Fraud Investigation Case Study: Kickback Scheme Defrauds Company

Fraud Investigation Techniques

Fraud Investigation Case Study: Kickback Scheme Defrauds Company

Hundreds of Thousands in Kickbacks Defrauds Company

Elaborate kickback scheme defrauds multi-national of hundreds of thousands of dollars.

An Asian multi-national manufacturer contacted us regarding an employee, a quality-control engineer, they had a suspicious feeling about. The employee’s engagement at a customer site in another state had gone significantly longer than usual and expenses were out of the normal range. A senior executive at the company related to us that, “it seems like he is finding reasons to stay there.”

The investigation focused on three primary areas:

  • A forensic investigation of the employee’s personal expense invoices and project invoices with various staffing agencies used on sort jobs.
  • Research to identify undisclosed bank accounts and corporate affiliations.
  • Field surveillance and GPS to track the employee’s activity in a company car and identify any personal relationships in the area.

 

What we Uncovered

The Investigation found fraudulent invoices being submitted for reimbursement and uncovered a sophisticated “kick-back” scheme where contracts sent through a specific staffing agency would result in a payment, based on a percentage value of the contract, deposited to a bank account registered to an undisclosed LLC owned by the employee.

Fraud Investigation Case Study

The investigation also revealed that the employee was submitting fraudulent time cards indicating he was working at the customer site when he was at his home over 300 miles away.

Fraud Investigation Wrap Up

The employee’s fraudulent activity cost the company significantly in terms of money, time, employee morale, and reputation with its customers. The employee was able to implement and carry-out this scheme over the long-term due to the absence of simple and affordable controls and systems that would have served as a “trip wire” alerting the company to suspicious activity much earlier in the process.

LRI has designed an affordable proactive fraud assessment for mid- to small-sized companies to specifically identify these areas of “opportunity” and recommend cost-efficient, proactive solutions to mitigate your company’s risk of fraud.

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