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Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
CFCI Study Guide – Updated Exam Well
Elaborated 2025/26 A+ Score.
Fraud
"Any illegal acts characterized by deceit, concealment, or violation of trust. These acts are not
dependent upon the perpetrated by individuals and organizations to obtain money, property, or services;
to avoid payment or loss of services; or to secure personal or business ad-vantage."
Main types of fraud
Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
Internal Fraud and External Fraud
Internal Fraud
Activities that may be criminal, committed within an organization, typically by the employee against the
employer.
External Fraud
Deceptive conduct by non-employees that
deprives the organization of value, and/or is undertaken for financial gain.
Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
"Cooking the books." This type of fraud generally refers to falsely representing the financial condition of
the company, so as to inflate the value of stock, fraudulently boost executive bonuses, or otherwise
mislead shareholders, lenders, employees, investment analysts, or other users of the information.
Skimming (cash larceny)
Accounts receivable fraud, this involves simply stealing cash before it enters the organization's
accounting system.
Billing Schemes
Using false documentation to cause a targeted organization to issue a payment for false services and/or
purchases.
Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
Check Tampering
Common method (Taking advantage of employee access to blank company checks, using a password to
steal computer-generated checks or producing counterfeit checks).
Employee reimbursement scheme
Making false claims for reimbursement or inflating or creating fictitious business expenses. (Travel /meal
reimbursement.
Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
Extortion
When a person demands payment or seeks to influence a business decision by threat of harm through
loss of business or personal injury.
Kickback Schemes
Forms of corruption involving employees and vendors, often using inflated billing or invoices for which
the employee is paid a portion of the inflated or fictitious invoice.
Credit Card Fraud
The creation, sale, or use of a counterfeit credit card, or the use of a stolen credit or debit card.
Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
C.N.P
Card not present transactions
Identity Theft
The fraudulent acquisition or stealing of confidential personal information through social engineering.
Identity Fraud
Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
Savings and Loan Crisis
The failure of about 1000 savings and loan banks as a result of risky business practices. The roots of the
S&L crisis lay in excessive lending, speculation, and risk-taking driven by the moral hazard created by
deregulation and taxpayer bailout guarantees.
Myth #1 of the Financial Services
"We have very little fraud here" ex: subprime mortgage fraud
Myth #2 of Financial Services
Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
"Ethics and training compliance has us covered" Fraud is not always covered in ethics policy or training.
Myth #3 of Financial Services
"Fraud is an unavoidable cost of doing business" Fraud is usually not serious enough to destroy a
financial service firm, it is much more than necessary cost of doing business.
Chapter 1 review points
- Statistical picture of fraud. The numbers do not lie: Fraud is a huge worldwide problem—for all
organizations.
- Financial services fraud. Seventy-four percent of financial institutions experienced attempted payment
fraud (check fraud, ACH fraud, or credit card fraud in 2020).
Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
2 types of insider fraud threat
Employee level fraud and management level fraud
True or False: Managment Level Fraud is committed less frequently than employee level fraud?
True: Management level fraud is committed less frequently than employee level fraud however the
financial loss is almost always greater.
Fraud Triangle
Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
Created by leading criminologist Donald Cressey. The three factors that contribute to fraudulent activity
by employees: opportunity, financial pressure, and rationalization.
Financial pressure
Financial difficulties, such as large amounts of credit card debt, an overwhelming burden of unpaid
medical bills, large gambling debts, extended unemployment, or similar financial difficulties.
Opportunity
Employee identifies a weakness in the organization's anti-fraud controls. For example, if an employee is
able to set up a phony vendor, have fraudulent invoices approved, and have payment sent to an address
that he or she controls.
Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
What caused the Fraud Triangle to morph into the Fraud Diamond?
A reevaluation for peoples unadorned lust for money caused personal Greed to become the 4th side,
morphing the triangle into the diamond.
Chapter 2 Review points
- External fraudsters are a varied and demographically diverse group, which makes it difficult for fraud
fighters to profile these criminals. The best approach to detecting and preventing external fraud against
financial institutions is to understand the red flags of these crimes.
- Internal fraudsters do have common behavioral and personality traits, which helps to detect suspicious
activity before it is too late.
- Up to 80 percent of employees are either totally honest or honest to the point that they will not steal
except in situations in which the opportunity to do so presents itself. And even then, these "fence
Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
sitters" may err on the side of honesty. The remaining 20 percent of your organization's employees are
fundamentally dishonest and will go out of their way to commit fraud.
- Internal fraud can be divided into two categories: employee level and management level. There is an
inverse ratio between the level of the organization at which fraud is committed and the amount of
financial loss resulting from frauds committed at each level. Thus, while management-level frauds are
committed less frequently than employee-level frauds, the financial loss resulting from the former is
almost always significantly greater than the amount lost from the latter.
- The Fraud Triangle (Pressure, Opportunity, and Rationalization) helps fraud fighters identify and stop
potential fraudsters from carrying out crimes that could result in financial losses to the organization.
- The elements of the Fraud Triangle have their own unique meaning in the context of the financial
services industry.
- The Fraud Triangle can arguably be reinterpreted as a Fraud Diamond when the element of greed is
included as a key motivator for fraud in the financial services industry.
Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
"A third-party"or "nominee" loan is a loan in the name of one party that is intended for use by another.
In other words, a persons PII is used with permission to secure a loan for someone who would not
qualify, thus circumventing the system.
Kickback on Illegal loans
A bank insider is induced to approve a loan to a non-credit worthy borrower, where the borrowers
agrees to give something of value to the banker to approve the loan.
Reciprocal loans
A dishonest loan officer or bank manager agrees to authorize loans to one or more crooked bank
colleagues or to dishonest counterparts in other financial institutions made with the understanding that
a comparable, reciprocal loan or favor would be made in return.
Remember: Financial statement frauds are among the least frequently committed frauds in most organizations. However, they are by far the costliest. Implementing effective internal controls for this type of fraud is usually challenging but imperative.
Chapter 5 review points
- ACFE Chairman Joe Wells explains executive-level check fraud this way:
- In most situations, check signers are owners, officers, or otherwise high-ranking employees, and thus have or can obtain access to all the blank checks they need. Even if company policy prohibits check signers from handling blank checks, normally the perpetrator can use her influence to overcome this impediment.
- Conflict of interest is one of the four types of fraud comprising the ACFE's definition of corruption, together with bribery, illegal gratuities, and economic extortion.
- Although the temptation to offer bribes to overseas officials to obtain government or corporate contracts sometimes may be tough to resist, the risk of discovery and subsequent penalties indicate that the risk is usually extremely high.
- The sanctioning by Wall Street bosses of rampant derivatives development and marketing cannot technically be defined as fraudulent. However, the courts are still working through cases whose outcome may produce new definitions of legal and illegal conduct in the C suites of major financial institutions.
- The most common motives driving dishonest financial services executives to falsify financial records and statements are to boost share price, increase executive bonuses, conceal illegal financial transactions, and secure financing.
- The three rating agencies—Moody's, Standard & Poor's, and Fitch—have been criticized by financial thought leaders and politicians for acting without objectivity in rating certain mortgage-backed securities.
- Buying and selling stocks on the strength of information available only to company or investment firm insiders and not to the investing public has been against the law since enactment of the Securities
Linked financing
A form of loan fraud in which a large depositor or a deposit broker agrees to give a bank its business in
exchange for a loan that it might otherwise not qualify for or that is used to perpetrate a real estate
fraud.
Working Capital or Asset-based Loan Fraud
Typically are made by committing the borrower's receivables, inventory, or other assets as collateral.
Also referred to a "Floor-plan" lending as merchandise is used as collateral for the loan.
