New Australian research conducted by Forensic Accounting and Corporate Investigations firm, Warfield & Associates, has detailed over one hundred cases where employees ripped off their bosses for at least $1 million. They devastated businesses, placed enormous stress on fellow employees, ruined relationships, lost everything and, in almost all cases, ended up in jail. This new research highlights who did it, how they did it, what their reasons were and how long it took to catch them.
To be included in the research, an employee had to commit an act of fraud involving at least one million dollars and be convicted in an Australian court of law.
There was extraordinary spending undertaken with other people’s money on exotic cars, escorts, houses, cosmetic surgery, overseas travel, buying businesses, racehorses, star wars memorabilia, strip clubs, jewellery and even several ‘special interest military vehicles’.
At least 39 cases involved gambling addictions in which the majority of the frauds were spent on a variety of gambling modes.
‘The impact of many of these frauds was significant. Some businesses did not survive, small business owners suffered emotional stress and health problems and many employees lost their jobs.’ Brett Warfield
‘The length of time that many of the frauds lasted was very concerning. Fraud can occur at any organisation. However, if the fraud is not being identified relatively quickly, then the organisation should ask why? Where were the failures in governance, audit and the whistleblowing protocols that allowed the fraud to occur.’ Brett Warfield
‘This research highlights the lessons to be learnt by small, medium sized and even the biggest organisations in the country about how they can better manage their internal fraud risk.’ Brett Warfield
Key findings included:
- 102 cases were identified involving employee fraud.
- $350 million was stolen.
- The largest amount stolen by an employee was $27.4 million.
- Six cases involved at least $10 million being stolen.
- Nine perpetrators had prior criminal histories for deception related offences.
- The banking and financial services sector was the hardest hit.
- The longest head sentence delivered was 15 years for a senior finance manager who stole over $20 million in a twelve year period.
- Lifestyle improvement was the main motivating factor in 44 cases.
- Gambling addiction was the main motivating factor in 39 of the cases and a contributing factor in four more.
- False invoicing and electronic funds transfer fraud were the most prevalent ways in which frauds were perpetrated.
- Of the employees who committed fraud against organisations other than banks, 43 were employed in the finance function.
- The longest time frame a fraud was committed was 17 years.
- 52 of the frauds took more than five years to discover.
- Ten cases involved collusion between the perpetrator and either another employee or external party, such as a supplier or contractor
About Warfield & Associates
Warfield & Associates is a Forensic Accounting and Corporate Investigation firm that helps organisations assess and mitigate their fraud risks. Our core services include 20 years’ experience with investigating fraud, corruption and unethical behaviour as well as providing fraud and corruption prevention risk management services including training.
This is the seventh major research study into Australian fraud released by Warfield & Associates since 2008.
