Maria Feliz is the controller for the Getmore Global Hedge Fund. Getmore manages over $ 100 billion in investments and has a wire- transfer department with eight employees. All outgoing wire transfers undergo a rigorous approval process. But despite this process, Bert Hemp, the internal auditor, recently discovered that a series of unauthorized outgoing transfers had taken place over the previous 6 months, with losses totally over $ 1 million. Maria immediately ordered an investigation upon hearing about the problem from Bert. Bert then logged in the accounting system to show Maria the transactions in question. But then, to his amazement, the transactions were no longer in the system. It was as if they had never taken place. Maria followed up with the IT department to see if copies of the transactions could be recovered from backup files. But the IT department responded that there were no such transactions in any of the backup files, and there was nothing else they could do to help. Bert then logged into the company’s bank account used for the transfers and located the transactions in question. They were all transfers to a small private bank in the Grand Cayman. It took Maria a lot of work, but she eventually found out that funds in Grand Cayman had been in the name of an anonymous Cook Island trust and had already been for-warded to a small private bank in Zimbabwe, Africa, which was unreachable by phone or e- mail. A government official in Zimbabwe explained that the money had probably already been passed on through several more countries and that try-ing to recover it was a waste of time. Even if the money were found, Maria would not be able to get her hands on it without opening legal cases in every country through which the money had passed. In fact, the entire chain of transfers would have been litigated and reversed, one country at a time, beginning with the last company in the chain. More-over, each bank in the chain would probably fight the reversal, and the process couldn’t be completed in 200 years. Unfortunately for Maria, all employees in the wire transfer department shared a login to the bank’s wire transfer division. Therefore, the online bank records only showed that Getmore’s login had been used to authorize the transfers. The records did not show which employee authorized the transfer. “We’re out of luck,” Bert said to Maria. “We aren’t going to recover a penny of this money.” “I don’t care,” replied Maria. “Start an investigation and catch the person who did this.” They both agreed that the thief was probably one of their eight wire- transfer employees. No one else would have had the knowledge to pull off such a crime.

a. Develop a fraud theory for this case.
b. Develop a plan for gathering evidence testing your fraud theory.

  • CreatedFebruary 26, 2015
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