Framework for Fraud Case Analysis

This report provides a framework for analyzing fraud cases, including theoretical analysis, red flags, risk analysis, best practices in fraud prevention, and an action plan. Case study of Mr. Thow is used as an example.

Fraud Case 1
Framework for Fraud Case Analysis

Fraud Case 2
Table of Contents
A: Facts of the Case.........................................................................................................................3
B: Theoretical Analysis...................................................................................................................3
C: Red Flags and Lessons Learned..................................................................................................3
D: Risk Analysis..............................................................................................................................4
E: Best Practices in Fraud & Corruption Prevention & Response..................................................4
F: Action Plan..................................................................................................................................4
G: Conclusion..................................................................................................................................5
References:......................................................................................................................................6

Fraud Case 3
A: Facts of the Case
Fraud can be defined as an illegal activity that is committed by individual intentionally within an
organization. In the given case, Mr. Thow was identified as guilty. He was the fraudster in given
case. He has been involved in several frauds like skimming of cash, misuse of company asset,
and misappropriation of asset and fraud of financial statement. In the given case, Mr. Thow was
found guilty in all these frauds. Victims in this fraud are the investors who invested money in the
company and creditors from different countries like National commercial bank of Jamaica and
Berkshire investment. Along with this, investors and customer of his own company also are
influenced by this fraud (Cohen, et. al., 2012). According to section 380, under the Canadian
criminal court, Mr. Thow was found guilty. According to this law, Mr. Thow can be held liable
for maximum sentenced of 14 and minimum 7 years prison from the panel of judges.
B: Theoretical Analysis
There are several theories that can be applied to the given case study.
1. Low hanging fruit theory- This theory covers high-risk fraud such as accounting issues
and financial misstatement. In the given case, Mr. Thow also did the same, as he
manipulated financial statement did fraud with the investors and creditors (Gottschalk,
2012).
2. Rotten apple theory- This tells that one rotten apple can spoil all the apples in the barrel.
In the given case, Mr. Thow treats him as NCBJ director or owner of the company and
did fraud. He can spoil the culture and brand image of entire organization negatively.

Fraud Case 4
Along with this, Mr. Thow is involved in committing fraud in the company, and seems like
he has planned to take away all the money from company for personal benefits (Kukull, et.
al., 2012).
C: Red Flags and Lessons Learned
Red flag to the individual in given case is that money of every single investor is sink because this
fraud (from 2003 to 2005). Mr. Thow has done this fraud. For doing it, he tells the investors that
he is the director of NCBJ and has illegally invested investor’s money. Court penalized him for
hundred of million dollars. Due to this activity the image of the company destroyed. The public
and other stakeholders of company have to come to know that there is a person in company who
is using the company name for illegal activities (Gullkvist, et. al., 2013).
Lesson, which every single investor gets from this case, is that before investing money they
should first do R&D of that company, read all the documents carefully, and then should invest
their money.
D: Risk Analysis
This fraud is the lesson for the company that a person has used its name and done fraud. It is the
responsibility of the company that it should monitor about what is going on in it and what is
happening in the industry. There is lack of control in the organization, as it does not know about
fraud taken place in it. The risk is very dangerous because this type of fraud can totally damage
the image of the company. Even, there might be chances that company will shut down
(Dorminey, et. al., 2012).
E: Best Practices in Fraud & Corruption Prevention & Response
An effective program of anti corruption can deter the risk of illegal activities, and give positive
impact on the corporate culture. Along with this, it also helps in improving the relationship of the

Fraud Case 5
company with the regulatory authorities and offers the organization opportunity to use remedial
measures to control the illegal activities and risk of fraud (Moore, et. al., 2012).
F: Action Plan
The action plan, which can be taken by company, is that company should conduct audit at least
once in six months and start job rotation system at its venue. This short term and continuous
action plan will help the company to prevent fraudulent activities. Along with this company
should evaluate the market and keep close eyes on the pattern and new entrance in the industry
(Olaison, et. al., 2014).
G: Conclusion
This report concludes that from the year 2003 to 2005, Mr. Thow has committed fraud with the
creditors and investors in different countries. He was found guilty in court. Along with this, there
are four types of frauds done by Mr. Thow such as skimming of cash, misuse of company asset,
misappropriation of asset and fraud of financial statement. Along with this, this fraud is
revelation for the companies whose name was used by Mr. Thow for doing this fraud.

Fraud Case 6
References
Cohen, J., Ding, Y., Lesage, C., and Stolowy, H. (2012) Corporate fraud and managers’
behavior: Evidence from the press, In Entrepreneurship, governance and ethics. pp. 271-315.
Dorminey, J., Fleming, A. S., Kranacher, M. J., and Riley Jr, R. A. (2012) The evolution of fraud
theory, Issues in Accounting Education, 27(2), pp. 555-579.
Gottschalk, P. (2012) White-collar crime and police crime: rotten apples or rotten
barrels?, Critical Criminology, 20(2), pp. 169-182.
Gullkvist, B., and Jokipii, A. (2013) Perceived importance of red flags across fraud
types, Critical Perspectives on Accounting, 24(1), pp. 44-61.
Kukull, W. A., and Ganguli, M. (2012). Generalizability The trees, the forest, and the low-
hanging fruit, Neurology, 78(23), pp. 1886-1891.
Moore, J. C., Spink, J., and Lipp, M. (2012) Development and application of a database of food
ingredient fraud and economically motivated adulteration from 1980 to 2010, Journal of Food
Science, 77(4).
Olaison, L., and Meier Sørensen, B. (2014) The abject of entrepreneurship: failure, fiasco,
fraud, International Journal of Entrepreneurial Behavior & Research, 20(2), pp. 193-211.