Fraud: Warning Signs to Watch out for

Fraud can be succinctly defined as “a false representation of a matter… intended to deceive another.” Fraud is not the product of miscommunication, ignorance, or incompetence at work: fraud is the deliberate, premeditated transmission of false information from predator to unwitting prey. If your business has been damaged by fraud, contact the offices of Berkowitz Klein today to start setting things right. If your business is in the clear, keep it that way: be on the lookout for these common indicators of fraud.


 Common Types of Business Fraud

Business fraud has many faces. In 2012, the Association of Certified Fraud Examiners (ACFE) identified the top five most common types of fraud against businesses to be billing fraud, corruption, check tampering, skimming, and expense reimbursement fraud.

Billing fraud, as the name suggests, encompasses fraudulent activities related to billing. This might take the form of hidden fees, unauthorized charges, or bait-and-switch schemes (in which the consumer is “baited” into paying a low price for one product, only to have it later “switched” for a different product at a higher price). In August of 2013, Angel Moran and Francis Maikisch were accused of running a fraudulent phone billing scheme to the tune of $2 million.

Corruption refers to fraudulent practices involving illegal collusion between individuals. Accepting kickbacks or offering bribe money are examples. Measures against corruption include compliance monitoring and whistle-blowing (though the latter is, unfortunately, too often conflated with career suicide).

Check tampering is exactly what it sounds like: tampering with checks. For example, imagine a scenario in which a payroll employee invents nonexistent people, issues checks to “them,” and then diverts the funds for their own use. Even legitimate, “normal” checks can be stolen or otherwise intercepted, and then chemically altered.

Skimming is a slang term for defalcation. In skimming fraud, money is taken from the business entity before it is entered in the financial record, making it difficult to track. For example, an employee might “skim” cash from a sale, and then deliberately fail to make a record of the sale.

Expense reimbursement fraud means that you paid out money for something, then asked to be reimbursed for it… except, either you never actually bought anything in the first place, or you bought something that wouldn’t be covered by your business, but you made it seem like a necessary expense. You could have flown coach, but you opted for first class — and then reported back to your company simply that you needed to be reimbursed X amount for your “travel expenses.”


The good news is that, thanks to the advent of technology, less and less is lost to the wind. In an increasingly digitized world, there are records of virtually every payment, every receipt, every transaction. Unfortunately, fraudsters know how to keep up with the curve — at your expense. Don’t be a victim of business fraud. Call on our experienced, aggressive attorneys today, and fight back.