Lying, cheating and stealing. Economic
fraud is really nothing more and rarely anything less. The effects of
economic fraud rarely go unnoticed, and they are almost always felt by
a multitude of victims.
That's because economic criminals are
planners--some even master planners. They use regular business
practices and the law to their advantage. Their best schemes remain
buried deep within an avalanche of ledgers, journals, reports,
registration statements and database files. Frequently, the criminal
becomes adroit in covering their schemes beneath a mantle of
"respectability." No one would expect the "guy next door" to be a
cheat.
Success, at any cost, is the motivating
force behind the actions of the fraudulent offender. These "con"
artists, or "opportunists," are quick to see advantages and swift in
exploiting them. With the advancement of technology, the perpetrator
who is always on the run can "work" from the mobile office, making his
or her trail harder to trace.
Each year, taxpayers lose staggering
amounts of money due to economic fraud. And the gross measure of a
dollar looks only at the initial cost, not at the ripple effect such
losses can produce. Economic criminals are selective in choosing their
victims, but young and old, black and white, labors and managers,
business and industry--no particular group escapes their attention.
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Consider
these scenarios: the soon-to-retire worker is a target for bogus investment
schemes; the ambitious, undereducated striver is a target for business
opportunity schemes; the technologically unsophisticated is a target for
auto repair, home appliance and home improvement frauds; the middle income
citizen is susceptible to "vacation" property and "resort" property frauds;
senior citizens are vulnerable targets for retirement community and nursing
home frauds; governments are targets for bid-fixing, price fixing, procurement
frauds, false claims and a host of other deceptions.
The effects of economic crime are self-multiplying;
they frequently reach beyond the original victim and they carry their
own "ripple effect" across society-at-large. Consider, for example, the
contractor, who, with inside help, secures a major construction contract
on a public works project. First, he arranges the kickback--money which
would have gone to procure laborers and quality materials. Next, the contractor
"arranges" this winning bid because he has lied about the quality of materials
used. The ripple now widens to the issues of public safety, municipal
liability, and insurance liability. Finally, if defects appear once the
project has been completed, performance bonds and other secured guarantees
may be defaulted; injuries may result, and costly additional repairs may
be required. As lawsuits ensue, insurance companies, bonding agencies,
and ultimately the public treasury are left holding the bag.
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What has really happened here? First:
restraint of trade--two or more individuals have organized to deprive
government and the public of the right to a quality contract arrived
at through a legitimate, arms-length competitive bid. Second, bribes
have been paid by the contractors to "buy" the contract and the
government process has been corrupted. Grand theft may have occurred
because the materials used were below the standard grades and
specifications called for by the contract. The ripples move ever
outward. The financial losses escalate.
The point is: even the seemingly
isolated bribe or other fraudulent act can have massive effects. A
skilled Forensic Accountant can track the labyrinthine path of
economic crime and assist in rooting it out at the source.
K
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