Uncovering 226 counts of fraud for a major retailer
KordaMentha Partner Richard Bennison recounts the successful investigation of a $16.7 million fraud perpetrated against a major fashion retailer by one of its senior executives. The KordaMentha Forensics team was marshalled to assess the matter on behalf of the retailer, which resulted in the senior executive being convicted of 226 counts of fraud.
‘KordaMentha was engaged by a law firm representing a large fashion retailer to assist them in investigating the concerns raised by their accounts staff on irregular supplier invoices. By day two of the investigation, KordaMentha had established that a total of $16.7 million had been paid out to various companies issuing fraudulent invoices. The evidence we helped to gather ultimately assisted in the successful prosecution of the senior executive.
The case requried us to efficiently identify:
- the exact amount of fraudulent money lost by the retail client
- whether any connections could be established between the senior executive and supplier companies that submitted the fraudulent invoices to the retailer
- the senior executive’s knowledge of the fraudulent invoices and the payments made in relation to those invoices
- whether the senior executive benefited from the payments made to those companies.
Comprehensive background searches were conducted on the supplier companies to identify who owned and controlled them. The results of these searches were mapped and presented in evidence. We identified a complex structure of interrelated companies and people, which we tracked back to the senior executive. This information gave us a clear picture of the companies used by the senior executive to receive funds, and the extent of his involvement and connections with these companies.
An important component of any financial investigation is to locate and review electronic evidence relevant to the alleged fraudulent conduct. Emails and documents can contain vital evidence and demonstrate a person’s knowledge of the matters under investigation. Accordingly, KordaMentha’s computer forensic experts took a forensic image of the senior executive’s computer and email account. This data revealed evidence of the fraud, in the form of a number of key documents and emails.
We were able to quantify the loss to the client caused by the fraud at $16.7 million via flow of funds data, the results of our background searches and other records provided by the retailer. Our analysis was later used by the client in a successful insurance claim lodged in respect to the fraud.
The computer forensic review also provided evidence that the senior executive:
- had created invoices which were fraudulently used to claim payment
- authorised payments by the retailer for the fraudulent supplier invoices
- authorised the transfer of funds from the accounts of supplier companies to party accounts.
In concluding the investigation, we collated a brief of evidence for the police, which was provided in the correct format to enable them to quickly lay charges against the senior executive. As a consequence, the executive was charged with 226 separate offences in relation to the fraudulent misappropriation of funds from his employer. In court, the senior executive pleaded guilty to all 226 charges and was sentenced to six years and four months in jail.
The guilty verdict reflects the strength of the evidence against him and demonstrates the effectiveness of the brief created by KordaMentha.’