Fraud

Fraud


     What is a Fraud? A fraud is when one party deceives or takes unfair

advantage of another. A fraud includes any act, omission, or concealment,

involving a breach of legal or equitable duty or trust, which results in

disadvantage or injury to another. In a court of law it is necessary to prove

that a false representation was made as a statement of fact, that was made with

the intent to deceive and to induce the other party to act upon it. It must be

proven that the person who has been defrauded suffered a injury or damage from

the act.

     Who commits a fraud and why? It is generally accepted that 20 percent of

employees are honest. Another 20 percent are dishonest and don't mind doing

wrong. That means the remaining 60 percent are potentially dishonest, that's a

total of 80 percent of employees which may be dishonest. To understand fraud you

first have to determine the contributing factors to why people commit fraud.

Some people commit fraud for the sport and thrill of it. There are other

recognizable reasons why honest people may commit a breach of trust. Need is the

most common reason. A desperate financial need is usually the cause of most

frauds. Still some people commit fraud to pay for an elevated life style which

other wise they could not afford. Needs arise from a number of locations these

include: Drug or alcohol addiction, Marriage break-ups and/of extravagant love

affairs, Gambling Debts, Business losses, Unexpected family crises, Mounting

debts, and the desire to live a lifestyle far beyond ones means.

      Fraud is costing society several hundred billion a year. Organizations

loose  close to 6 percent of annual revenue to fraud and abuse of social systems.

Fraud costs Canadian organizations $100 billion annually. On the average,

organizations loose $9 dollars a day per employee to fraud.  On an average of

fraudulent cases males received $185,000 and females received $48,000. A study

done by the insurance industry indicates the groups most likely to commit fraud.

The most typical person who may commit fraud is a college/university educated

white male. Men were responsible for almost four times the fraud as were females.

Losses caused by people with post-graduate degrees were five times greater than

those caused by high school graduates. Fifty eight percent of fraud is committed

by employees, which averages $60,000 per case. Twelve percent of fraud is cause

by owners, which on the average costs the insurance companies $1 million per

case. Fraud increases the cost of Canadians everyday living. It affects bank

rates, insurance rates, credit card rates, and product costs. All companies that

suffer losses factor in the loss to the premium and price the consumer pays.

     Fraud is a white collar crime because no one physically gets hurt. The

victims of Fraud are usually: Small companies which have large clientele, such

as Real estate, financial industry, and education industries. Fifty percent of

fraud involves corporations with cash accounts. About ten percent of fraud

arises from conflicts of interest, about five percent of fraud cases come from

fraudulent statements. Presently the funds obtained by frauds are not recovered.

Money obtained from crime is carefully hidden or spent avoiding recovery by the

victims and authorities. It is extremely difficult to locate hidden money's in

today's electronic age. Computers have increased the speed of transactions and

thus often not leaving sufficient documentation to track a potential fraud.

There are numerous ways of hiding fraudulent funds. Criminals often conceal

illicit payments, launder their money, Hide it in complex computer programs,

on/off in book transactions, off shore transactions, and net worth computations.

     Fraud is on the rise and the resources to combat it are on the decline,

thus making fraud investigators jobs that much more important. Many crimes,

particularly those which are non violent crimes are going unattended by the

police because they just don't have the man power to combat it. They are willing

to look into fra
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