Identity Resolution Daily

By Douglas Wood, Infoglide SVP of Sales and Services

I noted with interest the August 31 announcement that IBM is buying UK based i2 Inc.  I was in my hotel room when I read the announcement, attending the International Association of Financial Crimes Investigators (IAFCI) conference in Charlotte.  I was actually so surprised that I dropped one of my shoes onto the floor as I was hurrying out of the hotel room.

Perhaps I should not have been so shocked, though.  It was clear to me that the 2009 COPLINK/i2 ‘merger’ never quite developed the way either party had intended, and that neither entity was working particularly well with the other. Looks like IBM saw the same thing and swooped in to put the pieces together.  Good play on their part.

With loads of customers in several countries, i2 is a large provider of intelligence analytics for crime and fraud prevention serving the banking, defense, health care, insurance, law enforcement, national security and retail markets.  I suspect that IBM’s plans will include integrating the i2 and COPLINK platforms into the overall Infosphere portfolio, particularly the Identity Insights solution formerly known as Entity Analytics Solution (EAS).  With a new base of customers in which to up-sell software and services, IBM looks well positioned to take on SAS and other behemoth players in the fraud analytics business.  Or are they?

I don’t expect SAS to sit on its hands.  They never do.  Although more traditionally thought of as a NIH shop, I would expect some rapid bulking up on their part.  And what of HP?  The acquisition of Autonomy was interesting to say the least.  I find it hard to believe they are going to stop there.  Even BAE Systems is ready with their recent purchase of Detica/Norkom and the Netreveal platform.

In the meantime, startups such as Palantir Technologies and Infoglide Software continue to make major strides in building our respective next-gen technologies and customer bases. I am particularly proud of our Identity Resolution Engine product and MinorMonitor offerings.  The former provides cross database single-request fuzzy searching, social link discovery, anonymous resolution for data privacy and real time red flag analytics for commercial and government clients.  MinorMonitor is our free web tool that – using the same core technology used to keep terrorists off of airplanes - alerts parents on what their children are being exposed to on Facebook.

The possibilities are endless heading into the fourth quarter.  What’s going to happen next?  I’m not sure.  I expect that other shoe to drop sooner rather than later, though.

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Over the past few months, Infoglide Software Corporation - the leading provider of identity resolution and entity analytics technology for fraud and investigations - commissioned a survey to discover the biggest technology challenges facing banks in preventing and investigating fraud.

The survey was conducted with US-based banking institutions having over $4BN in assets.  Of note is that 30% of the respondents had international operations outside of the US.  The respondents included VPs of Compliance and Risk Management, directors of AML, Risk Applications/Fraud Control and managers of Fraud Investigation, Security, BSA and Loss Prevention.

The results of the survey are currently being compiled for general release, but it was extremely interesting to learn that the key challenges of fraud investigations include:

1.       the inability to access data due to privacy concerns

2.       a lack of real-time high performance data searching engine

3.       and an inability to cross-reference and discover relationships between suspicious entities in different databases.  

For regular readers of this blog, it comes as no surprise that identity resolution and entity analytics technology provides a solution to those challenges.  An identity resolution engine glides across the different data within (or perhaps even external to) a bank’s infrastructure, delivering a view of possible identity matches and non-obvious relationships or hidden links between those identities… despite variations in attributes and/or deliberate attempts to deceive.

Large banks need to know who’s who… and who’s working with who.  A true identity resolution engine is the right way for them to find out.

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 By Julie Garcia, Infoglide Director of Channel Sales

I just got back from the PPM 2000 Perspective User Conference in Florida where we were a presenter, exhibitor and sponsor. PPM’s Perspective is an incident reporting and investigation management software. We have integrated with their technology for a shared customer of ours and are currently exploring the possibility of an OEM and referral partner agreement. PPM 2000 is an impressive company who, I learned, has the bulk of the incident reporting market.The attendees at the conference were primarily responsible for security and investigations for their organizations, which included Disney, Progress Energy, Microsoft, and Cox Communications to name a few. Although the main message from our presentation was the joint benefit of embedding our technology within Perspective’s database, a surprising amount of people wanted to know how we would perform a “federated search” across multiple data sources within the organization such as case management, black lists, and HR data as well as third party data such as Lexis Nexis and whitepages.com.The conference provided a good opportunity to engage with PPM’s staff and customers. I look forward to having a long, mutually beneficial partnership with them.

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By the Infoglide Software team

Financial Fraud Law: SEC Brings Expert Network Insider Trading Charges

“The Securities and Exchange Commission has charged that six expert network consultants and employees illegally tipped hedge funds and other investors to generate nearly $6 million in illicit gains… The SEC alleged that four technology company employees, while moonlighting as consultants or ‘experts’ to Primary Global Research LLC (’PGR’) without the knowledge of their employers, abused their access to inside information about such technology companies as AMD, Apple, Dell, Flextronics, and Marvell. The consultants received hundreds of thousands of dollars in purported consulting fees from PGR for sharing the inside information with PGR employees and clients, according to the SEC.”

ksnt.com: Fraud Insurance Claims on Vehicles

“Clark said people have come up with clever ways to file fraud claims by staging accidents where everyone in the accident is part of it and they try to get some sort of disability payment.”

SFGate: Medicare fraud has its own most-wanted list

“Topping the list are Miami brothers Carlos, Luis and Jose Benitez. Owners of a string of medical clinics, they allegedly scammed Medicare out of $119 million by billing for costly HIV drugs that patients never received or did not need. Authorities say they bought hotels, helicopters and boats before fleeing to Cuba.”

Business Day: Employee fraud ‘is on the rise’ with executives leading the way

“Companies worldwide have seen an increase in fraud due to ineffective internal controls, according to a report issued by Deloitte yesterday… a significant percentage of companies (51%) recognised they did not have sufficient numbers of trained staff to provide effective assurance on fraud risk in their organisations, with smaller businesses finding themselves even more constrained.”

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By the Infoglide Software Team

Proactive Investors UK: Westminster Group secures distribution rights for ID fraud detection software in UK and Middle East

Westminster Group PLC (LON:WSG) said it has secured distribution rights in the UK and the Middle East for the identity fraud detection software of Texas-based Infoglide Software. The commercial details of the deal were not disclosed. Westminster expects the product to be popular with national security agencies across the Middle East in particular. Infoglide’s identity resolution technology searches, matches and links entities across multiple, disparate data sources using over 50 algorithms.”

WSJ: Confidentiality Cloaks Medicare Abuse

“Dr. Wayne, a 50-year-old osteopath, denies abusing the system and hasn’t been accused of wrongdoing by authorities. He says his regimen ‘does wonders’ if used correctly. He adds that he gave physical therapy to ‘patients who needed it, with appropriate diagnoses, and I should get paid for it.’ Medicare administrators apparently felt otherwise. In 2009 he says he was placed on heightened scrutiny and eventually sold his business. But not until he had received more than $2.6 million from Medicare between 2007 and 2009, according to the person familiar with the matter.”

GigaOm: Mining the Tar Sands of Big Data

“Unlike oil reserves, data is an abundant resource on our wired planet. Though much of it is noise, at scale and with the right mining algorithms, this data can yield information that can predict traffic jams, entertainment trends, even flu outbreaks. These are hints of the promise of big data, which will mature in the coming decade, driven by advances in three principal areas: sensor networks, cloud computing, and machine learning.”

Criminal Justice Online: West Haven Woman Admits Role in Mortgage Fraud Scheme

“Specifically, on October 1, 2009, MARTINEAU purchased a residence at 211 Lloyd Street in New Haven after working with others to obtain an FHA-insured loan to buy the house at the fraudulently inflated price of $160,000. The loan package for this transaction included false information about the MARTINEAU’s employment, assets and liabilities, and MARTINEAU’s intention to occupy the property as her principal residence. The loan application also was supported by false documentation, including earning statements and fraudulent bank records.”

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By the Infoglide Software Team

CNN: Lottery officials: Rightful winners of ‘03 jackpot getting paid

“The buyer redeemed the ticket later at the outlet in Burlington and wasn’t told that he won a free ticket, investigators determined, according to the CBC. That ticket went on to win a $12.5 million jackpot. It was claimed by Kathleen Chung, sister and daughter of men who worked at the outlet.”

O’Reilly Radar: Will data warehousing survive the advent of big data?

“The current hype around ‘big data‘ has caused some analysts and vendors to declare the death of data warehousing, and in some cases, the demise even of the relational database. A prerequisite to discussing these claims is to understand and clearly define the term ‘big data.’ However, it’s a fairly nebulous concept.”

Healthlaw Insights: Whistleblower Suits are Rewarding and So is Fraud Recovery

“In addition, the Medicare Fraud Strike Force has been extended to seven cities. Using advanced data analysis techniques to identify high billing levels in healthcare fraud hot spots, the interagency teams can target emerging or migrating schemes along with chronic fraud by criminals masquerading as healthcare providers or suppliers.”

ClaimsJournal.com: Florida Businessman Charged with Workers’ Compensation Fraud

“Florida CFO Jeff Atwater announced the arrest of David Rodriguez-Socarras, who officials allege used a ’shell’ company and fictitious name in order to cash nearly $3 million in payroll checks through a money service business to avoid workers’ compensation premiums and payroll taxes.”

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By the Infoglide Software Team

The Economist: Data, data everywhere

“By 2013 the amount of traffic flowing over the internet annually will reach 667 exabytes, according to Cisco, a maker of communications gear. And the quantity of data continues to grow faster than the ability of the network to carry it all.”

Financial Fraud Law: Fed’s 2010 Health Care Fraud Recovery: $4 Billion

“The federal government pointed to the expansion of Medicare Fraud Strike Force teams as one reason for the increased recovery. In FY 2010, the total number of cities with strike force prosecution teams was increased to seven, all of which have teams of investigators and prosecutors dedicated to fighting fraud.  The strike force teams use advanced data analysis techniques to identify high-billing levels in health care fraud hot spots so that interagency teams can target emerging or migrating schemes along with chronic fraud by criminals masquerading as health care providers or suppliers.”

Gartner: 10 Critical Myths and Realities of Master Data Management

“MDM is the latest attempt to solve the old problem of inconsistent versions of important data at the centre of an organization,” said Andrew White, research vice president at Gartner. “As with any new initiative, there is a lot of hype and confusion, and with hype and confusion comes misunderstanding. Executive sponsors of MDM and MDM program managers must avoid several common mistakes that have been known to derail MDM initiatives in the past.”

TechWorld: Cloud Computing: How big is big data? IDC’s answer

“The report notes that by 2020, much of this data will be held in cloud environments or will be “touched by cloud,” which means data that transits through a cloud service or is temporarily held in a cloud application. The report estimates that perhaps 15% of all data will be held in the cloud, and that around one-third will live in or pass through the cloud.”

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[Post from Infoglide] Financial Services Has a Growing Problem: Internal Fraud

“The Aite Group recently authored a report entitled ‘Internal Fraud: The Devil Within.’ After surveying 35 fraud and product executives at financial institutions across the U.S. and Canada, they concluded that internal fraud is a severe and growing problem that often goes undetected and almost always flies under the radar of public scrutiny.”

Bloor: There’s identity resolution and then there’s identity resolution

“The second type of identity resolution is similar but different. The classic example is in police work. Here you want to know that some particular criminal has fifteen different aliases, say. Moreover, under each of those identities he or she will have multiple contacts and you may want to do social network analysis against those contacts to see who else might have criminal tendencies.”

Chicago Sun Times: Police sensing crime before it happens

“In October, the Chicago Police Department’s new crime-forecasting unit was analyzing 911 calls for service and produced an intelligence report predicting a shooting would happen soon on a particular block on the South Side. Three minutes later, it did, police officials say. That got police Supt. Jody Weis thinking. He wondered if the department could produce intelligence reports even quicker. Next time, officers might have an hour’s notice before a shooting — instead of just a few minutes.”

KERO23:Ten People Indicted In Wide-Ranging Real Estate Scam

“The indictment alleges that, from approximately January 2004 to September 2007, the defendants perpetrated a scheme to defraud mortgage lenders by submitting fraudulent loan applications with material misrepresentations, including misrepresentations concerning the borrower’s income, assets, employment status, and intent to use the home as the borrower’s primary residence… The scheme involved more than $20 million in losses to lenders.”

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By Mike Betron, Infoglide Software Director of Marketing

The Aite Group recently authored a report entitled “Internal Fraud: The Devil Within.” After surveying 35 fraud and product executives at financial institutions across the U.S. and Canada, they concluded that internal fraud is a severe and growing problem that often goes undetected and almost always flies under the radar of public scrutiny.

On the customer relationship side of the business, many financial institutions have increased what they know about external actors by making their systems smarter, e.g. enhancing existing software with identity resolution:

“By incorporating identity resolution technology, they enhance existing historical data systems with information drawn from a wide variety of dynamic data sources (e.g., social media). Providing a real-time ‘360 view’ of an individual and his/her associations is improving daily business decisions at many leading companies.”

However, most have not yet incorporated the same technology to catch fraud. This survey suggests that insider collusion and individual fraudulent acts are on the upswing, representing a significant and growing percentage of monetary fraud losses. Furthermore, the report suggests that fraud problems are often swept under the rug:

“Most financial services firms are not keen to discuss the issue; institutions that build their brands on trust and reliability do not want it widely known that insider fraud is a problem. As a result, 35% of survey respondents reported prosecuting 10% or less of their confirmed internal fraud cases.”

Effective solutions (e.g., Infoglide’s Anti-Fraud Solution Suite) are proven and available. By not actively identifying internal fraud problems and pursuing effective solutions, financial services firms open themselves up to huge financial and public relations risk. Equally important, they enable competitors who move proactively to gain competitive advantage.

As report co-author Julie Conroy McNelley says, “Financial services firms must examine their current internal fraud prevention environment and determine how to bolster it. As competitors develop more robust defenses, fraudsters will migrate to the path of least resistance.”

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By the Infoglide Software Team

South Florida Business Journal: State Farm sues doctors, who fight back

“A contentious battle is heating up once again between State Farm Insurance Co. and a group of doctors that the insurer alleges have been involved in a multimillion-dollar insurance fraud scheme, according to a lawsuit. The suit claims the doctors submitted fraudulent claims based on ‘medically unnecessary diagnostic procedures’ used on those in car accidents.”

The National: Time for health care to move to the next level

“A Booz & Company study recently quantified some of the projected benefits from a proposed e-health initiative in Australia: by 2020, the programme could eliminate up to 10,000 deaths caused by medication mistakes, along with up to 310,000 unnecessary hospital admissions, 2 million unnecessary outpatient visits, and 7 million laboratory tests.”

[PDF] Inside the Midmarket: A 2011 Perspective

“In 2009, midsize businesses (53%) were mainly consumed with reducing costs and increasing efficiencies. The progress and momentum gained from these efforts continue to yield critical benefits and advantages for midsize businesses. Because of this momentum, they are now in a position to turn their attention to more forward-looking aspects of their business. This is demonstrated by the significant increase in focus on customers (+20 pts), innovation (+7 pts), and revenue growth (+5 pts).”

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