It is nearing the end of 2022, and like every other year, fraud is the cases worked on by the Sage Team. The Sage Team has been hired to handle fraud cases by corporations, attorneys, and accounting departments. We saw a lot of occupational fraud throughout the year, so we want to educate you more about this specific fraud.
Occupational frauds included asset misapplication, corruption, and fraudulent financial records. By far, the most significant area for fraud relates to Asset Misapplication mainly because of the abundance of opportunities. [1]
Occupational fraud: Asset misappropriation involving employee stealing and misuse of resources is the most common, with 86% of the cases reported with a median loss of USD 100,000. Corruption was reported at 50% with a median loss of USD 150,000, and financial statement fraud was at 9% with a median loss of USD 593,000.
Most cases relate to Asset Misapplication because that is where the money is, and Sage Investigations specializes in following the money. We have been following the money for 50 years now.
Below lays out how we do our job.
1. Meet with the client
Our investigation begins with a client meeting. We thoroughly interview the client and determine who is suspected, what activity is suspected, why they are suspected, what period of time they became under suspicion, what their responsibilities are, what assets or records they control, and the estimated dollar value of the theft. This information helps us develop the knowledge of the suspected fraud, learn if we can help, and if we can, we then define the scope of the investigation and secure a signed contract and retainer.
2. Meet with the client's attorney
We need to learn what the attorney wants from the investigator to help him develop his client's case and determine what type of case the attorney will be pursuing and what evidence he will need. We always want "Attorney-Client Privilege" so communications remain confidential between the attorney and his client and to maintain the "Attorney Work Product Doctrine."The doctrine is held by the attorney and protects the ideas and strategic decisions made concerning a case by guarding information revealing the thought process of an attorney, a client, and their agent (Investigator). These communications include documents and tangible things prepared in anticipation of litigation, including communications by text, email, letters, memorandums, or notes. The Sage Team then attempts to provide the documents and testimony available.
3. Secure records
We then obtain and review the records in existence that will aid in proving or disproving the allegations. Conduct a background investigation of the subject. Obtain any contract or financial disclosure made to the client. Obtain any financial records related to the subject, including payments to the subject, bank account records of the client, credit card statements, and credit card expenditure records (Excel reports or reports from travel expense software and receipts). We then obtain the depreciation schedule from the accounting department or the client tax return preparer to account for purchased assets.
4. Review of records
We then review and, if necessary, analyze the records. We use a timeline to follow the transactions. We compare the credit card statements to the reports and watch for images of documents to be photoshopped, and descriptions and amounts can be changed using Adobe software.
5. Solve the financial puzzle
The Sage Team uses DIO proprietary financial investigative technology to analyze financial records, including bank and brokerage accounts and credit card records. We enlist the client’s help to establish a timeline for expenditures and to provide an explanation of the expenditures.
Every investigation or examination is different, but we develop evidence efficiently and effectively to help clients solve their problems. The analyses we prepare are well documented with exhibit references and are developed with the anticipation that the case will be tried.
[1] Occupational Fraud 2022: A Report to the Nations
