Investigative Skill and Computer-Assisted Forensics Help Uncover a Fraud’s Hidden Scope
SITUATION: Amid concerns of inventory theft and asset misappropriation, an equipment dealer hired our team of financial fraud investigation specialists to perform a forensic examination of one of their branches.
STRATEGY: We met with corporate and branch management and gained an understanding of the company’s sales and inventory process. As our discussion unfolded, it became apparent that a sales manager may have been involved in a scheme to misappropriate funds and inventory from the equipment dealer.
Our task then became to assess the likelihood that a fraud had been committed and if so, develop evidence, quantify the misappropriation and prepare a proof of loss for insurance purposes. Our first pass traced the transactions through the sales process. Unfortunately, the company’s sales system maintained only partial records. We needed to go deeper to obtain the information we needed.
With the assistance of our computer forensic expert, we were able to extract data from the sales manager’s computer and locate evidence of sales activity that was no longer available on the sales system. With the uncovered sales activity, our team deployed advanced data analytics to track trends and identify the specific transactions related to the misappropriation schemes.
We obtained supporting documentation from customers, including evidence of payment. Using the evidence extracted from the sales manager’s computer and customer supporting documentation we were able to document the flow of transactions for the initial quote to the customer invoice and payment to identify evidence of the misappropriation of customer payments and company inventory.
RESULTS: The client utilized our report and accompanying exhibits to file an insurance claim and recover its losses. In addition, our work was shared with local law enforcement officials, who subsequently filed a criminal complaint against the now former sales manager. As a trusted partner, the FSS team continued to provide ongoing support to the company throughout the legal proceedings.
The misappropriation case is a prime example of how modern forensic examination techniques and financial fraud investigation expertise combine to uncover relationships between people, events and data within financial records—even when the trail of evidence initially appears incomplete.