Relay-Version: version B 2.10 5/3/83; site utzoo.UUCP Posting-Version: version B 2.10.1 6/24/83; site gatech.UUCP Path: utzoo!watmath!clyde!akgua!gatech!wan From: wan@gatech.UUCP (Peter N. Wan) Newsgroups: net.legal Subject: Re: Insurance companies question Message-ID: <3781@gatech.UUCP> Date: Sat, 4-Feb-84 23:33:21 EST Article-I.D.: gatech.3781 Posted: Sat Feb 4 23:33:21 1984 Date-Received: Wed, 8-Feb-84 07:52:50 EST References: <488@hou5a.UUCP>, <319@pyuxbb.UUCP> Organization: School of ICS, Georgia Tech (Atlanta, Georgia) Lines: 28 I believe that you are referring to the Equity Funding Corporation of America fraud, which involved over $2 billion. It was discovered in 1973 in Los Angeles, California. Insurance was only part of the plan in this fraud; the companies involved in this were Equity Funding Corporation CAL, Equity Funding Securities Corporation, and Equity Funding Life insurance Company. In addition to insurance, these companies engaged in financing of operations and selling mutual shares. A good writeup of the case is presented in "Crime by Computer" by Donn B. Parker (published by Charles Scribner's Sons, New York, ISBN 0-684-15576-1). In the writeup, Parker questions whether this was actually a computer fraud case; computers don't seem to have been a major factor in this case ("...the role it [the computer] played was no bigger and more complicated than that played by the Company's adding machines.") That is probably why no programmers were implicated in the case. In fact, not all of the records for the company were in the computer to be juggled; records were kept on microfiche and juggled by hand. The perpetrators of this fraud inflated their earnings, borrowed money without listing it as a liability in the corporate books, and sold fictitious policies to cover existing bogus policies (the fake policies produced cash-flow problems which eventually led to their downfall). Their use of the computer in these operations was described as being very simple. -- Peter N Wan WHAT : GaTech System Administrator, CSNET Technical Liaison MAIL : School of ICS, Georgia Tech, Atlanta, Georgia 30332 BELL : (404) 894-3658 [office] / (404) 894-3152 [messages] UUCP : ...!{akgua,allegra,emory,rlgvax,sb1,ut-ngp,ut-sally}!gatech!wan ARPA : wan.gatech@CSNet-Relay CSNET : wan@gatech