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Since the Beginning: Even founding employees can break bad

art1-6-16A number of times over the years, the investigators of ResultQuest® have been called in to scrutinize the activities of executives who were part of the founding group of a business. Sadly, in almost every case fraudulent activity was uncovered—usually determined to have evolved slowly over a course of years.

Most of this executive-level fraud involved manipulation of expense reports and/or misapplication of company assets. Typically, the offender exploited a position of authority and trust to carry out the theft. Top executives involved in setting up controls also know how to avoid the triggers that might uncover illicit activity. In addition, these executives can have the added advantage of being able to intimidate or reassign subordinates who might detect irregularities.

On the other hand, due to the stature of the individual, the scrutiny that might have otherwise been given was often neglected, and sometimes the activity was even quietly condoned and considered to be part of keeping an essential member of the team happy—just a cost of doing business.

Sadly, the decision to address the problem was usually put off until the matter began to affect the company’s financial position. By the time an investigation is commissioned, the scope and magnitude of the fraud can be shocking. The dollar value of exposure is nearly always proportional to the length of time served; i.e. the longer the tenure the larger the loss. The extent of the individual thefts also increase over time; as the perpetrator begins with small forays that build as boldness grows.

Some of the common schemes ResultQuest® has discovered involve:

  • Elaborate vacations masked as conferences
  • Expensive meals disguised as client entertainment
  • Equipment purchased by the company and converted to personal use
  • Fictitious vendor accounts and invoices
  • Camouflaged gifts for paramours

The experienced fraud investigators at ResultQuest® can help you tailor a comprehensive examination to identify and address concerns about executive-level fraud.   Call us at 713-781-9040 to discuss ways we can help you.