Fraud Investigation

Jul 22, 2019 | 0 comments

Jul 22, 2019 | Miscellaneous | 0 comments

Fraud Investigation

Fraud is a deliberate trickery that is made for individual advantage or an offense to the other. The definition of fraud differs depending on the legal authority (Gottschalk 1). According to Levi fraud can both be categorized as a civil war violation as well as a crime. The majority of tricks are deceitful, even though those that are not for individual gains are not categorized as technical frauds (11).

The most common fraud today remains to be the defrauding of money, other frauds are also present in science, art, and archaeology. In many cases, the act of lying has been termed as fraudulent, but on a lawful basis, lying is just a small tip of the real fraud (Brytting, Minogue &Morino 9). In the case of fraud, there has to be monetary damage and a measured falsification of the product condition.

Gottschalk illustrates that besides misrepresentation, the fraud offenses also comprises of false statement and deceitful conduct (4). The core reason for fraud is for the fraudster to gain something of value at the end of it which is usually money or property (Gottschalk 4). Levi states that they do this by deceiving or misleading their victims to the point they believe that which is false (30). While it’s good to note that not every instance of dishonesty is regarded as a fraud, being alert for the warning signs may be of help for someone to stop the scammers from taking advantage of one’s financial, personal, or business affair.

According to Glick, Rush &Robert, there are many methods through which fraud can be committed, this includes mail, internet, wire, and many others (17). The strain in verifying the legitimacy together with identifying an online platform makes it susceptible to online fraud as hackers can easily access crucial details like a credit card through the internet and steal your information, this concept has made internet fraud to be the fastest growing in the area of fraud (Coenen 67).

Proving fraud in a court of law is a big task as it has many challenges. Levi highlights the point that the laws on fraud vary depending on places and in general there is a specified threshold that must be met (49). The most vital thing to prove when it comes to fraud is the deliberate misrepresentation of the facts. For one to substantiate a fraud in court the complainant must validate that the defendant had a preceding knowledge and willingly distorted the facts (Levi 49).

Types of frauds

Identifying the risk of fraud and also finding out how it can happen in business is very vital and is considered as the initial step in creating an appropriate environment free from all types of fraud. The common types of fraud are:

False Accounting:

Most theatrical corporate failure has been associated with false accounting. The major aim of this fraud to misrepresent the affairs and results of the organization in a more improved way which is far from reality (Brytting, Minogue &Morino138). According to Gottschalk, this is usually one by either exaggerating the organization’s assets or devaluing the liability of the organization with a varied aim which may include obtaining financial support share, attracting investors, and customers (1). Regularly, there are always pressure on reporting the impracticable level of incomes, which usually takes preference over controls intended to stop fraud from happening

Asset misappropriation:

Employees can steal any corporate asset, or even they can collude with the third party or assist them in the act. According to Bennet the example of management and employee fraud include: Receiving rewards from suppliers or commission from suppliers, making false claims in regards to the expense, payroll fraud is also part of it in the sense that a ghost employee is created and funds diverted towards the employee, coercion from the third parties to reveal information or process wrong transactions and also the employee conflict on in terms of related to a transaction (1).

Wire fraud

According to Bennetthis type of fraud takes place over regional wires like phishing, telemarketing, and spam-related schemes. In US federal wire fraud is categorized under federal offense and is often investigated by the FBI, however, the state charges and laws are also applicable. Wire fraud is very wide and it includes pictures, signs, sound, or even writing that is transmitted by radio, wire, or television in a foreign commerce(1). Wire fraud has got some similarity to regular fraud, the only difference is that it happens via an electronic transmission

Computer Fraud

This type of fraud is the one by which a computer can either be a subject, a tool, or an object of fraud (Levi 53). The fraud has been on constant evolution considering the speed at which technology has evolved. According to Levi This type of fraud include:- getting unauthorized access to a bank and transferring or diverting funds from one account to the other, this is mostly done by hackers, pretending to be a genuine business on the internet and deliver poor quality merchandises contrary to what was expected and displayed online and also influencing the share price of a company by illegally spreading fake news on bulletin boards (54).

This kind of fraud can be carried out without the actual use of the computer, computers and the internet offer access to unauthorized parties where in most cases there is usually a collaboration with an insider (Brytting, Minogue &Morino 121). Computer-enhancing processing of large amounts of data and therefore its effective tool for cracking of passwords.

Insurance Fraud

According to Bennet, this fraud covers several areas with various natures, it includes exaggerated claims, false claims, or getting cover based on false information and even intentionally destroying assets and claiming it on insurance (1).

Intellectual property fraud:

Intellectual property comprises items such as customer lists, design rights, and patents, and also business assets, machinery, or stock into this category (Bennet 1). Coenen observes that just as any other assets, intellectual property is also vulnerable to stealing by either the staff or the third party, although it does not usually seem that the intellectual property is being embezzled. employees including the management in this scam could include a direct stealing of intellectual property for example when the leaving employee access the core business information that is a backbone of the organization and gives it to the competitor or even giving the list of customers of the company to the competitor (63).

In this case of intellectual fraud, the theft or violation by third parties could include:

Intentional under-reporting of the royalties by a party that is manufacturing or retailing the product that has already been licensed, knowingly creating products that compete and violates the design rights that are protected and registered by the owner and finally selling counterfeit products as the genuine one (Coenen 63).


Brytting, Minogue &Morino define corruption as untruthful or fraudulent behavior by those in power, typically involving bribery. This is usually an off-book kind of fraud that usually occurs in the form of rewards and commission, gratuities, or gifts to influent a fraud (16).

Money Laundering

Money laundering is the process by which criminals mask the original proprietorship and control of the incomes of criminal conduct by making such earnings to have resulted from a genuine source(Gottschalk 1). Though money laundry is not considered as fraud itself the links come as it is basically a mechanism through which the earning of crime are disseminated (Levi 32). Examples of such connection are when one obtains a loan from banks against the assets which resulted from an activity that is criminal in nature.

Investment Scheme Fraud

This is another third-party asset misappropriation. It entails taking money in the promise of investing it and getting a spectacular return only to turn and use it for the individual purpose (Gottschalk 1).

Bond/Redemption/Strawman Fraud

According to Bennet, this is based fundamentally on the conspiracy theory that all banks are in control of the government. Based on this theory the fraudsters send information randomly to people informing them that they need to purchase kits to get into the scheme with the promise that it would enable them to purchase desirable things like homes and cars or it would help them in discharging their debts (1). Other scammers in this category may promise to give access to the secret account and help the victims to evade tax.

Charity Fraud

A deceiving charity uses the same technique as the real one to steal money from people. It’s a norm when it comes to donation people usually don’t give attention to where the money is going to (Bennet 1). The fraudsters, in this case, take advantage of people mostly when there is a natural disaster because they know that people are usually generous and sympathetic during the period of disaster (Coenen 71). A good example of this fraud is kids wish network which is located in Florida US which is alleged to have raised millions of dollars in the name of helping dying children and their loved ones and in a real sense the charity spends only 3 cents per dollar for the help and the rest of the money goes for personal use.

Credit Card Fraud:

This has been a worldwide problem for many years. According to Coenen the effect of this fraud is not only felt by the victim, but also the merchants and the credit card companies. This type of fraud usually becomes fruitful based on the implementation of various schemes (71). According to Gottschalk, to avert credit card fraud both the merchants as well as the company have put in place various programs among them being adding features making the card more elaborated making it hard to imitate. Also, programs such as card verification code have been integrated into the card, together with card activation process and advanced authorization procedure have helped to curb this type of fraud (47). Merchants have also taken a further step by implementing different programs which have also been key to deterring this fraud. It’s actually very simple to be scammed with your debit card it is estimated that the credit card scam could lead to a loss of around $12 billion by the year 2020 (Gottschalk 48).

Lottery Fraud

The target of this fraud is often the elderly. Glick, Rush & Robert highlight the fact that the elderly are usually targeted simply because they are never skeptical enough more so when it comes to the lottery. It may basically begin with a phone call or a postcard mostly sent from Jamaica (99). The scammers usually request for funds that would cover taxes and other fees for the alleged money to be released. The victims are usually asked for additional cash once they have sent the initial claim with the hope of getting the money they have won(Glick, Rush & Robert 100).

Fraud investigation

To investigate fraud the following steps should be taken

Identification of the type of fraud

This is the initial stage of the investigation, it is very significant as it builds an investigative hypothesis at which it will provide the foundation at which investigation would be launched. At the beginning of the investigation, it’s significant to identify the type of fraud that has been committed. This sometimes becomes a challenge considering the many types of frauds that exist and there a new types which are committed on a day to day basis (Glick, Rush & Robert 111). By determining the type of fraud, it will ensure that I easily get the right people to help with the investigations.

Create an investigative plan

According to Levi this is a very significant part of fraud investigation even though it is usually overlooked, coming up with an investigative plan is time-consuming, but it is vital as it keeps investigations organized and focused considering the abundant documents that are usually involved in a fraud case (37). What usually gets measured is usually done. According to Coenen, the identification of the chronological event that leads to the actual fraud is often very core for the investigators and the fraud team (53). These steps are often effective when it comes to uncovering the vulnerable victims and their culpability. The proper investigative plan leads to the revelation of the loopholes and inconsistency that may be in a story. In the instances where the victim is the fraudsters. Investigators focus on where the victim timeline and the perpetrator’s timeline link and then come up with valid statements with facts.

Interview and reinterview the victim

For the investigator to know the victim well, they need to conduct background checks at the start. According to Glick, Rush &Robert, this will provide information on who they are and why they are probably targeted (87). The background checks also provide information on the victim past in regards to whether they have been a victim of fraud before (Glick, Rush &Robert 88). The interview should be conducted on ffavorableground, free from distractions, and in a place where the victim feels comfortable. The interview should start with an opened end design type of question to trigger the victim to tell the story in detail themselves without being given leads (Gottschalk 64). Frequently the investigators pepper the victim with complex questions so as the victim can provide every single detail necessary for the case.

According to Gottschalk detailed information is extremely essential in fraud investigation, investigators should ensure that they ask gritty questions of when, how, why, where, and what (73). Why was it taken? Who alerted them? When was the initial discovery? How were they made aware?

Re-interviewing the victim is also very necessary as it will enable them to provide additional information to assist investigation I cases where they later come up with additional documents(Gottschalk 73).

Securing evidence

Just like any other crime scene, fraud investigation sham critical issues for collecting as well as preserving evidence. Brytting, Minogue & Morino indicate that it’s upon the investigators to ensure that they get copies of essential documents for example credit statements, phone records, emails, and social media posts when it comes to fraud related to banks(139). In this case, the crime scene is usually virtual in nature, and evidence is usually obtained electronically as long as the victims can access the documents. According to Bennet the virtual nature of the evidence usually creates frustration for both the victim as well as the investigators (1). For instance, when a victim is alerted of the potential fraud may be in a banking institution, there is a chance that the victim has forgotten the login credential to the account hence complicating the issue even further(Levi 117). This causes investigators to lose more time.

Once the evidence is obtained, it has to be thoroughly analyzed, properly secured, and documented in the case file. Fraud investigation pose frequent problems and drawbacks, therefore, professionalism is required for the investigators throughout the process regardless of how frustrating the cases are, it requires a high level of focus(Glick, Rush &Robert 75).

Risk Management

Managing fraud risks is done using the same principle as managing business risks. According to Glick, Rush &Robert, the best approach to managing the risk of fraud is the systematic approach at the organizational level and the operational level (143). At the organizational level, the organization can come up with fraud policy statements and personnel policies at the operational level. Bearing in mind the fraud risks in precise operations the following steps should be considered:


In conclusion, it’s close to impossible to eliminate fraud considering how it has evolved over the years and technology has made it even complicated. However, governments should allocate more resources to combat fraud. Governments should also give a higher priority to the combat by ensuring the decision-makers are well conversant in regards to fraud and also how millions of dollars are being lost on fraud.

The line between the victim, the authorities and the public needs to be taken into consideration. Victims need to feel the effect that the government is doing something to fight the fraud. The issue that arises in fraud cases, for instance, a case where the crime happened in different jurisdictions, needs a collaborative effort from different governments to curb the menace.

Work cited

Bennet, Michael. “12 Most Common Types Of Fraud | Consumer” Consumer Protection, 29 Sept. 2015,

Brytting, T., Minogue, R., & Morino, V. (2016). The Anatomy of Fraud and Corruption: Organizational Causes and Remedies. London: Taylor and Francis.

Coenen, Tracy L. Expert Fraud Investigation: A Step-by-Step Guide. Hoboken, N.J: Wiley, 2013. Internet resource.

Glick, Rush G, and Robert S. Newsom. Fraud Investigation; Fundamentals for Police. Springfield, Ill: Thomas, 1974. Print.

Gottschalk, Petter. Fraud Investigation: Case Studies of Crime Signal Detection. , 2018. Internet resource.

Levi, M. (2018). SAGE Journals: Your gateway to world-class journal research. [online] Available at: [Accessed 5 Jul. 2018].