Acme Manufacturing is a major producer of automotive brakes throughout the world, with international headquarters in Pueblo, Colorado. Acme has enjoyed rapid growth in recent years, primarily due to sales in other countries. A recently acquired subsidiary of Acme, ABC, has increased its sales far in excess of any other company in the industry. ABC's products are in demand because all parts used in its brake systems are recyclable.

ABC's president Jan Brown is a dynamic leader. Jan has led the company since its inception ten years ago and has been instrumental in establishing ABC as a premier "green company" in the auto industry.

Jan's office is made up of personnel with whom she has worked for years. Two of her relatives, her sister and a cousin, also work for ABC. Her sister, Connie, is her administrative assistant and has been delegated many functions by Jan, such as the hiring and firing of middle management personnel. Jan's management style is considered to be quite arbitrary and she is feared throughout the company.

Since the merger of the companies, Acme has proposed an internal audit of ABC. Jan has no issues with an internal audit of ABC, since she believes her accounting records are sound. However, Connie has argued that the company does not need an audit. In addition, Connie claims that the accounting records of ABC are in good shape, since she has personally interviewed and hired (with Jan's approval) the last three financial controllers. On average, each controller's employment with the company has been approximately one year. Since ABC was privately held, she didn't feel that it was required to have an audit by a Certified Public Accounting firm each year.

Connie's personal life in the last few years has been very busy and successful. She has a new boyfriend from overseas, owns racehorses, and has a newly built 8,000 square foot house in an exclusive part of town. She also has taken many trips to the Caribbean islands in the last few years, always using a charter aircraft. She, by all indications, is living well beyond her salary at ABC. Her boyfriend doesn't work and has no wealth of his own.

Recently, ABC had a cash shortage at pay date of $20,000. The company needed to rely on a credit line to make up the difference. Other payroll shortages have also occurred in the last year. Connie has increased the line of credit at the bank to cover up the shortfalls. Connie handles all financial deals with creditors and with the bank.

ABC's bank fees for cash transfers overseas have also increased dramatically in the last few years. Jan's cousin, Kim, helps to reconcile bank accounts for the company and is very close to Connie.

 

 

1. For investigative purposes, what evidence needs to be procured to substantiate a conviction for the individual(s) involved? List all documents needed, and indicate which items will require a subpoena or search warrant, assuming that you are a fraud investigator from a state agency authorized to conduct such investigations.
2. After obtaining and reviewing the evidence, do you feel that you are ready to interview the perpetrator(s)? What is your recommended approach to such an interview(s)? What questions (minimum of ten would you most likely ask?