Top five global frauds of 2024 and key lessons for staying safe

One of the most high-profile frauds that took place this year involved Evergrande, a major property development company in China, which overstated its revenue by over $61bn dollars. Evergrande recorded revenue from home sales once contracts were signed, even though the homes were not yet built or delivered to buyers. This allowed Evergrande to show higher revenue on its financial statements, and as a result, Evergrande could sell bonds both domestically and internationally with increased ease, defrauding investors in the process.

In 2021, Evergrande struggled to have enough cash to meet its financial obligations. This led to a default, meaning that they failed to make repayments on a debt. This endangered millions of apartment units that had been sold but were not yet completed and left many buyers at risk of not receiving the homes they paid for.

Key takeaway: Regularly check accounts and financial statements for inconsistencies or large and unexplained payments. This case also highlights the importance of a third-party perspective when drafting accounts – the work of accountants is crucial when it comes to uncovering financial fraud.

One of the largest frauds this year took place in Vietnam, where the government is cracking down on corruption to inspire more international business.

Vietnamese tycoon Truong My Lan allegedly raised the equivalent of £944m from nearly 36,000 investors by issuing bonds illegally through four companies. She also stands accused of laundering £14.3bn and illegally transferring £3.5bn into and out of the country.

Lan received the death penalty in April, convicted of orchestrating Vietnam’s biggest-ever financial fraud case, amounting to £9.9bn – nearly three percent of the country’s 2022 GDP – and for illegally controlling the Saigon Commercial Bank (SCB), allowing loans that resulted in losses of around £21bn.

Key takeaway: While this is an extreme example, it demonstrates that even at the highest levels of corporations, individuals can still fall victim to deception and be swindled out of their money.

Understand where your money is going – many fraudsters prey on the goodwill and trust of others so ensure that you are putting your money into a trustworthy business. This may include doing a business intelligence review and background checks on the key stakeholders in the organisation.

In the UK, Jonathan Arafiena was sentenced to five years in prison for orchestrating an investment fraud scheme that defrauded over 310 victims of more than £12 million. Alongside accomplices Ashlee Morgan and Kofi Ofori-Duah, he ran a ‘boiler room’ operation, pressuring victims into fake investments in commodities, shares, binary options, and cryptocurrencies. The City of London Police’s investigation revealed that none of the victims’ money was invested as promised. Arafiena used the proceeds to fund a lavish lifestyle, purchasing luxury cars, watches, and gold bullion.

Key takeaway: Be well-informed when investing. Conduct thorough research and due diligence into what you’re investing in, whether they’re a registered company, and whether you understand and trust the business. Never invest in something off the back of a phone call, always hang up and perform checks to ensure that the individual at the other end of the call is genuine. Remember, if something seems too good to be true, it probably is.

Italian police arrested 22 people and seized assets worth around £500 million in a fraud investigation involving both EU and Italian funding schemes. The group allegedly defrauded the European Union COVID-19 recovery fund and the Italian government’s home improvement schemes. The suspects used front companies to present fake projects and obtain tax credits, then laundered money using cloud servers and crypto assets.

Key takeaway: This case highlights the importance of supplier due diligence – for instance, if government bodies had conducted thorough searches into these projects and realised they were fake, they could have subsequently suspended funding and recovered the money.

A vast online shopping fraud deceived customers under the guise of a websites selling luxury brands at low prices. More than 800,000 people in Europe and the US appear to have been duped into sharing card details and other sensitive personal data with a vast network of fake online designer shops, traceable to China.

Key takeaway: This case highlights the increase in Authorized Push Payment (APP) fraud, in which victims are manipulated into making real-time payments to fraudsters. Over the past twelve months, new developments in artificial intelligence (AI) have enabled fraudsters to execute more sophisticated social engineering scams. For example, AI is being utilised to correct the ‘bad English’ that we typically see as part of email phishing scams. It is important to always verify the legitimacy of online shops and be cautious with your personal data. Look for domains that use numbers or letters to imitate legitimate websites (e.g. 1 instead of a capital i), and check for the padlock in the top left of your browser to ensure that you are securely connected.