8.06

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Risk Assessment

Principle 8 - Assess Fraud, Improper Payment, and Information Security Risk

Attribute 8.06 - Management considers the types of fraud that could impact the entity to provide a basis for identifying and analyzing fraud. Fraud involves obtaining something of value through willful misrepresentation. Types of fraud may include the following:

  • Fraudulent reporting - Intentional misstatements or omissions of amounts or disclosures in financial or nonfinancial reports through willful misrepresentation to deceive report users. For fraudulent financial reports, this could include intentional alteration of accounting records, misrepresentation of transactions, or intentional misapplication of accounting principles. For fraudulent nonfinancial reports, this could include intentional misrepresentation of information.
  • Misappropriation of assets - The unauthorized acquisition, use, or disposal of an entity's assets through willful misrepresentation. This could include efforts to conceal theft of property, embezzlement of receipts, bid rigging, fraudulent payments, or misrepresentation of eligibility to obtain benefits.
  • Other illegal acts - Intentional violations of laws or regulations through willful misrepresentation that may be related to financial or nonfinancial activities. This could include certain types of corruption, bribery, extortion, and cybercrimes.

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Jamie's Story

No examples are available to illustrate governance gaps for this attribute.

Election Anomalies

The Green Book's Principle 8 addresses Assess Fraud, Improper Payment, and Information Security Risk. Obviously, improper payments is not a concern during the Assessment of Election Anomalies. However, improper payments by MC county may exist, but would require a separate assessment.

The Green Book's emphasis on fraud and information security as separate risk assessment activity is intentional. MC may be able to defer to the Arizona Secretary of State's Election Procedure Manual as general steps taken to ensure the integrity of election results. Fraud occurs when loopholes are identified and exploited by the fraudsters. The implementers of election services (i.e., Arizona Counties) are better positioned to detect fraud and assess the risk of fraud because they are handling the data, not the state. Hence, governance gaps may be identified from patterns of poor assessment and response to risk with respect to election fraud and information security.

Maricopa Dropbox Collection (2020)

Governance issues identified from Arizona Attorney General's Office 2020 General Election Investigation of Arizona Senate allegations of Maricopa County Election Department - Drop Box Collections issues.

Intent to Commit Fraud

This Green Book attribute begins with a fraud statement; "Fraud involves obtaining something of value through willful misrepresentation." In this case, over 56,000 undelivered early ballots under USPS control would be of immense value to a fraudster because they are still valid and can be submitted for tabulation, if only they could be acquired. The willful steps are as follows:

  1. Flood the Maricopa County Voter Registration database with fictitious addresses. This achieved with fraudulent registration. By entering a known address with no building suitable for occupancy at that address, the early ballot cannot be delivered and will most certainly be returned back to the USPS for processing. Occasionally, a citizen may make a mistake and enter an incorrect address. However, there are opportunities for the citizen to recognize and correct their original voter registration error, which seeks a valid ballot to make their voice hear in an election. In contrast, 56,000 undeliverable early ballots can only serve the fraudster; no citizen would benefit from this sizable stockpile of castable ballots.
  2. Acquire (a.k.a., "steal") undelivered early ballots from the USPS. Consider the following:
    • The motivation to steal is associated with the ability to fraudster's opportunity to sway election results; each additional ballot stolen increases the opportunity.
    • The early ballot as a theft's target is easily recognized. Note: There is a reason why credit cards are delivered to you without the Credit Card company being identified on the envelop. Postal theft is expected and credit card companies implement multiple barriers to prevent their fraudulent acquisition and ensure only the designated recipient can activate the card.
    • There are multiple opportunities for theft; opportunities increase with each USPS process step where early ballots are transported, including activities to 1) segregate early ballots from other first-class mail, 2) count the early ballots, 3) scan the early ballots to digitally record the fictious addresses, and 4) destroy the early ballots.
    • Lack of security for early ballots under USPS control. Early ballots were simply treated by USPS as first-class mail, not as opportunities for fraud.
    • The 56,000 undeliverable early ballots represent a sizable opportunity. Thousands of ballots could be stolen without being detected by casual observation.

The fraudster's willfulness is shown by intentionally using fictitious addresses to create a large stockpile of valid ballots that can be stolen from the USPS without much effort. See the heading Deviation: Fictious Addresses in MC Voter Registration Database from Maricopa Dropbox Collection (2020) webpage for additional information.

Fraudulent Reporting

The AZ AG's inspector confirmed the allegations of procedure violations. See the heading Deviation: Allegations Confirmed from Maricopa Dropbox Collection (2020) webpage. It is important to distinguish between the willful acts of fraud, which were committed external to MC activities, and negligent acts to prevent and detect fraud, which were committed by procedure deviations. MC employees did not commit fraud; they allowed fraud to occur. Allowing fraud is poor governance.

These allegations of drop box pick up violations were confirmed by the AZ AG's inspector's observation of the following topics:

Other Illegal Acts

The AZ AG's inspector confirmed the Arizona Senate's allegations of inappropriate drop-box pick up activities. The inspector characterized them as procedure violations. The AZ AG's inspector did not seek to determine if illegal acts had occurred. MC leadership allowed, and may have willfully supported, the violation of Maricopa County Election Procedures and the Arizona Secretary of State's Election Procedure Manual (EPM).The EPM was written specifically to ensure compliance with the law, Title 16 of Arizona Revised Statutes. By inference, the AZ AG's inspector suggests MC leadership knowingly allowed their staff to deviate from election procedures.

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