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Trudy Newkirk
Forensic CPA


Most instances of occupational fraud occur in companies with less than 100 employees.

This is usually a direct result of lack of separation of duties, such as a bookkeeper handling all tasks in the accounting system.  See the following case studies:

In a case of employee theft, an accounting employee for a small business diverted business checks as they arrived at the company, depositing them into her own bank account over a two-and-a-half year period.  Her employer did not catch this scheme until the employee quit and started the same scheme at another business.  Her ploy was discovered a month later by her new employer, who called the previous employer to relate the details of her scheme.  She had stolen more than $800,000 from the now-bankrupt company.

A corruption case involved Paul J Silvester, former state treasurer for Connecticut, who admitted accepting cash kickbacks in return for placing millions of dollars in state pension investments with certain equity funds.  Mr. Silvester was sentenced to 51 months in prison for taking bribes in return for investing $527.5 million from the state pension fund in five investment funds.

The collapse of Enron’s house of cards, involving fraudulent statements, is estimated to have caused a loss of about $70 billion in market capitalization to investors, employees and pensioners.  It’s reported that shareholders have lost $460 billion in the Enron, WorldCom, Qwest, Global Crossing and Tyco debacles.

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