Frauds- some example

 

Inspite of the huge technology advances, Fraud keeps happening by making people gullible or provide incentives to make more money quickly. As i keep mentioning that only a few out of Trillions in the stock market make returns commensurate with their effort or a fairly large return. But these returns come from losers generally, unless the company has done really well.

One example of making people gullible is for, say, 50 people are targeted by X. 25 he tells a share Y to be bought because it will go UP and 25 he tells share Y to be sold because it will go DOWN. Depending on which 25 is correct, he splits the 25 into 12 and 13. He tells a Share Y to be bought because it will go UP and 13 he tells will go DOWN. Depending on which way stock has gone he splits the next, say 12 into 6 and 6. By now the guy who was in 25 (go UP) is sure the guy is on to something. next time he is in the 12 UP, he is more convinced. Now the 3rd time (out of 6) the guy who is giving tip is more convincing that he is for real prediction and the gullible person sends him money to double or triple it. Off goes the money.

Another Fraud example is Cashier is only supposed to collect money and not invoice. To manage with lower staff, Cashier was given the responsibility of making the invoice and for adjustments. (internal control of segragting cash collection and invoice) Cashier took money from the customer and stamped received on the Proforma invoice and gave it to customer, for say 105 KD. Then after customer left he pocketed 5 KD and made the invoice to 100 KD and customer paid 100 KD. Accounts side no dues as 100 KD invoice matched to 100 KD payment. He was doing it for 10-20 invoices in a day pocketing 100KD/day. Being smart, he targeted it on some days only and not all to avoid suspicion. He was caught one day when the customer had an issue and came with proforma invoice. On checking while proforma showed 105 KD the actual invoice in system was 100 KD. IT checked all his transactions, and it was found over a 2 year period he has taken out 10000 KD in all. Thus if management had heard internal control to keep invoicing  and payment separate this could not have happened. Cashier had invoicing adjustment to round of currency to the nearest 0 or 5 at the end.