Fraud Case Analysis
Rita Crundwell started working for the City of Dixon’s finance department as a high school student, but she eventually became the city’s treasurer and comptroller in 1983. Seven years after her appointment, she began a twenty-two-year fraud scheme that enabled her to embezzle approximately $54 billion dollars from the taxpayers she was serving. To embezzle the municipality’s funds unnoticed, Crundwell discretely opened a bank account at the Fifth and Third Bank where city’s bank accounts were housed. She listed the bogus account as the Reserve Sewer Capital Development Account (RSCDA) Reserve Fund. Soon after, Crundwell began transferring funds from various accounts to increase the Capital Development Fund account. …show more content…
Perceived pressures explain the motivation behind a fraud scheme and they are classified as either financial or non-financial situations that cannot be solved through legitimate means. Popular perceived pressures include excessive debt, meeting shareholder expectations, or desiring a more lavish lifestyle. Perceived opportunity explains the methods utilized to commit and conceal the fraud scheme. Therefore, the individual violates company trust by using his or her position and knowledge to commit fraud. In addition, he or she must be able to continue the fraud scheme unsuspected. Finally, rationalization is when individuals justify their fraudulent actions as being acceptable. Fraud perpetrators believe that the company is not going to notice the funds missing or that they consider the funds as a loan to be paid back later. Dr. Donald Cressey, the father of the Fraud Triangle, believed that the combination of these three components resulted in the committing of fraud. Therefore, someone who has the perceived opportunity to commit fraud with justified reasoning, the individual cannot commit fraud without a perceived pressure (The Fraud Triangle n.d.) (Albrecht, Albrecht, Albrecht, & Zimbelman …show more content…
Unfortunately, the equine hobby became expensive over the years as more funds were required to purchase horses, housing, and supplies as well as pay for other equestrian-related expenses. As an employee for the City of Dixon, Crundwell made around $80,000 a year, but only claimed $61,000. Therefore, funding for her passion became her perceived pressure to commit fraud. In addition, she enjoyed traveling to horse shows in a 45-foot Liberty Coach bus. Crundwell also had perceived opportunity to utilize her position to commit and conceal her fraud for over twenty-years. The City of Dixon had a small team that operated with weak internal controls and no segregation of duties, which gave Crundwell complete control over the city’s finances. Therefore, she was able to open her bogus account and create fictitious invoices to embezzle funds. In addition, she collected the city’s mail to conceal her fraud from others. Crundwell was a trustworthy employee who always made herself available when away. Crundwell’s actions were justified in two ways: (1) she might have believed that she deserved more than what she was earning and (2) nobody would suspect that she was embezzling funds as she was a valued city employee (Smith 2012) (Trust...but Verify
Rita Crundwell started working for the City of Dixon’s finance department as a high school student, but she eventually became the city’s treasurer and comptroller in 1983. Seven years after her appointment, she began a twenty-two-year fraud scheme that enabled her to embezzle approximately $54 billion dollars from the taxpayers she was serving. To embezzle the municipality’s funds unnoticed, Crundwell discretely opened a bank account at the Fifth and Third Bank where city’s bank accounts were housed. She listed the bogus account as the Reserve Sewer Capital Development Account (RSCDA) Reserve Fund. Soon after, Crundwell began transferring funds from various accounts to increase the Capital Development Fund account. …show more content…
Perceived pressures explain the motivation behind a fraud scheme and they are classified as either financial or non-financial situations that cannot be solved through legitimate means. Popular perceived pressures include excessive debt, meeting shareholder expectations, or desiring a more lavish lifestyle. Perceived opportunity explains the methods utilized to commit and conceal the fraud scheme. Therefore, the individual violates company trust by using his or her position and knowledge to commit fraud. In addition, he or she must be able to continue the fraud scheme unsuspected. Finally, rationalization is when individuals justify their fraudulent actions as being acceptable. Fraud perpetrators believe that the company is not going to notice the funds missing or that they consider the funds as a loan to be paid back later. Dr. Donald Cressey, the father of the Fraud Triangle, believed that the combination of these three components resulted in the committing of fraud. Therefore, someone who has the perceived opportunity to commit fraud with justified reasoning, the individual cannot commit fraud without a perceived pressure (The Fraud Triangle n.d.) (Albrecht, Albrecht, Albrecht, & Zimbelman …show more content…
Unfortunately, the equine hobby became expensive over the years as more funds were required to purchase horses, housing, and supplies as well as pay for other equestrian-related expenses. As an employee for the City of Dixon, Crundwell made around $80,000 a year, but only claimed $61,000. Therefore, funding for her passion became her perceived pressure to commit fraud. In addition, she enjoyed traveling to horse shows in a 45-foot Liberty Coach bus. Crundwell also had perceived opportunity to utilize her position to commit and conceal her fraud for over twenty-years. The City of Dixon had a small team that operated with weak internal controls and no segregation of duties, which gave Crundwell complete control over the city’s finances. Therefore, she was able to open her bogus account and create fictitious invoices to embezzle funds. In addition, she collected the city’s mail to conceal her fraud from others. Crundwell was a trustworthy employee who always made herself available when away. Crundwell’s actions were justified in two ways: (1) she might have believed that she deserved more than what she was earning and (2) nobody would suspect that she was embezzling funds as she was a valued city employee (Smith 2012) (Trust...but Verify