Terrorism

Final Project Unit 10 Kaplan University Paula Nelson Introduction to Fraud Examination CJ 125 John Dauser Finding fraud in the accounting department, using a bogus company name to steal money from the company. Investigating the accountant for taking money. The bogus name for a fictitious company is called Hercules. The accountant was caught and charged with larceny. September 13, 2010 Final Project Unit 10 A call from the local company in my small town was placed to the Fraud Investigations where I work as a Fraud Investigator. I was asking to help figure out why there was an increase with the expense records. The records were indicating more expense to the company, but nothing had changed over the period for this to increase. The company had different branches in several different locations in surrounding counties. This particular branch had the only increase over the time period with no changes. Looking at their financial reports and all invoices on record there appears to be a pattern with the customers. Each customer orders the same products from this company, with little changes and increases during the period of time. This company buys product from vendors around a wide spread area to fill their orders. The drivers deliver and pick up product for this company. They return with invoices and D.O.T. records from the truck. Scanners are used with the routes during deliveries, used by the drivers. They scan all products delivering and picking up. The records are air tight with product going out and incoming. Looking at the accountants records, she keeps the invoices in a file cabinet returned from all drivers. The scanners up-load all data into the computer system of product going in and out. The accountant is authorized to pay and sig all companies checks. All checks for the company are cut on Fridays of every week. Looking at the invoices there are checks being paid, but there is no invoices to this one company called Hercules. There are checks going out to them, but no scanner down loads of product going out to them, or being picked up. There are no D.O.T reports in transportation on record of the route. Speaking with the route supervisor in transportation, Verne has no records of the route being on schedule for the company. Going over all of Verne’s records for transportation, they are no delivers made. Back in the accounting department, all the vendors’ financial statements match. The payments have delivered invoices to back up the checks paid. Each vendor has a physical address and drivers records on file. The files include invoices, and computer documents recorded with dates and times. I find Hercules to be paid, but no supporting documents from transportation, to the accounting. It is time to contact Karen, the accountant for the company. Karen has agreed to talk about the increase in expense reports records. Karen, I’m doing a report, and investigating the company’s records. Can you tell me why there is an increase in the expense reports' No, I cannot answer that question. You are the accountant, correct' Yes, but I can’t say why. I think it is your job, to tell me where the increase is coming from. You are the accountant for Somerset Food Service. Karen, I found an increase with the payables. Have you noticed the increase' No, I have not. You have been authorized to pay, and sign all checks. Correct, okay let me go through this process one more time. You tell me if I have this correct. Orders from this company go through the phone system, or salesmen’s' Correct, that is how they run the company with vendors and salesmen. Okay, an order is place the day before or week before. The order is faxed or called in. The order is then turned into transportation. Is this correct' Yes transportation and the warehouse are one big department together. Okay Karen, so Verne being transportation supervisor is over that entire department' Yes, he is. From the delivery drivers, warehouse pickers, stockers, and route schedule. Okay, is Verne familiar with the entire operation in his department' Yes, he is a retired Marine, very hard core. What would happen if a driver lost an invoice' We have a computer system that wills printer another one that is we re-printer after the driver has delivered. Okay, now how do you know the customer received the product, or brought back vendors product to this warehouse' Well, when the driver checks in, he has a route sheet, the sheet details all stops. After he returns this takes place before they can clock out and go home. Okay Karen, so driver Number One lost Hercules invoice before he got back. What will you do' I will print out another one. Can you go to your officer, right now, and please get one from Hercules, please' Yes, wait just one moment. Karen returns, there are no invoices in my office from Hercules. They are missing, somebody must have taken them. Okay Karen, just go print one off for me, please. Do you care to do this' We just discussed the computer system can re-print, when the driver loses invoices. Karen breaks into tears at this point. Speaking out the words “I can’t re-print them from the system”. I ask her why' Because the company does not exist. It never did exist; it is a bogus name for a vendor, that I created myself. Karen, please keep in-mind everything we talk about is part of my investigation, and report. Yes, I understand. So, let me understand this. You made up the company name Hercules' Yes, I made it up, the company is a bogus name. You have created financial statements, and reports that this company owes them money' Yes, I have made false records stating we owe them money. Just state what takes place, during the day you pay vendors' I write Hercules a check for payment. The company does not exist. I deposit the checks in the bank. The account belongs to whom, Karen' It belongs to me. Let me get this straight, the account at the bank belongs to you Karen' Yes, it does. Okay, when you enter in the computer, on the books money paid to vendors, who do you state the amount was paid to' All the vendors the company owes. No, Hercules payments' It is written out to Hercules on the checks, but entered on the system as being paid to other vendor names. Looking through the records, I found traces of payments being made with no records to back it up. I found payments without invoices, or Verne’s driver’s records. Where are they Karen' That would be payments I took from the company. I changed the payee in the computer system. Yes Karen, I seen that during the investigation. I found the amounts going out, but no records stating what for. I looked through the files, no copies where filed in your office. Then I checked the computer system, finding no records in the system for the amounts. I checked the re-print and no invoices printed out for products paid in the increased amounts for Hercules. I checked the change in payees, in the accounting data system, there was no invoices supporting that either. For months it looked at a glance, the payments were legitimate going out. But the records did not support the products coming in or going out. For example: Captains was paid $10,500.00 for sugar pick-up, looking at the invoice I found $8,000.00 in invoices from them. Where did $2500.00 of over payment go' It was made up to cover money paid to the Hercules vendor. So, the records were doctored to look like you paid Captains, but you changed the computer documents. Yes, those were changed, and the invoices from the drivers were in the office locked up. What about the scanners, do you have anything to say about the scanned product. Reports are printed daily on scanner and the drivers. Most of the drivers use their scanners, some don’t. Some scanner lose batteries power during the routes. The drivers who don’t use their scanners didn’t report product through the system. The scanners that batteries ran out didn’t return with information either. It was easy to get around. So Karen, you were able to pass through the scanners information without getting caught. Now the invoices, how did you get past the invoices, do you care to talk about that' The drivers lose them, and I just put off printing them out, I let the other departments know I will later. Does later ever come' No, it doesn’t. What about credits' The department needs invoices at times to do their job, Karen how do you address this' I help other departments out, so I tell them I will take care of it, I have my work in good standing, let me help out. Karen, do you care to give a statement in full and sign it' Karen takes a moment and agrees to give a full written statement and sign it. She will be charged with Grand Larceny. Now all the above statements are made from a fictitious story, permitted to go into the company and figure out how they operated over a five day period. I have been given the basics on the company’s policy and procedure from office, warehouse, drivers, and scanning department. While rapping the report up, and figuring out in person how to find fraud scheme going on with the company, I was there at the best time. A real case happen there I want to write a brief report on. The owner of the company asks me to sit in on a problem that occurred during my five days there. A driver came back from his route, on the route he was at his first stop in Hazard, Kentucky. The small restaurant paid the driver cash. The amount for the delivery was $ 2812.12. The next two stops was charge accounts, the next stop was cash. The cash amount from the stop was $4254.79. On the stop in Corbin Kentucky was at a factory, during this stop the driver left his money in the truck while unloading. When he finished the order and got the invoices signed for charge, he called in that somebody had taken the money out of his truck, from previous deliveries. I was ask to wait for the driver to return, after a couple of hour the driver was back, he came in to driver check in. He turned all invoices and charge tickets to the clerk; there was also money in the form of cash, and checks. This was small amounts from other stops on the way back. The company owner called the police to meet the driver at the stop where the money was stolen out of his truck. The driver gave his story of unloading the truck at each stop, when he put his money in the truck it was in his driver’s box. After finishing up the stop where he missed the money, he assumed somebody got in his truck to steal money. He believed a previous driver followed his route, and removed the money from the truck. He gave this statement, and signed it in the CEO’s office. He was told after signing the statement to clock out and go home. He asks was he fired. The owner told him not at this time. After the driver left, the owner asks if I was interested in riding to the site. I jumped on this chance. When we arrived, there was an investigator at the site. The owner made the statement this would be good for me to see. We entered the factory site, where the driver made the deliver, then reported the money missing out of his truck. There was a camera in the parking lot, know body would notice. It was very small, and the footage was very clear. It showed the driver walking towards the truck about three feet from the back of the trailer. He gave thumbs up to a man with a uniform of the Food Service on. The man entered the truck cab, then walked to a parked van and drove away. It was a previous employee from the past, which worked for the food service. He was fired in the past months. The investigator called in for a warrant to be issued for the driver. The driver was in on the fraud. He took apart in the money being stolen from the company he worked for. He had this man to steal it out of the truck. On the ride home I ask the company owner had this ever happen before' He said they have lost money many times. This was the first time it happen, and was caught on tape. I was told that this would take time, and not to talk in my small local town about this, till the process was complete, and the news would come out in our town. The owner told he had to put camera’s in his warehouse, and transportation clerk’s office in the past couple of years. His driver’s and workers was stealing money dropped on late night office returns. His office help with the driver’s go out at 7pm. This gave them a chance to still money, the drivers collected and returned with it. The warehouse workers were a problem with stealing money. He stated there is a lot of theft in the food service. References: Somerset Food Service, Karen Accountant manager, Mac company owner 75%, CEO, Jack, Supervisor Verne, Computer Specialist Steve Most companies have problems with accountants and financial records. Some theft is done on the inside. The employees steal from their employer’s because they believe it is okay to do so. All records have a paper trail, technology with scanners back-up what goes out, and what comes in. Invoices indicate what customers ordered and received. Expense reports give information on increase, and decrease of company’s financial reports, and records. Cameras show evidence in theft, and a person’s story.