NYS Teachers' Retirement System
Internal Control Update
"Forgery"

Introduction

Forgery is among the fastest growing white collar crimes today. Within the past two weeks, the Times Union reported several incidents involving forgery. An Albany woman, charged with possession of a forged instrument, allegedly had a license belonging to another person with an altered date of birth. In a separate incident, police investigated a complaint by a local business where someone had apparently stolen and cashed two of their business checks. In another article, a former copper trader in Japan pleaded guilty to forging his boss's signatures and swindling $770 million out of a subsidiary to cover up his estimated $2.6 billion in trading losses.

What is Forgery?

In simple terms, forgery is the alteration of an authentic document, such as changing the dollar amount on a check. Counterfeiting, another crime often connected with forgery, involves producing imitations of official documents. Government documents and checks are particularly vulnerable to these frauds due to their financial credibility, acceptability and ease of recognition. Driver's licenses, vehicle registrations, birth certificates, marriage licenses, death certificates, and professional licenses are among the commonly targeted government documents.

There are three basic types of forgery: altered documents, signature forgery, and false documents. With the help of technology, all three types are fairly common now.

  • Altered Documents. Documents can be altered by simply changing information within the document to benefit the forger. By applying household bleach, paint thinner or other special ink eradicators to a check, for example, the payee or amount can be changed fairly easily. These modifications are often undetectable. Documents can also be altered using cut and paste methods. Another way to alter documents is through technology. A document can be scanned into a computer and the image changed right on the desktop. Thanks to color inkjet printers, a forger can create a "new" document which looks as good or better than the original.

Here's a clever way a student gained admission to New York University (NYU) by using a forged college transcript. He simply obtained the transcript of a student attending another college, erased the student's name, grades, and classes and had a local print shop produce blank forms for him. He filled in fake classes and grades and sent it to NYU along with his admissions application.

  • Signature forgery. Signature forgery is probably the easiest method of forgery. All a forger needs to do is obtain a document for another person and sign that person's name to it. Even if the forgery is detected, it may be impossible to track down the forger.
  • False documents. False documents are easily created given the availability of inexpensive computers, scanners, and printers. For example, you can easily scan a business card and create a check, regardless of what the check for that business really looks like. A great deal of money can be stolen by printing and cashing these checks. Again, by the time the forgery is detected, the forger has moved on to his next target.

Reducing the Risk

As a general rule, don't trust the common belief that it can't happen to you. By following these precautions, you can reduce your risk of becoming a victim of a forgery scam.

  • Learn more about forgery and counterfeiting by reading articles on these topics or by surfing the Internet. The more you know, the better you can protect yourself.
  • Examine documents for authenticity. This is especially important if you handle documents as part of your job. Remember, government-issued documents make good targets.
    • Look for official, raised seals. This may indicate the document is an original.
    • Look for smudges, erasures, white out and other conditions which may suggest a document has been changed.
    • Look for consistency with other documents from the same source.
    • Look for logical relationships within the document.
    • Look for perforations on checks, with the main exception being government checks.
  • Reconcile your checkbook or line of credit regularly. Notify your bank immediately of any discrepancies.
  • When you receive check orders, take time to quickly scan the checks and deposit slips to ensure your account information and other data is correct.
  • Type checks, instead of writing them, to make altering more difficult.
  • When writing the check amount, use the entire line. Do not leave any space on the left-hand side and draw a line to the right-hand side to fill the rest of the line. Also, avoid using abbreviations for the payee.
  • Don't put bill payments in your mailbox and leave. You should either watch your mailbox until your mail has been picked up or drop the payments off at the post office.
  • Order checks with safety features to make forgery more difficult. A few of these features include:
    • Security Tint or Stain. When copied or altered, the check displays the word "void" on the face of the document.
    • Safety Block. This is a printed design usually of a repeating nature. A break in design may indicate an alteration.
    • Warning Band. This printed band calls attention to security features, such as the background color of the check. All the security in the world doesn't help much, unless people know what features you're using.
    • Watermarks. Watermarks are translucent and incorporated into the check. They are visible on both sides of the check and available only from papermills. They cannot be removed, duplicated, or changed.
    • Logoline. This feature looks like a solid line on the document, for example, a signature line on a check, but is actually a series of letters or words which will not duplicate when copied.

Conclusion

As one of the fastest-growing white collar crimes, forgery deserves more attention from the general public than it gets. The best form of protection is to stay informed and keep vigilant.