Fraud specialist and published author Pamela Mantone presented "Fraud - Real Life Horror Stories" at the 2013 Decosimo Accounting Forum hosted by the University of North Alabama on July 19.

1. A Global Reach with a Local Perspective
www.decosimo.com
UNIVERSITY OF NORTH ALABAMA
2013 ACCOUNTING SEMINAR
FRAUD – REAL LIFE HORROR STORIES
PAM MANTONE | July 19, 2013

2. Employee develops a trusting relationship with
employer
Over time, employer discontinues monitoring the
daily activities of the employee
Employee takes money and/or other assets over
an extended period of time
Cash flow crunch
Attempted concealment
Inherent limitations in internal control systems
THE BIG PICTURE

3. Mischaracterization of expenses
Altering financial information and records
Theft of cash
Unknown P. O. Box number
CASE 1- HOW?

4. The
“Infamous”
Payroll Taxes
Dilemma
• Payroll tax
payments
• Payroll quarterly
payments
Expect the
unexpected!
THE DISCOVERY

5. Employee terminated
Company refused to prosecute
No arrest record on file for individual
Allows employee to continue practice
elsewhere
Total embezzlement amounts in excess of
$250,000
WAS IT WORTH IT - PROBABLY

6. Mischaracterization of expenses
Altering financial information and records
Theft of cash
Use of unknown 2nd signature stamp
CASE 2- HOW?

7. GL Posting
• Picked wrong
account to post
fraudulent
invoice
• Discovery by
CFO
Expect the
unexpected!
THE DISCOVERY

8. Arrest record for employee now on file
Civil complaint filed
Convicted of embezzlement and sentenced to
10 years, but allowed probation and must pay
restitution to company
Total embezzlement amounts in excess of
$433,000
WAS IT WORTH IT - NO

9. Mischaracterization of expenses
Altering financial information and records
Theft of cash
Use of dormant bank accounts
Unknown P. O. Box number
CASE 3- HOW?

10. The
“Infamous”
Payroll Taxes
Dilemma
• Payroll tax
payments
• Payroll quarterly
payments
Expect the
unexpected!
THE DISCOVERY

11. Civil complaint filed
Federal indictments filed
Convicted and sentenced to 18 months for tax
evasion and pay IRS
Convicted and sentenced to 8 years for felony
theft charges and pay restitution to company
No probation allowed
Total embezzlement amounts in excess of
$448,000
WAS IT WORTH IT - NO

12. Mischaracterization of expenses
Altering financial information and records
Theft of cash
Use of dormant bank accounts
Unknown P. O. Box number
CASE 3- HOW?

13. Civil complaint filed
Federal indictments filed
Convicted and sentenced to 18 months for tax
evasion and pay IRS
Convicted and sentenced to 8 years for felony
theft charges and pay restitution to company
No probation allowed
Total embezzlement amounts in excess of
$448,000
WAS IT WORTH IT - NO

14. Lack of fraud awareness training for employees
By-passing internal control procedures in
order to perform quality service to customer
Social-engineered emails
CASE 4- HOW?

15. What a
company
does not
want to
happen !
• Contacted by
3rd party victim
Expect the
unexpected!
THE DISCOVERY

16. Company filed insurance claim
Insurance company required forensic
investigation
Forensic investigation concluded no employee
collusion in wire fraud scheme
Company incurred unrecoverable costs related
to forensic investigation
Received restitution of $250,000 from insurance
company and now conducts fraud awareness
training annually
WAS IT WORTH IT - NO

17. Pam Mantone, CPA, CFE, CFF, FCPA,
CITP, CGMA
Senior Assurance Manager | pammantone@decosimo.com
Pam practices in the areas of audit and attestation with
emphasis on forensic accounting, fraud examinations,
financial institutions, not-for-profit organizations and
governments.
Pam has performed forensic and fraud auditing services for
organizations, including the gathering of forensic evidence and
testifying to findings. She also provides consulting services
regarding implementation of fraud prevention and fraud
detection internal control systems. She presents to various
organizations on a variety of topics including fraud and forensic
techniques, internal control design and weaknesses and auditing
techniques.

18. Using Analytics to Detect Possible
Fraud: Tools and Techniques
$95 | Pre-order and save on Amazon.com
Using Analytics to Detect Possible Fraud: Tools and
Techniques is a practical overview of the first stage of
forensic accounting, providing a common source of
analytical techniques used for both efficiency and
effectiveness in forensic accounting investigations. The
book is written clearly so that those who do not have
advanced mathematical skills will be able to understand
the analytical tests and use the tests in a forensic
accounting setting. It also includes case studies and
visual techniques providing practical application of the
analytical tests discussed.
Learn more: www.decosimo.com/mantone

19. Questions