Top 5 Types of Corporate Fraud

Top 5 Types of Corporate Fraud

top five types of fraud

When it comes to protecting your business from the myriad of frauds that occur in U.S. workplaces every single day, being informed is the first step. Our private investigators are here to help you recognize these top five types of fraud in business so they can be stopped as soon as possible.  

Payroll Fraud  

Payroll fraud is one of the top five types of fraud that are seen the most often in businesses of all sizes but particularly small businesses. It also takes many different forms, such as employees lying about productivity, payment advances, or manipulation of timeclock records. As such, those records should be carefully monitored and all potential employees should be thoroughly screened before onboarding.  

Asset Misappropriation  

Luckily, asset misappropriation is one of the top five types of fraud that is the easiest to spot. Missing assets are going to be noticed. Most managers and supervisors keep tabs on asset misappropriation by rotating out staff who are in charge of supervising inventory or cash kept on hand. It’s also crucial that any accounting positions are not singular, and finances are managed by more than one person.  

Invoice Fraud Schemes  

This type of fraud is a bit more complicated, and usually involves an employee who works in accounting. It’s achieved by generating fake or inflated invoices for purposes of stealing money from the company. These invoices may detail products that were never sold, vendors who do not exist, or B2B transactions that never took place. To avoid this, all invoices must be cross-referenced with inventory or performed work that is documented.  

Financial Statement Fraud

This type of fraud is sometimes called “cooking the books,” in which financial records are altered or destroyed for financial gain or to fool investors into pouring more money into the company or to boost stock bonuses. Regardless of the aim, this kind of fraud can be devastating for a company, which is another reason accounting responsibilities must be delegated to numeral members of staff in order to prevent the funneling structure that allows this fraud to happen.

Tax Fraud  

This is the type of fraud most known to the general public. Anyone can commit tax fraud by failing to pay their taxes, but it can also happen when companies misrepresent their earnings to the IRS in order to fall into a smaller tax bracket, or take advantage of exemptions. In order to avoid this, it’s imperative that all earnings must be reported on time.  

Keeping Construction Honest: Investigating Fraud and Forgery

Keeping Construction Honest: Investigating Fraud and Forgery

Given the increasing economic turbulence felt globally in 2022—thanks to factors such as the Covid-19 pandemic and unfolding energy crisis—it comes as no surprise that fraud is on the rise. Even the construction industry is not impervious to these impacts. In fact, the complexities of numerous cost outputs, suppliers, and subcontractors mean that it has never been more important to be alert to the dangers of construction fraud. If you are the one steering the ship, now is the time to be vigilant if you want to avoid your company becoming another victim statistic.

Those behind devious acts of construction fraud don’t often fit preconceived notions of what a scammer looks like. Trusted employees or long-serving suppliers can go rogue when times get tough. On the other side of the same coin, opportunists can get greedy when funds start to flow, which is why it’s never the wrong time to sure up your construction company’s fraud and forgery protection. While you yourself may not be the deceiver, if the ball of compliance gets dropped, it could be your company that pays the ultimate cost. Let’s look at some of the types of construction fraud that should be on your radar, and how a corporate investigator can help you ensure that everything truly tracks.

When Construction Fraud Slips Under the Radar

Any construction company owners knows that operating in this business means keeping a lot of plates spinning. With so many variables in play, there are inevitably also a lot of opportunities for a falsification here and a substitution there to slip by unnoticed. As if that weren’t dangerous enough, when a trusted collaborator feels emboldened, they may decide to see how far they can push their luck. If those at the helm are asleep at the wheel, construction fraud can become an epidemic that will inevitably result in a reckoning. Bringing in a corporate investigator to uncover corporate fraud at the first sign of suspicion is a prudent move indeed, but what kinds of crime will they be looking for? Here are some examples:

  • Subcontractor Collusion
    In a world that sees bid rigging and price fixing happen every day, pre-approving subcontractors is a must and precautionary measures should be structured into your contracts. When the stakes are high, ensuring that the most qualified and fairly priced candidate is the one you land upon may call for some corporate intelligence gathering.
  • Fraudulent Payment Applications
    Inflated rates, falsified invoices, exaggerated labor costs, erroneous line items, and more. Sadly, intentionally falsified payment applications represent the most common form of construction fraud.
  • Substituting Materials
    When the team that you’ve placed your faith in decides to switch out specified materials for lower-grade alternatives—or not bother placing them at all—the consequences can be dire. Ranging from scrambling change orders to repair a badly bodged project through to catastrophic structural failure, this type of construction fraud should not be overlooked.
  • Manipulated Change Orders
    Sometimes, a construction boss doesn’t realize that original design specs had omissions in their scope until an unexpected change order arrives on their desk. Diligence is the best safeguard, but when you suspect you’ve already been hoodwinked, it’s time to call in the corporate investigations cavalry.
  • Diverting Equipment and Materials
    While the odd tool may drift off now and then from the average jobsite, you don’t want your inventory to become a revolving door buffet for those who want to restock their own private stashes. This kind of construction fraud sees company purchases diverted and precious equipment siphoned away.
  • Manipulation of the Schedule of Values

A sloppily maintained Schedule of Values is another opportunity for construction fraud to slip by unnoticed. A sly foreman or accountant might forge phony charges against concealed buyout savings in order to pocket the difference. Only the keenest of eyes will spot this kind of construction fraud once budget and performance have been balanced.

  • Falsified Representations
    Across America, construction contracts increasingly call for the meeting of requirements such as a percentage of minority workers, environmental stipulations, local suppliers, and more. When a subcontractor intentionally falsifies their capacity to meet such an obligation, the company can find themselves looking down the barrel of a loaded litigation situation.

    Seek Support From a Corporate Investigations Firm in the Know

If you suspect that your construction company may be among the many that fall prey to industry fraud in America each year, calling in a seasoned third-party investigator to launch a swift, efficient, and impartial investigation is a must. For those unsure as to whether their wider team are operating ethically, a Company Culture Audit is the ideal tool for illuminating the current state of play and cutting a clear path towards prevention and deterrence. Safeguard the integrity of your business against construction fraud with specialist support from Lauth Investigations International. Our team is ready and waiting to answer your questions today.

Are Members of Your Crew Malingering? Get Answers With a Private Investigator

Are Members of Your Crew Malingering? Get Answers With a Private Investigator

Being able to rely on your crew operating like a well oiled machine is the difference between profit and loss for your business. When the team is cohesive, mountains can be moved and your investments are sure to pay off. But what happens if you begin to suspect a member of your crew is malingering on the job? 

Maybe they start calling in sick on Mondays and you hear that their partying is getting out of hand. Or perhaps you think they’re laid up, only to notice that they come back to work with a tan. If you can’t trust your employees, things can start to feel unstable pretty quickly—but accusing them without evidence might lead to calls of employee discrimination or unfair dismissal. In moments such as these, a private investigator is the only collaborator to consider.

What Is Malingering?

The dictionary definition of malingering is: “To pretend or exaggerate incapacity or illness as to avoid duty or work.” It describes faking or overstating illness or incapacity in order to unjustly claim paid time off, and when its occurrence becomes pervasive, companies can find themselves with a big problem on their hands. 

It may be that an employee’s leave was originally valid but they are now exaggerating their healing time to extend their time at home, or it is possible that they strategically and deceptively called in sick so they could skip work while still lining their pockets. When it’s happening again and again, this can be a sign that corporate culture is sliding sideways and you need to take action fast. In any case and whichever way you paint it, malingering on the job is misconduct through and through.

When You Suspect a Member of Your Crew is Malingering

Whatever rouses your suspicion, when you fear that a member of your crew is malingering on the job, you need to proceed with caution. Why? Because launching disciplinary proceedings, making accusations, or carrying out surveillance of your own may later turn around and bite you if is later viewed as unfair dismissal, worker discrimination, or harassment.

One misstep and you might find yourself not only dealing with hemorrhaging labor costs, but also the hefty bill that comes with legal action taken against you. Whatever happens next needs to be by the book and 100% impartial. This is why a third-party private investigator from a specialist corporate investigations firm can be such a valued asset. With the optimal skill set for efficiency and zero chance of bias, they can give you the evidence you need to protect your company with total confidence.

How a Private Investigator Uncovers Malingering on the Job

If you hire a private investigator to demonstrate once and for all whether or not a member of your crew is malingering, there’s no need for it to disrupt day-to-day operations. In fact, a skilled corporate investigator will not only begin discreetly assembling an air-tight body of evidence on your behalf. They will also be able to advise you on steps to take to protect yourself legally, avoiding unwelcome surprises down the road ahead. 

As far as building a case that will allow you to take action goes, a private investigator will draw from a toolkit that includes sophisticated surveillance equipment, comprehensive background checks, data analysis, gathering witness statements, and even access to restricted databases used by law enforcement agencies that would be beyond the reach of your HR team. Whether evidence arises in your employee’s activities or discrepancies in their medical documentation, the truth will come to light.

Is your crew being let down by someone malingering on the job? Set things right with the help of an efficient, discreet, and cost-effective private investigator from Lauth Investigations International. Our team are ready and waiting to provide confidential guidance on the best course of action for your unique needs, so get in touch today.

Intellectual Property Theft: Don’t Let Your Greatest Assets Slip Away

Intellectual Property Theft: Don’t Let Your Greatest Assets Slip Away

When thinking about the security of your business, it’s easy to place focus on brick and mortar assets, valuable inventory, and carefully counted financials. However, there is another area of your business that needs to be protected at all costs. As the FBI confirms, intellectual property theft robs unsuspecting U.S. businesses of billions of dollars every year, stealing job security from hard-working Americans and tax revenues in the process. The takeaway? Don’t let your lack of awareness make you a number in next year’s statistics. 

Why is intellectual property protection such a prolific problem? Well, estimates place the value of intellectual property at about 70% of all business equity. This plump statistic makes the data and—in fact—the very ideas that fuel your business a tempting target for aspiring criminals. As such, an intellectual property private investigator is an ally that shouldn’t be overlooked.

  1. Who Are the Perpetrators Behind Intellectual Property Theft?

When someone decides to steal your organization’s customer data, product plans, pricing strategy, or design secrets, it’s important to know that while they might be an unknown agent, the criminal in question could well be a trusted insider—a wolf in your midst. It is a sad truth that disgruntled or ill-intentioned employees take it upon themselves to steal sensitive data from the hand that feeds them every day in America, making complacency a dangerous game indeed.

Perhaps a rival business has approached a member of your team with an under-the-table offer, or maybe they hope to gather intel before setting up a rival business. Whatever the motivation, common data extraction tactics include the use of external media such as a writable CD or USB mass storage device, or harnessing corporate email accounts to send information off-site. In other instances, intellectual property theft may involve hacking, making digital security paramount to your IP’s security. Establishing IT and site monitoring procedures and media policy controls are also key to maintaining employee best practices, supported by well-constructed non-compete agreements for staff privy to precious information.

  1. Prevention and Cure: Hiring An Intellectual Property Investigator

When a company suspects intellectual property theft, there is no time to waste. Whether a copyright investigation, a trademark theft investigation, or a more nuanced IP infringement investigation is called for, you can be certain that the longer that information is in circulation, the greater the potential threat to your company. As such, setting an intellectual property theft investigator to the task of tracing the breach, identifying proof, and gathering the evidence that will allow you to act quickly is a shrewd move indeed.

In parallel, many businesses choose to engage a private investigator as a form of proactive intellectual property protection. Experts within this corporate field can conduct careful analysis of your IP assets, detecting any potential vulnerabilities or violations before crisis sets in. A skilled corporate theft investigator from Lauth Investigations international will work tirelessly to prevent intellectual property breaches, global piracy, counterfeiting, and insider threats, utilizing tools such as data mining techniques, surveillance, and field investigation to uncover facts inaccessible to your HR department.

Is your intellectual property safe from prying eyes? If in doubt, contact Lauth Investigations International today, for bespoke guidance from a dedicated IP infringement investigator. Your intellectual assets represent the future prosperity of your brand, so don’t leave their integrity to chance.

Is Your Business Falling Prey to the Employee Fraud Epidemic?

Is Your Business Falling Prey to the Employee Fraud Epidemic?

Imagine, if you will, that you’re a mid-level manager, and you’ve had an eye on Bob for a while. Bob’s always struck you as an easy going family guy, but recently you’ve noticed that his behaviour has become a little strange.

Bob’s clothes are a little more flashy and you noticed a brand new wristwatch catching the light under his shirt sleeve—but it’s not just that. Bob has started staying late more than he used to, and doing things like closing his office door more often, or turning his screen away when you walk by. You debate whether you should talk to the HR director about the issue. Your gut tells you something is wrong, but you wonder what can be done about it—can you really trigger a corporate investigation on the basis of a hunch?

Moments like these can be the beginning of an unravelling that reveals an employee engaged in workplace fraud. But, the signs and signals are often blurry at best. Your imagined mid-level manager’s logic does have some fairly solid foundations—research indicates that 42% of fraudsters do, after all, live beyond their means. But just as easily, another individual engaged in fraud may do a far better job of covering their tracks, while Bob might just have come into a small inheritance.

A Problem Not to Underestimate

What are the risks to contemporary organizations? Employee fraud, forgery, workplace theft, malingering, white collar crime—the list goes on. In fact, it’s estimated that US businesses lose up to $110 million a day due to employee related crimes, while a typical employee theft-scheme lasts 14 months before being detected. The reality is that no business can afford to be asleep at the wheel when it comes to employee fraud.

It’s worth saying, too, that when we say no business, we really mean it. If you’re imagining that your company or organization is simply too small to fall prey to these kinds of problems, think again. The sad reality is that the risk of payroll schemes and billing fraud is actually twice as high in small businesses as it is in large ones.

What Exactly is Employee Fraud?

To any business owner, CEO, CFO, or Human Relations Director who hasn’t felt the viciously stinging impact of fraud before, it sounds like a big word. Surely fraud is something relegated to big-scale scandals that hit the news, right? Well, fraud can happen on any scale, and the perpetrator can be an ordinary Joe or Jane—or indeed a Bob gone rogue.

Employee fraud is a deliberate and deceptive act that aims to provide the perpetrator with unlawful gain, taking advantage of their position of authority or trust. It can happen under the watchful eye of any organization—large or small—and the consequences can be complex and far-reaching.

Examples of employee fraud might include financial statement fraud, the misappropriation of assets, payroll fraud, colluding with suppliers, credit card fraud, cash skimming or larceny, bribery, or data fraud. Occurrences can also range in scale from minor false expenses claims, right through to large-scale embezzlement that is haemorrhaging company profits. Whatever the scale, if your business is a victim of fraud, action must be taken.

Tackling Employee Fraud Head-On

Internal threats can come in many forms. If you suspect any form of employee fraud, then the time to launch a corporate investigation is now. When a red flag is raised for these kinds of issues in the workplace, the next steps taken need to be cautious. A heavy-handed approach may send fraudsters under cover, while dangerously disrupting workplace dynamics.

Knowing who to trust is these instances can also be a challenge—could colleagues be colluding, or might HR find it difficult to be impartial about a beloved co-worker? Because of the legal and psychological complexities of employee fraud, turning to a trusted corporate investigations service can be the strongest tactic. Seasoned professional corporate investigators can quickly and discreetly get to the bottom of the matter, and provide invaluable advice on how to move forwards.

Adding Preventative Measures to Your Toolkit

Of course, when it comes to things that can damage the standing of your business, nothing is better than prevention. To aid organizations in the prevention of all forms of corporate crime, Lauth Investigations offers innovate Corporate Culture Audits. This health check for your business will assess the risk of trouble ahead, illuminate current issues, and lay a path towards a more prosperous, productive, and secure future. We also provide a comprehensive corporate background checks—to help you avoid introducing a bad apple to the barrel.

Learn more about employee fraud investigations, Corporate Cuture Audits, corporate background checks, and more. Alternatively, contact our team today for a free no obligation quote.

When a Reckoning Arrives: Navigating Employee Theft or Fraud

When a Reckoning Arrives: Navigating Employee Theft or Fraud

employee theft

You’ve just pulled the trigger on hiring a bright and bold new employee, and you couldn’t be more excited. On paper, they are everything that your organization’s been looking for—and the decision to welcome them into your team comes with an implicit trust and vulnerability. So it can be difficult to imagine that such a candidate would engage in employee theft, but it is never out of the question.

At times, that faith can be bountifully rewarded, but at others, it can be met with deception and disappointment. This might be a cruel twist of fate, but it could be a correctable omission in your policies and procedures. Either way, what do you do next?

The dedicated corporate investigations team here at Lauth Investigations make it a number-one priority to help businesses like yours to minimize the risk of crises triggered by employee theft or fraud—or navigate such unwelcome occurrences with swift and decisive action, for optimal results. Read on to learn more about how to kick a laser-sharp corporate investigation into action, and the rewards to be found in harnessing preventative corporate culture audits.

Most Companies are Naive When it Comes to Employee Theft and Corporate Fraud

How common do you think workplace theft might be? Could the guilty among the workforce be 1 in 100, or perhaps 1 in 10? Shockingly to some, research reveals that roughly 75% of employees have stolen at least once over the course of their careers, resulting in a staggering $50 billion in losses absorbed by American businesses every year. While a visionary employer certainly shouldn’t allow such numbers to make them jaded at the cost of innovation, whenever suspicion arises, effective corporate investigations should certainly follow!

One of the other pitfalls that can often be correlated with misconceptions about corporate fraud, workplace theft, and even corporate data theft, is a hole in company policies. Each and every organization should have clear and calibrated policies in place that serve as a road map for handling these issues. The absence of such policies—or deviation away from them—can be detrimental should civil or criminal litigation be on the cards. If in doubt, turning to an expert corporate investigations specialist can ensure the best possible trajectory forwards, whether crisis has already arrived or not.

The Advantage of Assigning an External Corporate Investigator

Above all else, the goal of the dedicated corporate investigations specialist is to protect the resources and reputation of the company they serve. While this may be an appealing proposition, many employers still wonder if they can get away with conducting theft or fraud related corporate investigations in-house.

While this can be an effective option, internal theft and fraud investigations do come with some degree of inherent risk. The act of one colleague investigation another can leave a company open to accusations of bias or a cover-up. Meanwhile, the employee burdened with the responsibility it drawn away from their usual tasks—leaving either their professional role or the investigation to suffer. Finally, poorly conducted investigations can become a legal minefield if a neat conclusion is not forthcoming.

Following every lead to uncover and act upon suspected crimes in the workplace should be an unwaveringly thorough process. If not, the consequences can be far reaching, which is why a seasoned private investigator can be the ultimate ally. Gathering evidence, conducting interviews, liaising with authorities, and tracing assets are all part of the job—and these diligent, impartial, and fast moving investigations allow companies to get back to doing their best work at the first possible opportunity.

Revealing Pervasive Patterns and Turning the Corner Away From Employee Theft and Fraud

When all signs point to a crime being committed, a laser-focused corporate investigation is the appropriate course of action. However, what is the right path when managers or CEOs have a niggling sense that something isn’t right, suspect widespread misbehavior, or feel that the company is inexplicably underperforming?

In these moments, a comprehensive corporate culture audit is an excellent undertaking—akin to a health-check for your business. This particular arm of corporate investigations services offers preventative momentum, the chance to gain a clear picture of a broad array of potential hidden issues, and a plan that is ready to correct them.
If you suspect that corporate theft or fraud is occurring on your watch, reach out to the  Lauth Investigations team for friendly and definitive advice on the options that lay before you. Learn more about our expertise in the field of corporate investigations, and about the transformational power provided by corporate culture audits. Alternatively, contact us today for confidential guidance on your unique situation, and to receive a no-obligation quote.