Procurement and billing fraud consists of various types of deceitful activities within the purchasing and payables processes of a business. These malicious acts can include the seemingly routine selection of vendors, the awarding of business, the payment of invoices and other similar functions. Since these tasks ultimately involve the disbursement of company funds to third parties, all steps within these processes are susceptible to fraud. These types of frauds generally fall within one of the following categories:
- Procurement Fraud
- Billing Fraud
Procurement and Billing Fraud
Mr. Peng was employed by the Canadian Transportation Association (henceforth referred to as the CTA), and was responsible for maintaining the structural integrity of the train tracks that were spread across the country. For the previous 10 years, Mr. Peng had been engaging in fraudulent acts – specifically, billing fraud-by sending the CTA monthly invoices for parts needed for the train tracks. These invoices were sent from ‘Nail’s Re US’, a company that he had registered, where Mr. Peng was the sole director and officer.His scheme remained intact because the contract had been awarded to a company with a similar title: ‘Nail R US’. They were procured to provide the equipment that would be required to repair the train tracks.
Mr. Peng’s scheme to defraud the CTA remained undetected for a prolonged period of time. As his thirst for greed continued to consume him, he wrongfully assumed that he could ‘up the ante’ and attempted to defraud the CTA to an even greater extent. When greed and desperation set in, chronic fraudsters tend to believe that they will not be caught and exposed.He went on to create fake invoices, using his registered company as a sub-contractor to the legitimate company that had been awarded the contract, ‘Nail R US’.
Mr. Peng was able to continue with his acts of deceit and fraud until his retirement. It was then that the new acting manager (who had temporarily assumed the role of Mr. Peng) questioned the authenticity of ‘Nail’s Re US’, since it had become apparent that two companies with very similar names were routinely billing the CTA for the same products. The payment for these products was being sent to different bank accounts, at different financial institutions. The new acting manager knew that ‘Nail R US’ was the approved vendor, and so it further called into question the dealings of ‘Nail’s Re US’. The acting manager decided that the best course of action would be to retain forensic accountants to further investigate.
Relevant Evidence:
- Invoices submitted
- Banking records of the suspected fraudster
- Electronic Communication, such as text and email
- Interviews with the suspect and other relevant parties