There is a special fascination with what are known as salami slicing scams, the theft of tiny amounts of money, often from computer systems, so small that they might go unnoticed but which can add up to significant sums over time.
Though the term has only been used since the 1970s, salami slicing scams date back thousands of years. Coin clipping is arguably the original and most widespread salami slicing scam peaking in the 17th century. The evolution of money through the digital age has seen weird and wonderful methods dreamed up to steal tiny slivers of value from computer systems. We’ve gathered together some of the best examples of salami slicing scams, along with some insight into what drives our fascination with this particular type of grift.
Salami tactics before salami slicing
Given its rich nature, salami is meant to be eaten sparingly, in slices, but cured meat isn’t the only thing that works best when chopped into small pieces, so salami slicing has meaning beyond the literal interpretation.
In the late 1940s, Hungarian dictator, Mátyás Rákosi, used the term ‘salami tactics’ in reference to the step-by-step creep of the Communist Party toward power in Hungary.
Regarding the banks, for instance, first we requested only state control, later the nationalisation of only three big banks. Industry, in a similar way, first the state management of mines was demanded. We gradually expanded this request to the biggest machinery and smelting plants and, finally, we shifted to nationalization.The Social Survey
The term ‘salami tactics’ entered the lexicon of political commentary to refer to strategies that work by small increments of escalation.
NATO and the USA are currently using salami slicing tactics in their support of Ukraine’s defence against the Russian invasion, with military support packages that gradually escalate in their reach and effectiveness.
But we’re going to focus on the use of the term salami slicing in describing a specific type of financial fraud.
Salami slicing fraud
There is no certainty over when the term salami slicing was first used in relation to scams or fraud, but Thomas Whiteside, in his book, Computer Capers, first published in 1978, attributes the term ‘salami slicing scam’ to Donn Parker, an early computer crime expert.
Parker also used the synonym ‘thin slice-at-a-time’ technique. Both phrases refer to embezzlement achieved by stealing amounts so small that they are unlikely to be noticed.
How salami slicing scams work
Though the initial reference to salami slicing scams was made by a computer crime specialist, the technique can equally apply in the physical sense. Any theft that is small enough to go under the radar and can be perpetrated consistently without notice fits the bill.
Coin clipping is the most obvious example of a physical salami slicing scam working by removing a small portion from the edge of coins made from gold and silver (aka commodity money), then melting down and selling the proceeds.
Coin clipping was possible in the era of hammer-struck coinage (up to the 17th century) because the process produced irregularly shaped coins. A small amount of the coin’s edge could be removed and the area filed down to obscure the impact.
Other techniques were used that fall under the coin clipping banner, such as sweating – general abrasion – or plugging, where the coin’s centre is removed and replaced with pewter and alloy of similar weight.
Despite being punishable by death, coin clipping was such a problem in 17th-century England that the nation’s entire stock of coins had to be minted as new, with better designs.
Victorian historian Lord Macauley reported that at its climax, coin clipping, hoarding and profitable arbitrage in Europe meant that only one coin in every two thousand was genuine1.
Salami slicing computer scams
As you’ll see from the salami slicing examples below, there are several cases of the theft of coins, notes or gold a little bit at a time, but the computer era opened up a whole new world of opportunity for embezzlement.
The most common approach to computer-based salami-slicing scams is rounding, which works by automatically reducing digital financial records by a few pennies or cents to the nearest whole number. The proceeds are then diverted to an account controlled by the perpetrator, where they are collected over time and can eventually be withdrawn.
Each individual account is unlikely to notice or even care about such a tiny discrepancy, with the onus being on the business to keep accurate records, which was less common in the early years of computing.
Salami slicing fraud gained popular attention via the plot of Superman III (released in 1983) when Richard Pryor played a computer engineer who came up with a plan to catch pennies floating in the system of his evil employer. There are, however, numerous real-world examples, a selection of which are collected below:
Salami Slicing Scam Examples
The Loughton Incinerator Thefts
Between 1988 and 1992, four employees of the Loughton Incinerator used by the Bank of England to destroy notes withdrawn from circulation stole around £600,000 over four years by stuffing the notes down their underwear.
They used a clever system of switching padlocks to store the bank notes intended for destruction in cages but were caught because of the attention their extravagant lifestyle generated.2
Royal Canadian Mint
An employee of the Royal Canadian Mint stole 22 gold pucks worth £150k, each weighing between 192 and 264 grams, by shoving them up his rectum.
Despite setting off metal detectors 28 times, it was years before he was finally caught, having taken advantage of working alone in a room with poor surveillance coverage.3
Edmonton LTR Fares
Over 13 years, a machine attendant stole $2 million in coins from ticket machines operated by Edmonton LRT using a magnet & car antenna. The stolen coins were estimated to weigh 37 tonnes. They were eventually caught after audits exposed shortfalls in revenue, and private investigators were called in.
Raising salary deductions by two cents
Two programmers employed by a garment factory in New York to manage payroll increased deductions for federal taxes by two cents and diverted the proceeds to their own federal withholding accounts. At the end of the financial year, the IRS systems automatically refunded the diverted funds as a cheque.4
Zwana salami scam undone by the alphabet
A computer programmer at a mail order business rounded down sales commission by a couple of cents and diverted the funds to an account he created.
He named the alias account Zwana, knowing that the system worked through accounts alphabetically and could, therefore program it to divert funds to the last account in that sequence.
The salami slicer was undone by pure coincidence as his employers decided to reward the sales commission account at either end of the alphabet.4
Embezzlement from Californian produce grower ends in San Quentin
A computer programmer employed to create systems to manage the accountants of a California fruit-growing business created an algorithm to inflate cost variances by pennies or fractions of cents. The difference between the true and inflated costs was funnelled into accounts of fictitious businesses presumed as suppliers. Fraud of over $ 1 million was eventually uncovered, earning the culprit five and half years in San Quentin. 4
$50k siphoned in pennies from 58,000 trading accounts
In 2008, a Californian man was jailed for a salami slicing scam that exploited Paypal’s tactic of verifying new users by depositing a few pennies into their bank account and getting them to confirm the amounts.
He played the long game, creating a computer script that enabled him to open 58,000 accounts, often in the name of cartoon characters like Hank Hill (from King of the Hill) and Rusty Shackleford.5 The scam netted $50,000 in pennies from trading sites, including Charles Schwab and Etrade, without ever using the service.
The scam was extended to Google Checkout, scooping $8,225.29 before finally getting flattened collecting pennies in front of the proverbial steamroller.6
Salami Sliced at the petrol pump
In 1997, several petrol stations in the Gardena area of South Bay, California, were discovered to be using computer chips designed to defraud customers by serving less petrol than indicated by the dispenser.
Twelve outlets owned by Mepco Oil Inc were found to give customers between 7-25% less petrol than paid for.
Authorities were alerted by suspicious customers, but an initial investigation in 1995 found nothing amiss.
I would be amazed if this was not happening in other jurisdictions. Computer fraud if the crime of the future. It was virtually unprovable until you took apart the gas pump.Gil Garcetti, LA District Attorney
The salami slicing scam was perpetrated by a station manager, his brother and a further accomplice who were accused of defrauding customers of $ 1 million.7
Widespread salami slicing from Buffalo parking meters
In a similar case to that of the Edmonton LRT, four separate instances of theft from parking fare boxes in Buffalo were uncovered from 2011-2014, totalling $300,000.
The first was the largest, conducted over more than eight years, bringing home $210,000 worth of quarters — 10,500 pounds (4,760 kilograms) — rolled and packed in $500 boxes to be exchanged for cash at banks on his lunch hour.
Suspicions were raised due to disparities between meters and the more secure pay-and-display machines.
Concerns from parking Commissioner Kevin J Helfer led to an FBI investigation, with two arrests in December 2011 and two more in 2014, one of whom spent his haul on a jet ski, SUV, two boats and a moped, all funded from the part-time salary of a coin-collector for parking meters.8
Salami slicing isn’t the perfect crime
There is no such thing as a free lunch, so no matter how small the salami is sliced there is always a trail that will eventually lead back to the perpetrator.
With the examples of physical salami slicing, the proceeds must be transported, hidden and laundered – one machine attendant stole 37 tonnes of coins over 13 years – even then, any change in lifestyle becomes a red flag to authorities.
No matter how clever the digital penny-shaving tactics are, there is always a trail that auditors can follow. It is often the case that employees use their unique knowledge of custom systems to exploit them; often, these are systems they’ve designed themselves, but sooner or later, someone else will want to take a look under the hood and question those tiny discrepancies.
Why salami slicing fraud fascinates us
Part of the fascination with salami slicing frauds lies in their ingenuity. The Superman III plot played on the idea that computer systems aren’t sure what to do with fractions of pennies, which float around the ether, waiting for someone smart enough to scoop them up. That is, of course, fiction, but salami slicing scams have reappeared in film, notably Office Space in 1998.
Given the size of sums involved, with a penny shaved here and there, salami slicing scams may have the appearance of the perfect crime, as it is easy to rationalise that the theft of micro-amounts has little or no impact on the individual account holders. This might also suggest that, somehow, there is less criminality involved.
This rationalisation is, perhaps, a variant of unit bias. There’s no difference between stealing $ 1 million in one hit from a bank vault or a fraction of a penny at a time across thousands of digital bank accounts.
Salami Slicing FAQs
Salami slicing is the theft of tiny amounts of money, so small that they might go unnoticed but which can add up over time to significant sums.
The original use of the term ‘salami slicing scam’ isn’t certain but some attribute it to early computer crime specialist Donn Parker.
Salami slicing scams are also known as penny shaving or the thin slice-at-a-time technique
In the late 1940s, Hungarian dictator Mátyás Rákosi used the term ‘salami tactics’ in reference to the step-by-step creep of the Communist Party toward power in Hungary.
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