Sophisticated fraudsters exploit socio-political tensions by strategically deploying accusations of racism. This tactic is used to deter investigations, shame government actors into compliance, and secure a "free pass" to continue stealing hundreds of millions of dollars.
Viewing fraud as its own form of infrastructure, with its own "APIs of evil," provides transferable lessons. By understanding how fraudulent systems are built and operate, we can gain insights to better architect and secure the legitimate, critical infrastructure in our lives.
When responsible actors in civil society and media ignore or downplay fraud, they create a vacuum. This field is then ceded to irresponsible demagogues who, while potentially careless or ungentle in their methods, are telling a truth the public can see. This erodes trust in institutions that appear to be willfully blind.
Large-scale fraud operates like a business with a supply chain of specialized services like incorporation agents, mail services, and accountants. While some tools are generic (Excel), graphing the use of shared, specialized infrastructure can quickly unravel entire fraud networks.
A fraud operation can be brilliant at exploiting systemic weaknesses while being comically bad at faking basic evidence, like having one person forge dozens of signatures. This paradox is not surprising and reflects a division of labor similar to legitimate businesses, with different skill levels for strategy versus execution.
A defender's key advantage is their massive dataset of legitimate activity. Machine learning excels by modeling the messy, typo-ridden chaos of real business data. Fraudsters, however sophisticated, cannot perfectly replicate this organic "noise," causing their cleaner, fabricated patterns to stand out as anomalies.
Fraud rings often cluster ethnically not due to predisposition, but because they require extreme levels of trust for co-conspirators to remain loyal under threat of prison. This leverages pre-existing high-trust networks like family and community, an extreme version of how legitimate businesses also hire from trusted circles.
A simple request for a cell phone video of a business's workplace acts as a highly effective "proof-of-work" test. Legitimate business owners can produce this trivially, generating a huge amount of signal. Fraudsters juggling multiple lies find it difficult, making it a minimally invasive but powerful vetting tool.
A core conceit of fraud is faking business growth. Consequently, fraudulent enterprises often report growth rates that dwarf even the most successful legitimate companies. For example, the fraudulent 'Feeding Our Future' program claimed a 578% CAGR, more than double Uber's peak growth rate. This makes sorting by growth an effective detection method.