Fraud, Specifically Corporate Fraud, Is A Common Occurrence

In today's day and age sales workers are taught to lie and cheat to get a good price. Also studies show, greed is closely related to envy, they’re the evil step sisters of life. That same study shows, almost everyone in today’s society show traces of greed. Greed has an impact of destruction of relationships, and most times leads to loneliness. Greed seems to be a common motive of fraud. Fraud is the “wrongful or criminal deception intended to result in financial or personal gain”. Also executives of big companies have a goal to rip you off, to make the maximum amount of money

Internal fraud consists in “a type of fraud that is committed by an individual against an organization. [Furthermore], a perpetrator of fraud engages in activities that are designed to defraud, misappropriate property, or circumvent the regulations, law, or policies of a company”[8]. Not only has the incidence of internal fraud increased in frequency because of the availability of sensitive information such as client details or confidential business documents; moreover, this type of fraud is found in various types of organizations, ranging from corporations, public service institutions and financial institutions. Our analysis will concentrate on the most common and prolific types of internal fraud, namely identity theft, insider trading, loan fraud and wire fraud. Interestingly, PriceWaterhouseCooper conducted a survey that revealed that the “demographics of a typical fraudster are as follows: males (85% of cases), 31-50 years (72% of cases), reached high-school level (50%), Bachelor’s or post graduate degree (50%) and middle or senior management (52%)”[9].

Occupational fraud is defined as the use of a person’s job for individual enrichment through the purposeful mishandling or misapplication of his or her employer’s capital or assets (Wells, 2005). Occupational fraud can have a serious impact with far-reaching consequences. In 2004 for the Association of Certified Fraud Examiners (ACFE) conducted a survey that provided 508 usable studies of fraud for a total of over $761 million

In fraud committed against organizations, the victim of fraud is the employee’s organization. In frauds committed on behalf of an organization, executives usually are involved in some type of financial statement fraud; typically, to make the company’s reported financial results appear better than they actually are. In this second case, the victims are investors in the company’s stock. A third way to classify frauds is via the use of the ACFE’s occupational fraud definition, “the use of one’s occupation for personnel enrichment through the deliberate misuse or misapplication of the employing organization’s resources or assets” (ACFE, 2010). The ACFE includes three major categories of occupational fraud: asset misappropriations involves the theft or misuse of the organization’s assets, corruption involves the wrongful use of influence in a business transaction in order to procure benefits contrary to their duty to their employer, and fraudulent financial statements involving falsification of an organization’s financial statements for personal gain.

Fraud and corruption is one of the biggest issues that the society is facing and is also one of the most challenging issues that have yet to be tackled worldwide. Organizations end up losing a lot of profits due to the scrupulous nature of its employee’s fraudulous

Fraud is an issue that causes major scandals, although it is a very ancient scheme. Recent fraud events gave light to gaps that facilitated its events. Its extent was drastic by affecting financial markets that eventually trickled into global markets. Major organizations and countries worked cohesively and continue to address the gaps and, in effect, implemented strict compliance regulations to diminish and refrain fraudulent activities. Strict compliance regulations are examples of a fraud response plan the small family business could have implemented to refrain the perpetrators from fraudulent incidents, protect organizational assets and the organization’s going concern.

As we drill down into the world of identity theft a little deeper, the Association of Certified Fraud Examiners (ACFE) uses Cressey’s, “Fraud Triangle”, to assist in explaining fraud and how it can be applied to identity theft as there are three (3) factors in the triangle: Pressure, Opportunity, and Rationalization. (ACFE). In the pressure stage, this is usually the motivation of the crime. In the Opportunity stage, the would be criminal has an open window if you will to gain the vital information of the victim. In the final stage of rationalization, the would be criminal now transforms themselves into a modern day Robin Hood where they steal from the victims and give to the poor or in this case; the greedy.

Employee fraud often takes place when pressure (motivation), opportunity and rationalism are present. In fact, employee perception where failure to meet sales target might leave them unemployed and unable to settle bills for their family (Kelly, 2016). Furthermore, watching other co-worker committing fraud will most likely influence the employee to do the same because their mindset tends to persuade themselves that it is one of a way to meet their quota plus “everyone is doing it.”

Fraudulent behavior is an increasingly popular choice of lifestyle that everyday affects the lives of millions, whether they are the perpetrator or the guiltless party – both expose themselves to unwarranted future lifestyles. Undisclosed bonuses and salaries demonstrate the degree of unfairness that exists behind closed doors. Today, this research paper will focus on the importance of Sarbanes-Oxley and its lasting impact aiming to protect hundreds of thousands of entry-level employees or any other type of employee facing the possibility of being a victim of fraud.

According to Daniel F. Dooley (2008), a member of the Commercial Fraud Taskforce, financial fraud with private middle-market companies is on the rise. In fact, Mr. Dooley believes that he has seen more instances of fraud in the past two years than in the previous ten. He notes seven areas in which financial fraud has increased over the past few years:

In today’s society crime occurs everyday across all aspects of life. One particular crime is that of white collar and corporate level crime. It is important that we as a society study this type of crime in depth because many individuals believe that white collar and corporate level crimes are victimless crimes when in reality they have the potential to destroy major corporations and economies all with one single case. The news or media rarely talk about this type of crime because it is often difficult to understand and individuals typically lack interest in these types of cases. One particular case is that of Jordan Belfort. Dubbed the infamous “Wolf of Wall Street” Jordan Belfort is a former stockbroker who robbed investors of over $200 million dollars to create his wealth through “pump and dump” schemes, insider trading, money laundering securities fraud, and stock-market manipulation. As an attempt to further understand these complex cases I will break down Belfort’s case as far as the methods and means as to how he got started, his use of “pump and dump” schemes and other means as to how he acquired his wealth. In addition to this I will discuss the sanctions and disciplinary action that Jordan Belfort was given, how the case affected society and what new regulations were

The fraud triangle suggests opportunity, pressure and rationalization must be present for fraud to occur. Unfortunately, these three factors were present for Betty Vinson at World-Com. The situation stemmed from upper management not wanting to lower expectations or disappoint Wall Street with the financial performance of the company. As a result, Vinson was told to make false accounting entries from 2000 to 2002. There was extreme pressure from upper management and Vinson complied out of fear of losing her job. Although Ms. Vinson felt the entries were wrong and did question them, she rationalized the act and failed to recognize the criminal nature of her actions.

White collar crime is not a victimless crime. People’s lives can be ruined through the loss of a job, loss of savings and loss of assets. It is hard to not hear about white collar crime when looking at news. While not a justification for illegal actions, pressure is very high for companies to perform well and show growth. This pressure can lead people to commit crimes to falsify results or to enrich themselves. Laws and regulation, such as Sarbanes-Oxley have been implemented to provide greater transparency and accountability. However, the crime has become more sophisticated and complex. Many examples of such crimes involve greed and feelings of entitlement. One such

The perfect fraud storm occurred between the years 2000 and 2002 involving two of the largest energy and telecom corporations in the United States: Enron and WorldCom. It was determined that both organizations fraudulently overstated assets, created assets from expenses or overstated revenues, costing investors billions of dollars and resulting in both organizations declaring bankruptcy (Albrecht, Albrecht, Albrecht & Zimbelman, 2012). Nine factors contributed to fraud triangle creating this perfect fraud storm, and assisting management in concealing the fraud until exposed and rectified.

Over the past two years, corporate America has endured a plethora of fraudulent acts committed by those of high status within their respective corporations, most of which involve internal fraud. Internal fraud has two main aspects, misappropriation of assets and fraudulent financial reporting, with the focus of this discussion lying within the former. Misappropriation of assets is defined as fraud for personal gain. It is the most common type of fraud found among employees and frequently includes theft of cash and inventory.