Fraud and Forensic Services Case Studies

“The Next Steps After Discovering Fraud”

The Client Situation:
The management of a regional company discovered that hundreds of thousands of dollars were being stolen from the money room that is at the center of its revenue collection operations.

The GAP Approach:
The GAP Team was retained to:

  • conduct financial and operational audits
  • determine how the thefts occurred
  • design state-of-the-art loss prevention measures
  • manage the money room, after all the senior money room supervisors were suspended

The team made a detailed analysis of manual records and electronic data, conducted financial audits, reviewed internal controls, and interviewed all relevant personnel.

The Benefits:
GAP was able to:

  • identify the money room’s vulnerabilities
  • quantify the amount of losses
  • determine how the thefts and other frauds occurred
  • create enhanced internal controls to prevent future defalcations
  • compile sufficient evidence which resulted in successful prosecution

The team also provided the needed interim management support that bridged the operational gap until the company was able to obtain replacement personnel.

During the course of this assignment, GAP discovered and put an end to theft schemes that were uncovered. Because of lax internal controls, there were a myriad of opportunities for both supervisory and clerical personnel to steal fare revenues, through a variety of schemes ranging from sophisticated to mundane. By working closely and cooperatively with management, the team was able to design and recommend a series of enhanced financial and internal controls that enabled the company to end this and other improper conduct.

“Expert Witness in Check-Kiting Scheme”

The Client Situation: 
A Midwestern bank suffered significant losses due to a check-kiting scheme.

The GAP Approach: 
A law firm representing the bank required an expert witness familiar with check-kiting schemes and the standard banking practices involved to identify and halt such schemes.

The GAP consultant was retained to:

  • determine the timeline for the check-kiting scheme
  • diagram the flows of the checks between 3 banks and 2 related companies
  • interview all related parties to determine the level of knowledge of the activities
  • Investigate the role the primary bank played in aiding and abetting the continuation of the check-kiting scheme

The Benefits: 
The GAP consultant was able to:

  • determine that the primary bank involved did not have an effective system of internal controls to identify suspicious activity
  • conclude that the bank’s policy of paying checks drawn on uncollected funds contributed to the success of the check-kiting scheme
  • discover a number of red flags highlighting suspicious activity on the checking account that existed over a multiple year period
  • discern that bank management accepted uncorroborated representations by the client which enabled the scheme to continue and escalate
  • provide industry and subject matter expertise