Wk 7 Discussion (Investigating Fraud) - Post 1
mvazquez21
BookshelfOnline_PrinciplesofFraud375-384.pdf
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 1/21
PRINTED BY: [email protected]. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.
that a governmental unit is required by law to keep or those that are necessary for a
governmental unit to keep in order to discharge its duties imposed by law.
Many types of public records contain similar information about individuals or entities. Yet
each agency or governmental unit is responsible for quite different functions that may
require them to maintain very unique information. The investigator should be prepared to
consult a variety of public records in order to gather the information necessary.
Local or County Records
The great majority of an individual’s civil records can be found at the county courthouse in
the jurisdiction where the subject does business or resides.
Voter Registration Records
In order to vote, citizens must register in their respective precincts by filling out a form
detailing their name, address, date of birth, Social Security number, and signature. Voter
registration records are routinely verified by the county, and old addresses are deleted as
new ones appear.
Marriage License Records
Marriage license information includes the couple’s married names, the maiden name of the
female, the addresses of the individuals, proof of the couple’s identities (driver’s license
numbers or passports), and both parties’ dates of birth.
Real Property Records
When an individual purchases real estate, he becomes a taxpayer and a registrant in several
county records. Each real estate transaction will list a deed verifying the transfer of the
property. If the individual either buys or sells a house or piece of property, or if his real
property becomes subject to a state or federal lien, the transaction will be reflected in the
county real property indexes. Additionally, if improvements are made to the property (e.g.,
adding a new room or installing a pool), a mechanic’s lien or other notice may be on file in
the county property records.
A search of these records will reveal:
374
375
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 2/21
• Residency and addresses of buyer and seller (referred to respectively as grantor and
grantee)
• Price of the property
• Mortgage company and amount originally financed
• Real estate ownership
• Who financed the transaction, if applicable
• Title companies involved
• Improvements to the property and the names and addresses of the contractors
Property Tax Records
Most counties charge landowners with property taxes for upkeep of local their schools,
courthouses, police forces, and so forth. Property tax records can provide the fraud
examiner with an idea of the estimated value, for tax purposes, of the property listed; of the
identity of the owner of a vacant piece of land or a piece of property, if ownership is
unknown; and of the name of the last person to pay taxes on the property.
When searching real property and tax records, the examiner should always look for other
names shown on the documents. Frequently, the name of the attorney or notary public who
verified the documents is listed, providing another potential source of further information.
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 3/21
PRINTED BY: [email protected]. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.
Health and Fire Departments
Most county health or fire departments conduct routine inspections of businesses for health
and safety code or fire code violations. These inspectors may have valuable information
about the business and its operations, employees, and owners.
Sheriff/County Prosecutor
The county sheriff or the county prosecutor may maintain general incident files related to
the businesses within the county. These incident files can provide leads on reports or
contacts with the managers or owners of the business or on third parties who have made
complaints against the subject.
County Fire Marshal
The county fire marshal should have a record of any fires that have occurred at specific
properties. These records may contain information about a property’s insurer, as well as
information about any previously conducted investigations.
Utility Company Records
Many utility companies are nonprofit corporations or municipalities. Although the recent
trend has been to restrict access to utility company records, some companies still make their
records available to the public. Utility records may contain the phone number of the
customer, even if that number is unlisted.
Permits
If a business or individual constructs a new building or makes improvements to an existing
building, there should be a building permit on file with the local building authority. In
addition, before most businesses can open their doors, the city or county may require that
they possess certain permits. The local fire department may require permits ensuring that
the business complies with the fire code. The city health department will require permits
for restaurants or other businesses that serve food. Planning and zoning departments
enforce regulations regarding the types and locations of businesses.
375
376
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 4/21
State Records
Business Filings
To open a bank account or to conduct business in a name other than one’s own, the law
requires certain documents to be filed. These documents can include articles of
incorporation, foreign corporation registration, and fictitious name or doing business as
(DBA) registration.
Articles of Incorporation Corporations are formed by filing articles of incorporation with
the secretary of state (or state corporation bureau or corporate registry office) in the state
where the company does business. These corporate records are public records and will
include:
• Corporate name
• Ownership information
• Stock value
• Initial shareholders
• Names of the directors and officers
• Registered agent
• Location of the principal office
• Date of incorporation
• Standing/status
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 5/21
PRINTED BY: [email protected]. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.
This information will permit the investigator to review a corporate structure, identify the
registered agent, and trace incorporation dates. The records will often include limited
partnership information as well.
Foreign Corporation Registration Some states also require foreign corporations (i.e.,
corporations that were incorporated in another state) that conduct business transactions in
the state to register with the state corporation office. The application is typically filed with
the secretary of state and must include the date of incorporation, the principal office, the
address of the registered agent, and the names of the officers and directors.
Fictitious Names/Doing Business as Registration
A fictitious name or doing business as (DBA) situation occurs when a business owner
operates a company under a name that is different from his legal name. DBA information
for sole proprietorships or partnerships is typically filed at the county level, though some
states require filing at the state level as well. Most states also require limited partnerships,
trusts, and joint ventures to file DBA information at the state or county level. DBA filings
will provide insight into the true business venture behind the name. Very similar to
corporate filings with the Secretary of State, these records will allow an investigator to
identify the type of business entity, the date the business was started, and the
owners/principals of the business.
Uniform Commercial Code Filings
A search of Uniform Commercial Code (UCC) filings can help identify personal property that
an individual or business has financed. UCC statements are documents filed by lenders with
the secretary of state or with the county level unit to perfect their security interests in
financed personal property. Banks, finance companies, and other lenders will generate
records or filings of loans granted to individuals and businesses and collateralized by
specific assets, such as household furniture, appliances, boats and yachts, automobiles,
aircraft, and business equipment.
UCC filings can also disclose when and where a person obtained a personal loan, the type of
property that he pledged to the lender to secure the loan, and the current address of the
debtor. These documents are great sources for reviewing itemized lists of personal property
held by the debtor.
376
377
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 6/21
Additionally, UCC filings can help fraud investigators uncover hidden ownership or
relationships between parties by providing the names of all listed debtors and their
addresses. The examiner may find information linking individuals to the companies they
own or discover information about a company’s subsidiaries, branch offices, or parent
company.
UCC statements can be readily retrieved from the secretary of state’s office, through service
companies, or through online public records services.
Employee/Labor Records
Some states’ labor departments require the filing of periodic lists of employees, revealing
their names, Social Security numbers, and salaries. These filings can help a fraud examiner
track a subject’s employment and income. In addition, by examining previous filings, an
investigator can identify former employees of the company.
Workers’ Compensation Information
Because workers’ compensation is a state program, these records are held at the state level.
Records of workers’ compensation claims are available in most states and are normally
maintained for seven years, but
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 7/21
PRINTED BY: [email protected]. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.
public access to these records varies from state to state. There are two types of documents
relating to workers’ compensation cases: (1) injury reports and (2) court-contested claims.
The reports commonly show the date of the incident, the amount of time lost, the employer
at the time of the incident, the type of injury, the body part affected, and the job-related
disability. To obtain workers’ compensation information, the requesting party must have
the subject’s name and Social Security number. Many states also require some type of
authorization from the subject before disclosure.
State Tax Filings
The revenue departments of some states require certain businesses to obtain tax permits,
such as resale licenses or retail sales tax permits. Although tax returns are generally not
available to the public, information regarding applications for and issuance of tax permits
often is.
Additionally, law enforcement officials may be able to access corporate, business, and
personal state tax information, which may unwittingly reveal hidden assets or investments.
Tax returns may also disclose the identity of the accountant or attorney preparing the
return.
When examining a state tax return, loans to or from officers, stockholders, or related
entities should be examined closely. Any mortgages, notes, and bonds shown as liabilities on
a corporate return should be investigated. Interest payments and interest income are also
very important. Interest income may be shown from a bank that was previously unknown
to the investigator.
Professional Associations and Licensing Boards
Many state and local agencies or bodies maintain records identifying individuals who hold
special licenses or memberships. These can include:
• Medical practitioners, such as doctors, dentists, and nurses
• Attorneys
• Certified public accountants
• Real estate licensees
• Notaries
• Law enforcement personnel
• Firefighters
377
378
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 8/21
• Security guards
• Stockbrokers
• Teachers
• Insurance agents
• Private investigators
• Bail bond agents
• Travel agents
• Barbers, cosmetologists, and massage therapists
• Contractors, engineers, electricians, and architects
The licenses and applications granted by the state may be public record. Some applications
contain no more than a name and address, but other applications contain lengthy personal
information, such as previous residential addresses, previous employers, education and
training, and financial statements.
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 9/21
PRINTED BY: [email protected]. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.
The state regulatory or licensing agency may also have the authority to suspend or revoke
the licenses necessary for a business to operate.
The Courts
Each year, a great deal of litigation occurs, and many people are subjected to judicial action.
Researching civil and criminal suits can provide invaluable information to assist in:
• Locating individuals
• Identifying pending actions
• Uncovering closed cases
• Determining marital status
• Tracing sources of funds (e.g., probate)
• Identifying financial conditions (e.g., bankruptcy)
• Discovering litigation history
• Uncovering outstanding judgments
A wealth of information is available from reviewing court files. Often, civil or criminal
actions are not readily known and the researcher must be able to identify the jurisdiction,
county, or court involved. Most of the papers filed in civil suits are accessible as public
records; however criminal and juvenile actions may not be open to review. Additionally,
different case types are filed at different levels and in different courts. Therefore, to
uncover the information desired, the investigator may be required to check several types of
courts at several different levels.
Litigation History
Court clerks maintain files on all active and closed lawsuits in their jurisdictions.
Information regarding these suits is public record and can be searched by scanning the
indexes for the subject’s name as plaintiff or defendant.
Based on court issues and the financial nature of the claim, different levels of courts may
have jurisdiction over a given case. To determine a full picture of the litigation history
against a company or individual, the fraud examiner should search each of the following
courts:
• State courts
378
379
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 10/21
∘ State trial courts of general jurisdiction (criminal/civil)
∘ State intermediate appellate courts (criminal/civil)
∘ Highest state courts (criminal/civil)
∘ Probate courts (estate administration)
∘ Family courts (matters concerning adoption, annulments, divorce, alimony, custody,
child support, etc.)
∘ Traffic courts (minor traffic law violations)
∘ Juvenile courts (cases involving delinquent children under a certain age)
∘ Small claims courts (civil suits of a relatively low dollar amount)
∘ Municipal court (offenses against city ordinances)
• Federal courts
∘ U.S. district courts (criminal/civil)
∘ U.S. circuit courts of appeal (criminal/civil)
∘ U.S. Supreme Court (criminal/civil)
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 11/21
PRINTED BY: [email protected]. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.
∘ Bankruptcy courts (federal)
∘ U.S. Tax Court (cases arising over alleged tax deficiencies)
∘ U.S. Court of International Trade (cases involving tariffs and international trade
disputes)
Divorce Records
If the subject of the investigation is in the process of becoming, or has been, divorced, the
fraud examiner may wish to search for the opposing spouse. Divorce record searches will
return marriage partner names and addresses, location of marriage, divorce filing date, and
file number. Moreover, court documents from a divorce case frequently contain the
subject’s financial inventory, which is submitted at the time of the divorce or separation, as
well as the partition of assets to each party in the settlement.
Personal Injury Suit Records
Documents in a personal injury suit will frequently contain an accident report, injury
history, statements of the involved parties, and information about the financial settlement
of the case.
Financial Suit Records
Reviewing documents filed in a financial suit will disclose the subject’s debtors and
creditors, and will present an outside view of an individual’s business history or ability to
perform.
Bankruptcy Records
Bankruptcy documents are usually located in the federal bankruptcy court for the district
where the debtor resided or had his principal place of business. When checking bankruptcy
court records, the fraud examiner should check not only the individual or business being
investigated, but also any related businesses, principals, employees, or relatives.
The Bankruptcy Code (§107) specifically provides that all documents filed with federal
bankruptcy courts are public record and can be examined by anyone without charge. A
bankruptcy case file may include the case number; the debtor’s name(s), Social Security
379
380
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 12/21
number, and address; the filing date, the bankruptcy chapter designation; and the case
closure date. It may also include transcripts of depositions or interviews. If fraud was
suspected, the trustee may have conducted a fraud investigation; thus, investigators may
wish to check with the trustee to find out whether any such investigations were undertaken.
Probate Records
Probate records are documents filed to show the dispersal of assets after a subject’s death.
The probate court conducts an investigation to verify any debts owed by the individual’s
estate and sees to the distribution of assets according to the deceased’s will (or, if there is no
will, by state law) after all debts are paid. Information about the debts left in an individual’s
estate will give the investigator the names of persons having an interest in the deceased’s
estate, as well as the subject’s financial position at the time of death. Likewise, the dispersal
of assets will reveal the names and addresses of heirs to the deceased and provide some
indication of the value of the property willed to them.
The Internet
The Internet is often the first place fraud examiners turn for information. It is an amazing
research tool, but investigators should remember that much of the information on public
websites is questionable. Fraud examiners should not rely on information gleaned from
public pages without verifying the authenticity and accuracy of the information.
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 13/21
PRINTED BY: [email protected]. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.
Search engines like Google and Yahoo provide a convenient way to access the wealth of
information available on the Internet. In addition, there are many other ways for fraud
examiners to find information online. A list of specific helpful Internet resources is included
in Appendix A.
Commercial Online Services
A commercial online service may be the best and most efficient way to conduct public
records searches, as it provides access to a wide range of data in a single place. There are
several companies that provide varying levels of public record information to subscribers.
The information is stored on a central database that a subscriber can access from his
computer. Some companies provide information that is actually retrieved in hard copy and
mailed or faxed to the subscriber, even though the request was made through the online
service.
While convenient, the use of commercial public record services comes with an important
caveat for investigators to keep in mind: Online records companies have to get their
information from somewhere. If the information in the source’s records is incorrect, the
report received from the database company will also be incorrect. Therefore, it is essential
to remember that accessing information online is never a full substitute for actual
examination of the public records themselves.
Directories
Directories are specialized websites that collect the names of numerous other related
websites, allowing users to browse through a listing of possible sites to visit. Directories
contain direct links to pages that have a common interest. Some all-inclusive directories
cover a plethora of different topics, and others are more focused on particular subjects or
disciplines (e.g., accounting and auditing directories that fraud examiners may find very
useful).
Blogs
A blog is a user-created website consisting of diary-like entries. Although there are many
different types of blogs, ranging from community and corporate blogs to blogs focusing on a
particular subject, the most relevant type for fraud examiners is the personal blog—an
ongoing commentary written by one person.
380
381
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 14/21
Reviewing an individual’s blog can reveal information that may be relevant to an
investigation. For example, with information obtained from a personal blog, the
investigator may be able to establish a timeline of the individual’s activities or gain insight
into the subject’s thoughts and mindset, which can be used in the interviewing process.
Blogs, unlike social networks, are generally open to everyone; furthermore, many blogs can
easily be searched, often using traditional search engines. Google Blog Search, for example,
uses Google search technology to search blogs. In addition to traditional search engines,
blogs can be searched via specialized blog-search sites, such as Technorati and IceRocket.
Social Networking Sites
Social networking sites are specialized websites that help users develop and maintain their
relationships more easily. Essentially, social networking sites take traditional networking
activities online. With these sites, users can, generally without charge, log onto one of the
services, create an account, provide specific details about their life—such as schools
attended, past and present employers, hobbies, sports, and interests—and become
networked to other individuals that share similar backgrounds or interests. Once users
become connected to other members, they can view the activity on each other’s pages.
User pages on social networking sites contain valuable information. People regularly post
many personal details on their social networking pages, including information
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 15/21
PRINTED BY: [email protected]. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.
about their professional profile, academic history, business connections, personal
affiliations, hobbies, favorite sports teams, opinions, work schedule, height, weight, gender,
travel schedule, intellectual property, political and charitable causes, updates on family
events, drug or alcohol habits, illnesses, and so on. They may also post photos and videos,
which can help investigators track changes in physical appearance and location.
Social networking sites can be searched like traditional websites; much of the information
available on social networking sites can be found using traditional search engines.
However, there is an ever-growing number of specialized resources that an examiner can
also use to search these sites. For example, each social network has a search engine for
locating members. Users can use these engines to search for members by name, phone
number, or e-mail address. In general, users can search for members without logging in,
and searches can usually be done anonymously. If, however, a member’s profile is private,
the researcher will only see a snapshot of the member’s information. For example, to view a
member’s profile in Facebook or LinkedIn, the researcher must connect with the other
member.
In addition to traditional search engines and search engines within social networking sites,
social network search engines are also available and may provide better results. These
search engines use social networks to order, prioritize, or refine search results. Some
popular social networking search engines include Spokeo, Yoname, and FriendFeed.
REPORT WRITING
Fraud examinations conclude with reporting the investigation results. In general, this
communication takes the form of a formal written report that includes information
pertinent to the examination engagement. Such a report is normally used for internal
reporting purposes but may also be used for complaints to police services or claims to
insurance companies. It is important to note that the topic of writing reports is broad and
detailed; many of the finer points of report writing are beyond the scope of this textbook.
However, this section is included to provide a general overview of the culmination of the
investigation techniques discussed throughout this text.
Purpose of the Report
According to anthropologists, some of the earliest forms of writing were actually drawings
recording ceremonial dances. These drawings were made to record specific movements so
that others could repeat those that were thought to please the gods. While technology has
381
382
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 16/21
advanced since those early days, and we no longer write on cave walls or do ceremonial
dances to please the gods, we still need to record our specific activities and findings to
comply with policies and procedures and, in some cases, to satisfy the courts.
The records or reports stemming from an investigation must be accurate and
understandable so that others may know what transpired without having to speak to the
report’s author. In other words, the report must speak for itself. An important point to
remember is that an investigation is often judged not by what was “uncovered,” but by the
way in which the information is presented. As such, a good investigation report:
• Conveys evidence: The written report communicates all evidence necessary for
thorough and proper evaluation of the case.
• Adds credibility: Because the written report is completed in a timely manner, it adds
credibility to the investigation and can be used to corroborate earlier facts.
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 17/21
PRINTED BY: [email protected]. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.
• Accomplishes objectives of case: Knowing that a written report must be issued after the
examination is completed, the report forces the examiner to consider his actions
beforehand.
Know the Reader
As with any written document, it is important to identify the reader of the internal report.
Internally, this may include the board of directors, corporate executives, internal auditors,
and in-house legal counsel.
Each of the readers might have different expectations as to the information he expects to
see in a report. For instance, the board of directors might only wish to know that an
investigation was conducted and what the outcome was (such as the termination and
prosecution of the offending employee). An internal auditor would likely be more interested
in whether internal controls were overridden, and how. In-house legal counsel might
wonder whether proper procedures were followed in the investigation and consequent
employee termination. Ultimately, these internal readers will determine what information
is included in the report.
Along with the expected internal readers, others who are external to the company might
gain access to the internal investigation report. Some of these readers may be given the
report voluntarily, and others may gain access to it through other means, including the
courts. These external readers could include:
• External auditors
• Outside legal counsel (including those retained by employees who might be the subject
of the internal investigation)
• Law enforcement agencies
• Government attorneys or prosecutors
• Other government agencies (e.g., employment or human rights commissions)
• Insurance companies
It is important to remember that while not all investigation reports end up being scrutinized
by lawyers and/or used in a civil or criminal trial, they should all be written as if they will
be. For this reason, the following points should be followed:
382
383
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 18/21
• State only the facts. Do not guess or make assumptions in the report. If information is
unknown, that fact should be clearly stated.
• Do not make errors. Minor typographical and other errors might make the report
appear unprofessional and could be embarrassing, especially in court. In addition to
using a spellchecker, it might be worthwhile to obtain the services of an independent
proofreader.
• Do have a follow-up section. In some cases, information or documentation important to
the investigation might not be available to the investigator. This should be listed in a
separate section.
Format
Using a template or standard report format will reduce the amount of time spent writing a
report while ensuring that all pertinent information is included. Nevertheless, some
situations might require a customized report format—but even then the basic format
outlined below should be followed:
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 19/21
PRINTED BY: [email protected]. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.
• Author/date
• Summary
• Introduction/purpose
• Body
• Results
• Follow-up/recommendations
These section names are not mandatory and can be changed to suit the report writer’s
preferences; but as a general rule, all of the information in these sections should be
included somewhere in the report.
Summary
This section is intended to give very basic information. It should set out the main points of
the report in a few sentences and should include the subject, basis, findings, and outcome of
the investigation.
EXAMPLE
This report deals with an internal investigation conducted at the Rockside Industries’
Wayside Plant based on an anonymous tip that an employee was submitting false expense
claims. The investigation determined that $105,375.89 in false invoices had been submitted
for reimbursement through the purchasing department. The director of purchasing and a
senior buyer were terminated.
Introduction
This section provides more detail on what the report is about and prepares the reader for
what is to come—that is, the body of the report. Unless there is a separate section, this is
where the purpose of the report will be explained, along with any required background
information.
EXAMPLE
This report documents the results of an internal investigation into the unauthorized use of
purchase cards at the Rockside Industries’ Wayside plant. It is intended for use by Rockside
Industries in its civil action for recovery of misappropriated funds and for making a
complaint to police.
383
384
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 20/21
On May 10, 2010, the security department received an anonymous tip on the fraud hotline
advising that an invoice for the purchase of a computer backup power supply (UPS) was
false and that the actual purchase was for a portable DVD player.
Investigation determined that there was no original invoice for the transaction on file;
instead, the file contained a photocopy of the invoice. The purchase was made with a
corporate purchase card issued to Randall Trait, a senior buyer at Rockside’s Wayside plant.
It had been approved by Robert Morton, the purchasing director. The vendor, ABLE Tech,
was contacted, and it confirmed that the invoice number on the file copy matched an
invoice it had for the sale of a portable DVD player.
The Wayside plant has a physical asset database in which all nondisposable items having a
purchase price of $200 or more are recorded. Each item is assigned a unique ID number and
barcode label, which are used to track the item. This database is maintained by the
purchasing director. There was no record of the UPS in the physical assets database, and no
ID number had been issued for any similar item in the past six months.
An on-site visit was made to ABLE Tech, which has been an approved vendor since June 12,
2005. The manager, Charles Front, advised that in the past six months,
4/10/2018 Bookshelf Online: Principles of Fraud
https://online.vitalsource.com/#/books/9781118233566/cfi/6/32!/4/2@0:0 21/21
PRINTED BY: [email protected]. Printing is for personal, private use only. No part of this book may be reproduced or transmitted without publisher's prior permission. Violators will be prosecuted.
384
385
