Opportunity knocks for fiddlers and cheats

Attempts to profile a typical fraudster may point the finger of suspicion at completely innocent employees. Guy Clapperton learns that vigilance and caution can pay off


There are a number of profiling techniques to ascertain who’s going to commit a fraud.

KPMG has published evidence to suggest that the most likely internal fraudster is male, 36 to 45 years old, in the finance department or senior management and works in collaboration with colleagues.

According to RGL Forensics, 85 per cent of fraudsters are first-time offenders, high-level staffers do the most damage, and 67 per cent are men and 33 per cent women.

None of these descriptions is unique to fraudsters – if you suspect every middle-aged male in senior management and finance departments, you’ll have a very long list of possible criminals. What seems to make the difference is the opportunity.

CASE STUDY 1

£25,000 invoices and the bogus contractor

Geoffrey, a senior manager, defrauded his company of £400,000. His opportunity came from having oversight of a £20-million budget and the ability to sign off £25,000 invoices. He realised early in the job that there was an opportunity to pay sums from these invoices into a personal account.

He did it so that it looked as though the money was going to an independent contractor, who in fact did not exist. His motivation was debt and isolation from his partner: “I had borrowed lots of money and owed money to friends. My wife was terrified by the idea of debt, so I tried to solve it all by myself,” he explains.

The most likely internal fraudster is male, 36 to 45 years old, in the finance department or senior management

Once he had paid his debts, he felt trapped by his aspirations; he had become addicted to spending. “I got used to having money. I couldn’t leave home without at least £5,000 in my pocket.” He felt that his company didn’t value him and that it had a laissez-faire attitude to the rules.

The lack of financial controls allowed him to commit the frauds, which were detected when his employer brought in a new set of auditors. They traced a false remittance advice from his fraudulent company to a false address and the whole thing unravelled. He was imprisoned.

CASE STUDY 2

Pay-outs for fake insurance claims

Robert worked for an insurance company, which he defrauded of £65,000 by faking pay-outs on claims. When he received the money he would share it with friends, who encouraged him to continue the deception.

His opportunity arose when he realised his company wouldn’t check pay-outs of £750 or less. His motive was initially debt; he had only £100 a month left after all his repayments, but even when he had paid everything off he continued. “I just did not have enough money to do the things I wanted to do,” he says. “I had an addiction to spending.”

He also felt undervalued and believed he could have been better paid stacking shelves in a supermarket. He targeted certain files. “Third-party claims were collected loosely within case files, so if a file was checked, it could always be argued that the information had fallen out,” he explains. He put through about one fraudulent claim a fortnight; in two years he had one claim queried, said the documents must have gone missing and heard no more about it.

His wrongdoing ended when he returned from a holiday to be told his boss wanted to see him. He was sent to prison. He still doesn’t know what gave him away.