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Examining the different types of vendor fraud

Whenever you have been tasked with handling a company's financial transactions, you essentially hold its spending power in the palms of your hands. With that authority comes a good deal of scrutiny, particularly over the companies and vendors in New York City that you work with. Several of the past clients that we here at Sapone & Petrillo, LLP have worked with have seen the nature of their vendor relationships cause others to accuse them of embezzlement. Why would your work with your company's vendors potentially lead to criminal accusations? 

Information shared by RSM US shows vendor fraud to be one of the most pervasive forms of embezzlement seen today. Its data identifies three types of such fraud: 

  • Fraudulent billing schemes: Where you are accused of making a false payment for your own benefit. This can be perpetrated either through a payment to a fictitious vendor that you have created or double payment made to a legitimate one (where you would then allegedly take the funds from the second payment). 
  • Check tampering schemes: Where you alter company checks by changing the payee or payment information, or issue inappropriate checks altogether. 
  • Bribery or extortion: Where you receive unauthorized payments from a vendor in exchange for landing an account or contract (or demand such a payment from a vendor). 

The common thread amongst these different types of fraud schemes is payment made to yourself or those close to you. One way to potentially avoid the appearance of embezzlement is to ask another employee to handle any vendor transactions with which you may have a personal connection, or to first obtain authorization from your superiors before completing such deals. 

More information on avoiding accusations of embezzlement can be found by continuing to browse through our site. 

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