Mr. Brackens starts calling you every day to find out whats going on in the audit. You let him know that its coming along and how appreciative you are of the cooperation. He lets you know that he wants to be informed of everything you find in the audit. He doesnt want to wait until the report goes out, so if there are problems in this area, he wants to be able to fix them right away. He lets you know that he has been a loyal employee of JMC for a very long time, and he wants his department to be the most efficient in the company. He expects a call from you every day until the audit is over. You go to human resources and review the employee files for the purchasing department. They follow. There is nothing in the files that indicates that anyone is having financial problems. You perform a public records search on Thomas Brackens. There isnt a whole lot on him. He has owned two homes, one on Twin Rivers Road with Diana Brackens and is currently assessed at$125,000 and second one on River place Drive with Laura Brackens and is assessed at $300,000. He is divorced from Diana and pays no alimony or child support. He is responsible for Dianas house payment, which is approximately $485 per month. The house is just about paid off, only 3more years and hes done. Diana is responsible for the payment of real estate taxes and utilities. The divorce papers do not give you a hint as to whether or not it was amicable, but he remarried shortly after his divorce was final. He also owns two cars, a Lincoln Town car and a Lexus SUV. The cars are approximately 3 years old and paid for. He also owns a 24 foot sailboat that he keeps on Lake Travis. He has owned the sailboat for five years. Performing a corporate records search, you find that Brackens is listed as the owner of Lantern Co. His son, Thomas Jr. is also an owner. Searches on the other employees have not turned up anything unusual except you find that Angela Harkins husband works for Oak Hill Distributors and has for approximately five years.

Has fraud occurred? Why or why not?

Who are your suspects?

What is your fraud theory?

How will you prove it?