Fraud Talk: The $200,000 Car – When Fraudsters Use Audit Guidelines to Steal

In this episode of the ACFE’s monthly podcast Fraud Talk, the president and co-founder of Verracy, Mary Breslin, CFE, discusses a case she investigated where an employee stole $1.8 million after being overly interested in auditing processes. After being tipped off when she saw he purchased an expensive sports car, she shares lessons she learned from the case.

In the excerpt below from the full transcript of episode 111, Mary discusses when she first noticed an unusually expensive car in the company parking lot and found out it belonged to an employee, “Charlie,” who had been hired to help sell old fleet vehicles. Download the full transcript in PDF form or listen to the episode at the bottom of this post.

Mary: If you ever want to know what's going on, there's one person you always want to go to, and that is the receptionist because everything that's happening in an organization, that receptionist is probably in one way form or another privy to seeing part of letting people in and out of the building, they know.

I spoke to her and I asked her, "Hey, I just passed this gorgeous Audi R8 in the parking lot, still has dealer tags on it, whose car is that?" She's like, "Oh, yes. Oh, everybody's been about that, that's Charlie's." I'm like, "Okay," and so I'm walking to my office. I'm the chief audit executive, so I know how much money everybody makes. We do payroll audits, we do executive compensation audits. I knew how much everybody makes.

I walking to my office and I'm doing the mental math, I'm calculating in my head. All I can think about is, "If Charlie just bought a $200,000 car, he's either in debt up to his eyeballs or he's living in a van down by the river. That's the only way. Or, option three is somebody, maybe us, paying for it," right?

I go to my office and I start thinking about Charlie. One of the things that I am thinking about is how audit-friendly Charlie was … Charlie probably came back to myself and my team … in hindsight, I realized something, he would not just come to me, which would normally be what a senior manager would do, would come to somebody who's on their level.

He would often just go to my employees, to my team and ask, "Hey, I read this in the audit report, I read this. Right here it said like, 'This could lead to fraud,' so I was really curious about that. How can it lead to fraud?" Multiple times he came back over and over again, overly interested and, "What about this? What about that?" with the audit report. He was clearly literally using that report as a pathway, a road to success; not in the way we thought, unfortunately.

Now, just because Charlie had bought an expensive car didn't mean I could start a fraud investigation on that. I didn't have predications. I decided we were going to start looking at some of the follow-up action items and a few things started to pop. Again, I wasn't sure I really had a case to start a fraud investigation, but I thought, "You know what? Let me just talk to him to tell him I want to follow up on some of the items and stuff."