Analysis of a fraud case
Fraud Report Instructions
Please complete a Fraud Report on a case of your choice. Please make sure you follow the outline below. I have also attached a student’s fraud report from last year. I have made notes in red to show you all the wrong things that the student did so you can improve your report.
To give a fraud report (10 points) on a published crime, website (newspaper or anything not found in your text book (Save as s Word document with file name, “Fraud Report-Smith (YOUR LAST NAME”).
The Grading Will Follow Each Outline Below
Miss one item in the Report and your grade drops from 10 to 9
Miss three items in the Report and your grade drops from 10 to 5
Fraud Report (See below)
Outline
Title(See below)
Summary
Tips
Theft
Concealment
Conversion
Conclusion
Please see student example below. Please review all the errors on this report to make sure you don’t do it on yours! Please make sure to follow the outline above!
Model of a Student Fraud Report
| Assignment for Course: | ACT-5717 |
| Submitted to: | John T. Sennetti |
| Submitted by: | |
| Students should call this “The Fraud Report” | |
Date of Submission:
Title of Assignment: REPORT
CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledged and disclosed in the paper. I have also cited any sources from which I used data, ideas or words, either quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course.
Student’s Signature: ___Felipe Smith ___
*****************************************************************
Instructor’s Grade on Assignment:
Instructor’s Comments:
CONFIDENTIAL
The Evidence for
The Wake County School
Fraud
(MAKE SURE YOU HAVE A TITLE)
(PLEASE USE THIS TABLE OF CONTENTS)
Executive summary……………………………………………………………………………………….1
Tips……………………….……………………………………………………………………………………….2
Theft……………………..……………………………………………………………………………………….3
Concealment………………………………………………………………………………………………….4
Conversion…………………………………………………………………………………………………….5
Summary……………………………………………………………………………………………………….6
- Executive Summary (STUDENTS SHOULD NOTE THAT THIS IS AN ABSTRACT OF WHAT YOU ARE ABOUT TO GIVE)
The Wake County School fraud took place over a period of two and a half years. The school fraud, located in Raleigh, North Carolina, consisted of several employees committing fraudulent activities in conjunction with one of their suppliers, Barnes Motor and Parts Co. located in Wilson, North Carolina. They generated false invoices for school buses and automotive parts and expenses. Together, the school board and supplier diverted an amount exceeding $4.8 million dollars by creating those fraudulent invoices, allowing school employees to obtain kickbacks from the supplier. Through the scandal, employees received cars, electronics, golf equipment and others items as form of payments. Although the school board did have the necessary audit software and proper internal controls in order to catch possible fraudulent activities and unusual patterns, they failed in detecting and pointing out red flags.
In the end, the school district discovered the fraud and proceeded to fire several employees. Harold Ray Estes was sentenced to 11 – 15 years and fined $500,000. Vern Hatley, the Transportation Director, is serving a sentence of seven to ten years. Carol Dail Finch received a sentence between five years ten months and seven years nine months. Some of money and property fraudulently received was recovered in order to recover some of its looses that occurred between July 1, 2002 and December 31, 2005.
http://www.wcpss.net/audit/summerford.pdf
http://www.wral.com/news/local/asset_gallery/1065906
(TRY TO HAVE MORE THAN ONE SOURCE.)
Felipe Smith
Date__
- The Tips (NOTE-THIS STUDENT CONFUSED RED FLAGS WIT TIPS. IF YOU DO GET CONFUSED YOU WILL LOSE POINTS)
There were numerous red flags that were not noticed:
- Payments to Barnes Motor & Parts increased 342% from 2002 to 2003 (an increase in excess of $3,700,000).
- 2/3 of the invoices from Barnes Motor & Parts were under the $2,500 bid limit, and did not have a corresponding purchase order.
- For two years, over 99.95% of invoices were under $2,500.
- On 24 occasions, there were 50 or more invoices from Barnes Motor & Parts with the same invoice date, and a majority of these invoices had consecutive invoice numbers.
- On June 10, 2003, as the fiscal year end approached, Barnes Motor & Parts submitted 466 invoices totaling $909,266.
[Here is the only Tip-the rest are supporting materials (above):
In the end, what sparked the tip were the school board and its concerns about a vendor’s sale of certain parts, equipment and supplies to the Transportation Department.]
The case was reported to the district attorney’s office. Wake County District Attorney Colon Willoughby said the questions were raised from within the department.
“In an internal review, the school system developed information that appeared to be irregularities in their purchasing of goods,” he said.
http://www.ezrstats.com/CS/CS_Wake_County.htm
http://www.wral.com/news/local/story/112905/
Felipe Smith
Date
III. The Theft
NOTE—THIS STUDENT DID NOT REALLY ANSWER THE QUESTION-THE THEFT WAS COLLECTING THE CASH IN THE INVOICES FALSLEY PAID
Hundreds of invoices show lots of transactions between Wake County Schools’ Transportation Department and a Wilson-based supplier Barnes Motor and Parts. In 1999, 12 percent of Wake County schools’ transportation supply budget went to the Wilson-based supplier. Four years later, that number was up to 66 percent, totaling more than $4 million. No other supplier even came close.
http://www.wral.com/news/local/asset_gallery/1065906/
http://www.wral.com/news/local/story/113029/
http://www.wcpss.net/audit/summerford.pdf
Felipe Smith
Date__
- The Concealment [THE ANSWER BELOW IS TOO VAGUE-WHAT WAS BEING CONCEALED IS THAT EMPLOYEES, NOT REAL VENDORS, WERE GETTING THESE PAYMENTS]
Some invoices describe the products ordered while others did not. SBI agents looked closely at the invoices, the descriptions, and what was actually received. It was discovered that fraudulent invoices were created in order to allow the school employees to siphon money from the school funds, fund false invoices for vendor, and in return receive kickbacks from vendor for their collaboration.
http://www.wcpss.net/audit/summerford.pdf
Felipe Smith
Date__
- The Conversion
(THIS IS NOT A GOOD EXAMPLE BELOW. “CONVERSION” MEANS CONVERSION TO CASH. WHAT WAS DONE WITH THE CASH IS IMPORTANT, BUT NOT AS IMPORTANT AS TO HOW THEY GOT THE CASH. GETTING THE CASH IS THE CONVERSION.)
Examples of items received through the false invoices and their related kickbacks included personal items such as automobiles, campers, golf carts, plasma-screen televisions, cards, trucks, boats, trailers and other high-priced items for themselves.
http://www.wral.com/news/local/asset_gallery/1065906/
http://www.wcpss.net/audit/summerford.pdf
Felipe Smith
Date__
This report reflects that the following Wake County school employees, holding several positions throughout the school, furnished a signed statement on December 11, 2009, indicating that they had stolen an estimated $4.8 million from the school district and concealed it by issuing fraudulent invoices to a vendor/business partner, in return for kickbacks.
The statements made by the articles are corroborated by the documentary evidence and the interviews of other witnesses described herein and their pertaining websites.
Felipe Smith
Date__
[NOTICE THE SUMMARY SUMMARIZES AND HAS NO EVIDENCE]
………………Answer Preview……………
Members of Angel Food Ministries’ Founding Family Sentenced – http://www.irs.gov/uac/Examples-of-Corporate-Fraud-Investigations-Fiscal-Year-2013.
Summary of the case
Wesley Joseph (Joe) Wingo and his son, Andrew (Andy) Wingo and his wife Linda Wingo, the founders of Angel Foods Ministries (AFM) were sentenced for taking part in illegal financial activities that involved their company. Joe Wingo received a 84 month prison period after pleading guilty of a conspiracy to engage in money laundering. He was further ordered to forfeit $1,503,285 and also pay $15,000 as a criminal fee. Joe Wingo on his part received a 84 months jail term penalty. Just like Joe, he was also ordered to forfeit $2,400,000. This was after he pleaded guilty of one account of intentions to commit……………..
APA
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