But there is another shady business that is growing strong under the shadows of counterfeit money – the business of counterfeit documents.
Document forgery is a serious threat to global economies.
Document forgery weakens various institutions and fuels the underground economy. It is a crime that involves forging, altering, or passing along false documents to deceive someone. This includes falsifying tax returns, financial records, business records, contracts, checks, and other official documents.
One of the most famous cases of document forgery was the Hitler Diaries forgery. This massive scandal rocked the world of journalism and publishing back in the 80s. So, here’s the scoop: a set of journals supposedly written by none other than Adolf Hitler himself during his time as the head honcho of Nazi Germany were found by a German magazine called Stern in 1983. That sounds like a huge deal, right? Well, several big-shot newspapers, including the Sunday Times in the U.K. and Newsweek in the U.S., thought so too, and they forked out some serious cash to get their hands on them.
It turns out these so-called diaries were a total fake! The man behind the forgery was a dodgy dude named Konrad Kujau, who had a history of fraud, and who had been working with a journalist named Gerd Heidemann, who was a consultant for Stern and had access to the diaries.
Experts in handwriting and paper analysis were brought in to test the diaries, and they discovered that they were written on paper produced after Hitler’s death and that the handwriting didn’t match Hitler’s known writing style. This scandal was a huge deal, and it led to the resignation of several high-profile journalists and editors. It also showed that publications need to be way more careful when verifying documents and sources.
Apart from this curious case, various types of documents are often forged including:
- Tax returns and income statements
- Personal checks
- Bank account records
- Business record-keeping books
- Immigration documents (such as visas, passports, etc.)
- Identification cards and birth certificates
The Economics of Document Forgery
- Tax returns and income statements
One of the most common reasons for document forgery is to avoid paying tax returns. This leads to a loss of crores of rupees in taxation, thereby limiting economic growth. India is losing over Rs 75,000 crore (US$ 10.3 billion) in taxes every year, according to the report State of Tax Justice. MNCs and private individuals are major culprits behind tax abuse. Recently, the Economic Offences Wing (EOW) of Odisha arrested a CA for orchestrating a major income tax refund scam. The CA committed fraud through forged documents, resulting in crores of rupees in losses to the government.
Countries all over the world are losing a total of over US$ 427 billion in taxes each year to international corporate tax abuse and private tax evasion.
- Personal checks
There has been a significant surge in check fraud linked to mail theft across the U.S. The Financial Crimes Enforcement Network, also known as FinCEN, sent out an alert to banks warning them about it. Even though paper checks have been on the decline for years, fraudsters have been targeting mailboxes more and more to carry out their scams.
In fact, reports of check fraud filed by banks almost doubled last year, going from 350,000 in 2020 to 680,000 in 2021, according to FinCEN. The U.S. Postal Inspection Service, which is the law enforcement arm of the post office, got over 299,000 complaints of mail theft from March 2020 through February 2021 alone. That’s a whopping 161% increase from the previous year!
- Bank account records
Bank account scams are expensive for businesses. According to a report by LexisNexis Risk Solutions, every US$ 1.00 of fraud costs merchants US$ 3.6. In a notorious case of bank account fraud, Wells Fargo, one of the oldest and most powerful banks in the U.S., agreed to pay US $3 billion in 2020, to settle criminal charges and a civil action due to its widespread mistreatment of customers in its community bank.
Between 2002 and 2016, Wells Fargo employees resorted to fraudulent activities to meet unattainable sales targets. They went as far as opening millions of accounts in customers’ names without their consent, enrolling unsuspecting account holders in credit card and bill payment programs, generating bogus personal identification numbers, forging signatures, and covertly transferring funds belonging to customers.
- Business record-keeping books
Companies employ a variety of cooking-the-books accounting methods to mislead investors. The first type is asset misappropriation, which involves an employee misusing or stealing their employer’s resources. It happens in the majority of fraud schemes. Then follows financial statement fraud, where the perpetrator intentionally creates false or misleading statements in an organization’s financial records. This type of fraud can cause the highest financial loss. The third category is corruption, which includes offenses such as bribery, conflicts of interest, and extortion. Misappropriation of documents is a major act in all these frauds.
In an ongoing and scintillating case of Zilingo, shareholders found alleged financial irregularities in the company’s accounts. One of its founders and CEO, Ankita Bose, was suspended after a whistleblower apprised the company investors of financial wrongdoings in which Bose was alleged to be involved.
Zilingo was including discounts in its net revenue and placing an intense emphasis on maximizing Gross Merchandise Value (GMV), leading to unscrupulous behavior from its sales team. The sales team would often engage in cash-based deals with vendors, overbilling purchases, and under-invoicing sales. In many instances, the buyer and seller were the same entities. The sales team allegedly used fake email IDs to send documents to Zilingo’s auditors in Singapore, confirming the amounts owed by certain vendors.
- Immigration documents (such as visas, passports, etc.)
Immigration document fraud can have significant economic impacts on both individuals and society as a whole. When individuals engage in immigration document fraud, they often do so to gain unauthorized access to jobs, government benefits, or other resources that they would not otherwise be entitled to receive. This can result in unfair competition for jobs, decreased wages for legal workers, and increased strain on public resources such as healthcare and education.
According to PEW Research, about two-thirds (66%) of unauthorized immigrant adults in 2017 had been in the U.S. for more than 10 years, compared with 41% in 2007. Such an influx of immigrants into a country may result in some displacement of native-born workers, leading to structural unemployment. This occurs when migrants obtain jobs in unskilled labor at lower wages, which can make it difficult for native-born low-skilled workers to secure employment in higher-skilled occupations.
- Identification cards and birth certificates
Although false identification (ID) is believed to cost society billions of dollars every year, the available data on the prevalence of birth certificate fraud is limited. Not only does your birth certificate provide information about your birth, but it also discloses your complete name, birthplace, your parent’s names (and even your mother’s maiden name), and of course, your birth date. This collection of personally identifiable information can furnish scammers with ample data to commit identity theft.
Conclusion
Document forgery is a serious threat to global economies as it can result in significant financial losses and undermine the integrity of important legal and financial systems. It can lead to tax evasion, asset misappropriation, increased strain on public resources, and even loss of identity.
Thus, preventing document forgery has become more crucial than ever before in order to ensure a stable and secure global economy. This requires the implementation of robust security measures and the use of advanced technologies such as blockchain and digital signatures to prevent fraud and ensure the authenticity of documents.