You are auditing a bank, and someone provides you with an anonymous tip that an employee is embezzling money from the bank. You decide to investigate the allegation. Your interviews with other bank employees confirm that the suspected embezzler has been acting very strange lately. Some employees have seen the employee crying in the bathroom and acting strange in other ways. The bank recently downsized due to poor economic growth, yet the suspect recently bought a new Lexus. Based on some helpful hints from bank employees and through your own investigation, you discover that the mortgage taken out by the suspect three years ago for his personal home has recently been paid in full. After calculating the suspects net worth, you deter- mine that he has about $249,000 in income from unknown sources this year alone.

1. What are possible explanations for why the suspect (1) is experiencing emotional changes and (2) has had an increase in unknown income?

2. Can you conclude from these facts that the suspect has indeed been committing fraud?