In his own words, Daniel Jones was The Dude. With his waist-long dreadlocks, part-time rock band, and well-paid job managing a companys online search directoryhe seemed to have it all. Originally from Germany, Jones, now age 32, earned his doctorate and taught at the University of Munich before coming to the United States, where he started his career in computers. In 1996, Jones started working with the company as a director of operations for U.S.-Speech Engineering Service and Retrieval Technologyworking on a new, closely guarded search engine tied to the companys .net concept. The company allows employees to order an unlimited amount of software and hardware, at no cost, for business purposes. Between December 2001 and November 2002, Jones ordered or used his assistant and other employees (including a high school intern) to order nearly 1,700 pieces of software which had very low cost but were worth a lot on the street. He then resold them for reduced prices reaping millions. When items with a cost of goods sold of more than $1,000 are ordered, an e-mail is sent to the employees direct supervisor, who must click on an Approve button before the order is filled. In no individual order was the cost of goods more than 1,000he made sure none of the orders required a supervisors approval. The loosely controlled internal ordering system reflects the trust the company puts in its employees. In June, FBI agents said they saw Jones exchanging a large box of software for cash in a department store parking lot. The FBI contacted the companys security and began monitoring Jones bank accounts. Previously, one account with his bank had an average balance of $2,159. In a short time, however, the average balance ballooned to $129,775. Another account at another bank showed irregular deposits totalling $500,000none of which appeared to be from any legitimate income or other source. Investigators also noted that Jones purchased a Ferrari F355 Berlinetta, a Jaguar XJ6, and traded in lesser vehicles for a Hummer, a Mercedes 500SEL, and a Harley-Davidson motorcycle. He also bought an $8,000 platinum diamond ring, a $2,230 wristwatch, and a $4,000 bracelet. You figured that I like big boys toys by looking at some of my pictures, Jones wrote on his personal Web page. I just cant resist. The Dudes Web page includes a camera for monitoring his cat and photos of his yacht, cars, and other treasures. For a relatively low-level manager, it was an impressive collection. But at his company, where teenage software engineers can earn more than company directors, no one batted an eyelid. A neighbour across the street from Jones said that he was clearly wealthy, but not flamboyant with his money. He described Jones as an intelligent man who didnt flaunt his education, would loan neighbours tools, and was always friendly. The neighbour was surprised to hear the accusations against someone he called his friend. All he knew about Jones was that he was a good neighbour who loved cars. He was very, very helpful. The few times I had problems with my PC, hed come and help straighten them out, the neighbour said. They are just ideal neighbours. I feel terrible for him and his wife." Jones and his wife lived in a modest 1960s split-level home. In 2001, he joined the city's Rotary Club, "where he seemed more outgoing and personable than the stereotype techie," said a local jeweller and immediate past president of the club. He seemed like what I would expect a genius software developer to be."

1. In the scenario, Jones' employer has been putting more emphasis on controlling cost. With the slowing of overall technology spending, executives have ordered managers to closely monitor expenses and have given vice presidents greater responsibility for statements of financial positions. What positive or negative consequences might this pose to the company in future fraud prevention?