Fraud Analysis: Theories and Case Studies

This article discusses the application of fraud theories like the Fraud Triangle, Fraud Scale, and Rational Choice theory in analyzing the motives behind fraudulent activities. The case study of R. v. Inshanalli, 2017 ONCJ is used to illustrate the predatory nature of a fraudster and the absence of integrity. The article concludes by emphasizing the importance of identifying the type of fraudster to apply the appropriate fraud theory.

Running head: FRAUD ANALYSIS
FRAUD ANALYSIS
Name of the Student
Name of the University
Author Note

1FRAUD ANALYSIS
A: Facts of the Case
In the case of R. v. Inshanalli, 2017 ONCJ it had been held by the court that the appellant
was guilty of committing fraud which amounted to $5000 which was contrary to the provisions
of s 380(1)(a) of the criminal code as well as violation of probations which had been applied on
her and thus violating the provisions of s. 733.1(1)(a) of the Criminal Code.
The appellant was employed by the victim as a bookkeeper/controller from 2014 April to
2016 January where she had been dismissed with respect to the identification of her fraudulent
activities which she indulged into during her course of employment. The discovery was that
about 134 cheques had been written by her which were not authorized and ranged from $1456.00
to $5839.28. 125 of the 134 cheques had forged signatures of the victim Gerard Waslens’ done
by the appellant.
The appellant in this case Ms. Inshanalli who is 62 years of age also have a history of
committing the same kind of offence in the past. She had in 2004 indulge into fraudulent activity
which involved stealing of $750,000 for the company she had been employed in and had been
subjected to two years of imprisonment. In 2010 she had also indulged in fraudulent activities
where she had been sentenced to an eighteen month period along with a probation which stated
that she is no longer eligible to work in the position of an accountant or bookkeeper.
B: Fraud Theory Analysis
The application of a number of theories can be done in the situation for the purpose of analyzing
the actions of the person committing the fraud and understanding how and why were such
actions initiated.

2FRAUD ANALYSIS
1. The Fraud Triangle- there are three factors which have been set out by this theory which
can influence a person to do fraud (Mansor, 2015).
(a) Perceived fraud- this is how a person is motivated in relation to fraud. There are
issues faced by such person of which he cannot identify legal solutions and thus
indulge into illegal activities.
(b) Perceived opportunity- the modus operandi of the action is stated through this factor.
The person finds out a way through which another person can be deceived
(c) Rationalization- personal reasoning in favor of the action has to be present to turn a
person into fraud (Said et al., 2017).
In this case it is clear that the appellant is subjected to a considerable history of crime in the
past which took place in the year 2004 and 2010. She had been punished for such action in form
of imprisonment as well as imposed with probations to not work as an accountant or bookkeeper.
She had utilized all the funds which she had been able to gain access to towards her gambling
addiction. In addition no voluntary remorse or restitution had been depicted by the appellant
during such situations. Thus can be stated that she is a predatory fraudster and would commit the
crime if placed in the same position again and this theory cannot be applied as rationalization as
well as pressures are not required to be in place for such fraud to take place.
2. The fraud scale- this theory had been initiated in the year 1984 as a substitute to the
above discussed theory. The theory incorporates the elements of integrity or ethics with
rationalization. The way in which a person makes decisions is considered for the purpose
of analyzing the presence of integrity. Ethical commitment is directly proportional to
integrity. In addition the probability of fraud is inversely proportional to integrity (Huber,
2017).

3FRAUD ANALYSIS
Although the theory is not comprehensively applicable in the situation of the appellant
the application of the element of integrity can be done in the situation where there is no
factor of pressure (peer pressure for participating in gambling is not considered as a pressure)
and given the predatory nature of the appellant. She did not have integrity as he was doing
the same kind of activities even after being prosecuted for them.
3. Rational Choice theory- The theory belongs to the subject of criminology and its
application is initiated to determine the reason behind getting into a criminal activity by
people. There are three elements of this theory which are that the person believes that he
or she is an individual, he or she has to do goal maximization, he or she only takes into
consideration self interest (Hindmoor & Taylor, 2015).
The primary finding of this theory is that the person indulges in criminal activities when he
finds that the cost of crime is lesser than the benefits provided by it (Beaudry‐Cyr, 2016).
In the present case the goal of the appellant was to indulge in criminal activities for the
purpose of fulfilling her gambling addiction. In addition she had realized that the benefit she
could attain by getting all the money was much more than the cost in form of imprisonment
which she may have to bare in relation to the crime. Thus the cost of the crime was viewed as
minimal by and benefits were judged as high.
c. Conclusion
The above discussed theories give idea in relation to the way in which and why
fraudulent activities are indulged into be individuals. Another case which included the same
situation as in the case of R. v. Inshanalli, 2017 ONCJ was R v Slobbe where it had been found

4FRAUD ANALYSIS
by the court that the person indulged in fraud to fulfill his lavish lifestyle. The person was a
trusted individual who latter turned into a fraudsters to fulfill is needs. On the other had in the
case of R. v. Paterson, 2013 it had been analyzed by the court that the primary motivation of
fraud was his falling business and the victim has suffered a loss of $55,500,000. In this case the
fraud triangle theory will be applicable. This is because there was a pressure on the part of the
person committing the fraud, he got an opportunity based on the position in which he was and his
rational thinking made him take the decision to indulge into the action. Thus the type of fraudster
has to be identified so that the fraud theories can be appropriately applied for the analysis.

5FRAUD ANALYSIS
References
Beaudry‐Cyr, M. (2016). Rational Choice Theory. The Encyclopedia of Crime and Punishment.
Hindmoor, A., & Taylor, B. (2015). Rational choice. Palgrave Macmillan Ltd.
Huber, W. (2017). FORENSIC ACCOUNTING, FRAUD THEORY, AND THE END OF THE
FRAUD TRIANGLE. Journal of Theoretical Accounting Research, 12(2).
Mansor, N. (2015). Fraud triangle theory and fraud diamond theory. Understanding the
convergent and divergent for future research. International Journal of Academic
Research in Accounting, Finance and Management Science, 1, 38-45.
R. v. Inshanalli, 2017 ONCJ 234
R. v. Paterson, 2013 BCPC 5
Said, J., Alam, M. M., Ramli, M., & Rafidi, M. (2017). Integrating ethical values into fraud
triangle theory in assessing employee fraud: Evidence from the Malaysian banking
industry. Journal of International Studies, 10(2), 170-184.