Prosecuting internal fraud

Would it surprise you to think that prosecuting workplace fraud is actually one of the best ways to discourage it?

We were able to uncover a theft of $450,000 for an insurance company. The account director had come across something that didn’t seem right, which he discovered during the company’s fiscal year-end. He’d decided to take a big client out for lunch and prior to the meeting had looked at the client’s files. Several claims had been made by the client, which he mentioned to the client over lunch, they said they actually had never made any claims during the year.

It turns out that the account manager responsible for that client had managed to manipulate the system and make the claims on his own behalf. How did she do it? By changing her own email address to that of her client. She was able to send herself an email under the name of the client, indicating that their banking details had changed. The new banking information was actually her own account, not the client’s.

She further created her own evidence by using the company letterhead and drafted a letter confirming the change to update the bank e-transfer information. Then, she was ready to make her first fraudulent claim, which was processed without any issue.

Since the account manager had been approved to OK claims up to $50,000 it was never questioned. She rewarded herself by making several smaller claims – every month putting through one for between $25,000 – $50,000.

We were able to prove and document the money going into her account and prepare for prosecution. However, we were called off the job because the company decided instead to fire the manager and not pursue the issue any further.

For us, it was disappointing. We also later learned that she’d been having an affair with some of her superiors and threatened to reveal the affairs to their wives if they prosecuted her. She got away with all of that money through blackmail.

The problem with “solving” a problem this way is that the only thing it really succeeds in doing is telling employees that it’s OK to steal and no harsh consequences will come out of it. According to the Association of Certified Fraud Examiners, six per cent of business income is lost to internal fraud.

There are likely untold numbers of companies that don’t uncover it because fraud is designed to be covered up. Finding fraud in a company and proceeding with prosecution is the right thing to do. Consider it a plus, not a negative.

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