Design a Fraud Case

Design a Fraud Case

Introduction

Fraud and financial offenses are a type of larceny/theft that results if a person or organization takes property or money or even use them in an illicit manner, with an intention to gain benefit from it. Such offences typically include some type of subterfuge, deceit, or abuse of position of trust, which differentiate that from a common theft to robbery. In today's complex business world, financial and fraud offences can take different forms, including forgery, money laundering, credit card fraud, and embezzlement (Pickett & Pickett, 2002; Find Law, 2013). Considering the significance of fraud cases prevention, this essay illustrates a fraud case related to a bank and their Relationship Manager (RM). The essay covers fraud scheme, its detection, things that went wrong, and how they could be prevented.

Fraud Scheme

“The relationship manager of a bank is found guilty for misleading the bank by bringing bankrupt clients in order to achieve his target and also for taking bribery (gifts and money) from those clients”.

A bank set a target for their Relationship Manager to bring wealthy clients who take the total of 20 million in a year as credit facilities from the bank. The relationship manager can get bonus only by achieving this target. In order to achieve the given target for getting a bonus, the relationship manager committed a fraud crime involving fraudulent balance sheet and bribery. Bank had the policy of “No Tangible Guarantees; they only accept 'Audited' balance sheet and high turnover of customers. To fulfill bank policies, the relationship manager had been bringing clients who were bankrupted and represented their fraudulent (fake) balance sheet audited by 'unknown' audit firms. Furthermore, he also cheated the bank by giving fraudulent invoices that represented high turnover of customers. The relationship manager was guilty for forcing his clients to give him gifts and pay bribes. The laws define Bribery as the acceptance or offer of anything (gifts or payment of money) that holds value in exchange for influence on a public/government official or employee (Find Law - Bribery, 2013). So, this description of bribery by legislation clearly makes it evident that relationship manager took bribes from his client for providing them bank credit facilities, which they may not get otherwise.

Secondly, there are also legislation regarding Financial Statement fraud. According to laws, this fraud occurs when a person or entity engage in certain practices to hide or maneuver the accounts of a company for helping it continue to remain attractive to investors. For countering financial statement frauds, the United States Congress initiated the Sarbanes Oxley act. This type of fraud may be actionable under the False Claim Act as well as the Dodd Frank Act (Walton, Haller, & Raffournier, 2003; Rezaee & Riley, 2009). Taking account of such high considerations of financial statement frauds, it can be stated that the relationship manager is guilty of representing fraudulent balance sheet of clients to the bank as well as showing high turnover of customers, which was not the ...