What is fraud?
Fraud is an intent to deprive another of a legal right or the intent to deceive for personal gain. It can be a civil violation, a criminal violation, or both.
Who determines if fraud has occurred?
Only a trier of fact (judge, jury, arbitrator, etc.) can determine if fraud has occurred. Attorneys, financial experts, fraud experts, auditors, private investigators, and others can gather evidence to present to the trier of fact, but cannot (or should not) make the determination themselves. This is why an expert's report may list indicators of fraud, red flags, anomalies, and analyses, but should not ever explicitly state, "This is fraud." This is partly why phrases such as, "appears as though," and "is consistent with," appear in expert reports.
Is it theft, misappropriation, or fraud?
These terms all result in a loss of value (cash, identity, assets, contracts, etc.) for the victim. How the loss occurs and how much it's worth can be factors for determining whether the act is theft, misappropriation, or fraud but the lines are not always clear and may vary across jurisdictions and industries. The terms are also used as subsets of one another. If something has been misused, stolen, or transferred without authorization, there's a word for it and a method for ascribing a value to it.
Skimming, larceny (regular theft), misuse, fraudulent disbursements, grand larceny (bigger theft), etc. are all terms for different types of asset misappropriation. The methods of transfer also have names: ghost employees, altered payees, write-off schemes, understated sales, purchasing schemes, asset requisition schemes, etc. Overall, the world of fraud is large and dynamic. One manual from one organization contains thousands of pages describing different schemes and methods and includes contract bidding schemes, vendor billing schemes, financial statement fraud, misappropriation, and many more. Investment fraud schemes have grown more complex; some are perpetrated completely online and involve fake cryptocurrency investment.
You don't need to know what to call it - that's our job. If you feel something is amiss, want peace of mind, or need to meet compliance regulations, contact us.
When should I take action?
Now. Read our Worrisome Words article and our Foundations articles to learn some basic controls. If you need help implementing them, want a basic review, or have a gut feeling, contact us. We can outline a risk management plan for your organization that ranges from an account or department and up to a full corporate scope.
To whom do you report your findings?
We report our findings to you, the client. We can walk you through your options with an attorney for a civil lawsuit, a criminal report, or an insurance claim but our report ultimately belongs to you and we do not share it with anyone without express written consent from you. There are very few exceptions to this policy, which we explicitly describe in our contract with you. We do not discuss details of any matter, in summary or in anonymous form, without express written consent from you. You will never see an article or presentation from us describing your matter that you have not explicitly authorized.