Fraud Scenario #1 You have been called in to investigate a suspected case of pilferage at CNH Manufacturing Company. In reviewing departmental costs for the previous year, the president and owner of the firm, Devika Madison, noticed a 36% increase in office supplies among all departments of the organization. However, the company has only experienced a 4% growth rate. In an attempt to determine what was causing this large increase in office supply usage, the president went into the company records and found a number of invoices for each department that showed some unusual purchases (i.e., small electronics not typically used in the organization, purchases of a new printer every 2 or 3 months). The president sat down with each departmental manager and in every case the manager was able to identify the valid office supply invoices (i.e., containing items they authorized, received, and used) and the ones they had never seen before (i.e., containing items never authorized and never received). In each case, the bogus purchase invoices were approved for payment by the company purchase manager, Jack Simpson. Additionally, the documentation trail also indicated Jack personally signed for each of these shipments. Additional information on your suspect, Jack Simpson, is as follows:

36 years old, divorced 10 months ago.

10 years with the company. Originally started as a factory line worker and has worked his way up to the purchase manager position.

Recently started wearing expensive looking clothes and now drives a new silver BMW convertible.

Recently started smoking. Some employees have also smelled alcohol on his breath first thing in the morning or right after lunch.

Likes to socialize. On more than one occasion has picked up the entire bar tab for the Friday night employee happy hour after work.

His last three vacations have been to Las Vegas. Many of the other employees in the office noticed he is not usually in a good mood right after he returns from vacation.