Summer 2013 • Issue 48, page 22

Fraudulent Manipulation of Bank Statements in Adobe Acrobat PDF format

By Davis, Peter*

Of particular interest and importance to receivers are bank records, as they are reflective of the actual financial history of the entity. However, we have identified bank statements in several of our investigations that have been electronically manipulated to reflect deceptive and fraudulent statement entries. Both the payee names and amounts were changed for electronic transfers reflected on statements. In some cases, fake deposits were placed on the statements, and the balances manipulated such that they rolled forward. Changes made to bank statements are virtually impossible to identify without having a copy of the original bank statement to compare them to.

Bank statements are downloaded from bank web sites in PDF format by accounting personnel in lieu of receiving them via mail. This practice is becoming ever more common. In the cases we have seen, the statements were manipulated using software that is able to crack open the PDF file, and then editing tools were used to change the amounts, dates, payees and deposits. The files were then converted back to a PDF file.

PDF’s are editable. Even if the original PDF file is scanned as an image in bitmap format, a process known as Optical Character Recognition (OCR) allows users to convert the PDF into a text format. Acrobat contains an OCR feature, and there are others available on the web. Even PDF’s that are not in a text format can still be edited through other means. Techniques such as using screen capture software to take an image of the file and then editing and resaving it can be used to change an electronic file. The creator of the PDF can add password protection, but ultimately this protection can be broken.

Receivers should exercise caution when relying on even PDF bank statement copies which did not come directly from the financial institution. The lesson learned is that receivers must remain on heightened alert in fraudulent schemes when reviewing bank statements given the ease of electronic manipulation of bank statements.

*Peter S. Davis of Simon Consulting, LLC has significant experience in complex forensic accounting, fraud detection, bankruptcy matters and receiverships. Mr. Davis is a CPA, ABV, CFF, CIRA, CTP and CFE, is conversant in German and has consulted for companies in the U.S., Germany and Japan. Erik O’Malley of Simon Consulting, LLC provided research assistance for this article. Mr. Davis may be reached at pdavis@simonconsulting.net or 602.279.7503.