Question

You are auditing a bank, and someone provides you with an anonymous tip that an employee is embezzling money from the bank. You decide to investigate the allegation. Your interviews with other bank employees confirm that the suspected embezzler has been acting very strange lately. Some employees have seen the employee crying in the bathroom and acting strangely in other ways. The bank recently downsized due to poor economic growth, yet the suspect recently bought a new Lexus. Based on some “helpful” hints from bank employees and through your own investigation, you discover that the mortgage taken out by the suspect three years ago for his personal home has recently been paid in full. After calculating the suspect’s net worth, you determine that he has about $249,000 in income from unknown sources this year alone. 1. What are possible explanations for why the suspect (1) is experiencing emotional changes and (2) has had an increase in unknown income? 2. Can you conclude from these facts that the suspect has indeed been committing fraud?

Answer 1

Requirement 1

There are many thinkable reasons why the employee has showed behavioral changes. There are also many conceivable reasons why the employee has experienced an upsurge in unidentified income. One purpose for the unidentified income is that a family member, such as a parent or sibling, could have approved and given the money to the employee, but there is always the likelihood that the employee is obligating fraud. With net worth information, it is impossible to know the reasons for the responsive change and the increase in unknown income. Before jumping to deductions, the detective should conduct extra investigations such as concocting a weakness chart to help associate all aspects of the “suspected” fraud, and should search public records such as obituaries or wills to see if a close relative recently died.

Requirement 2

It is impossible to determine from these evidences that the suspect has been obligating fraud. Conversion evidence is incidental. Since it is essential to prove intent to convict someone of fraud, incidental confirmation is helpful in obtaining admissions and other confirmation, but it is not adequate. To prove fraud, you usually need a admission, an obviously fake document, or a series of repeated similar fraudulent actions from which intent can be inferred.