CASE STUDIES
PURCHASING EXECUTIVE FALSIFIES INVOICES TO CONCEAL $320,000 FRAUD
The Theft
This retailer had 42 stores, all of which received direct shipments from vendors. After a store received a delivery, the receiving paperwork was forwarded to corporate headquarters, at which time the manifests and invoices were reviewed for approval.
With the participation of a vendor, a senior purchasing executive would carefully forge numbers on the receiving documentation by increasing the quantities received by the stores. If, for example, the store paperwork indicated that it received 140 units, he would change the 4 to an 8, so it now showed that 180 units were received. He would then have the vendor submit an invoice for the inflated quantities of product, which he would approve for payment. The vendor would then kickback a percentage of each overpayment to the purchasing executive.
The Investigation
After having their accounting firm conduct a financial audit and finding no explanation why gross profit was unusually low, the CFO contacted Danbee Investigations.
After a comprehensive investigative analysis of the company’s internal controls, systems, and paperwork, Danbee representatives uncovered numerous discrepancies. When it became clear that certain documents were falsified and fraud had been committed, corporate legal counsel was provided with the evidence compiled by the Danbee investigators.
The Outcome
The purchasing executive was terminated and the vendor was barred from doing business with the company. Since the purchasing executive’s departure, gross profit margins have returned to normal levels.
