Creative Accounting

CFO submits falsified reports

The Theft

Annual bonuses given to top executives at this corporation were primarily determined by whether they successfully met operating budgets and profit projections. Faced with the prospect of losing his year end bonus, and knowing that he would be leaving the company, the CFO inflated the bottom line by understating expenses for various departments. The CFO submitted the fictitious financial reports and received his performance incentive. The real numbers didn’t surface until several months later, when the CFO’s successor uncovered the discrepancies.

When the CFO was recruited two years prior to this incident, the company didn’t perform a thorough background investigation, despite the fact that he was being offered a position of considerable responsibility and trust.

According to the CFO’s resume, his prior employer was a company that had been acquired and experienced a management consolidation. The CFO explained that none of the top executives he worked with were still with the firm and in a position to provide references. However, because of the CFO’s seemingly impressive credentials he was offered the position.

The Investigation

During Danbee’s investigation, it was determined that the company the CFO previously worked for had actually declared bankruptcy, and the assets, not the corporation, were acquired.

Further investigation revealed that one of the CFO’s prior employers included a family-held business, of which he was a stockholder, that had also declared bankruptcy and had been sued by numerous suppliers for fraud. [This position was not listed on his resume.]

Danbee Investigations also determined that the CFO had embellished his academic credentials.

It became clear that this executive had carefully crafted a professional history based on deception and misrepresentation.

The Outcome

All of these facts however, came to light after the CFO had resigned and moved out of state. Although he left no forwarding address, Danbee Investigations located him at his new company where he was in a similar position.

After learning the facts that had been uncovered during the investigation, and that his former employer was prepared to file a lawsuit, the CFO agreed to promptly repay the bonus.