The Background:

A national insurance company’s internal auditor noticed a suspicious check to a vendor that he did not recognize. The check had been authorized and signed by one of the company’s senior vice presidents. The auditor brought his suspicions to the attention of senior management. The decision was made to discreetly conduct an internal investigation on the transaction that generated the disbursement, to see if other similar transactions had been executed. Other mysterious transactions were discovered, but the scope of the problem was unknown.

 An investigator, now part of Lakelet Financial Forensics Group was called upon to conduct a thorough investigation and offer advice and assistance to get to the bottom of this problem.

The Problem:

The goal of the insurance company was to fully and discreetly investigate the situation, and that assets representing the ill-gotten gains could be located, secured, and returned to the company, making it whole again. Discretion was critical and the investigation was to be kept secret so as to not shake the confidence of its clients and investors in the company.  The company agreed that if they had reasonable assurances that the goal could be achieved; they would cooperate fully with prosecuting the embezzler(s) to the fullest extent of the law.

The Solution:

A discreet forensic audit of all transactions either authorized by or paid for with a check signed by the suspected senior vice president, was conducted in such a way as to meet the goals of the company and facilitate the prosecution of the alleged perpetrator(s). This audit included a full analysis of all internal controls associated with the disbursement of corporate monies.

The Result:

Not one, but two senior vice presidents of the company were found to have embezzled over $5.5 million from the company.  This was accomplished because of poor internal controls over the disbursement of monies and an elaborate network of shell companies, which had been created by the suspects. The fruits of their crime were located, secured, and eventually returned to the company making them whole again.

 Problems with the company’s internal controls were highlighted, corrective actions were proposed, and the company ultimately implemented these actions. Both senior vice presidents went to prison for approximately two years, followed by three years of probation.