Vendor fraud is a scenario when someone creates a fictitious vendor name to hide money for personal gain, earns unlawful kickbacks, overbills the company- you get the idea. Vendor fraud may not be the first type of fraud that comes to mind. However it’s still fraud, and no small business owner wants to deal with it. The upgraded version of AuditMyBooks Analyzer has over half a dozen of vendor rule checks, and we’re constantly working to add new rules to help detect errors and fraud in your QuickBooks files.
A former firefighter from Brainerd, Minnesota was sentenced to 30 months in prison for his role in embezzling over $600,000 from the Mille Lacs Band of Ojibwe. He worked there as a construction project manager and admitted to arranging kickbacks for personal enrichment from 2005 to mid 2007.
This dynamic husband and wife duo from Denver, Colorado were accused of stealing nearly $270,000 from a Denver construction firm. She worked at the firm as a project accountant. Their theft scheme was a combination of check forgery and creating bogus vendor companies.
A jewelry department store had noticed that their inventory was shrinking by increasing amounts. The manager made it so employee theft was highly unlikely and shoplifting was near impossible. It so happened that a vendor employee was shorting this store and other store inventories by almost $200,000 from past years. Proper audits may have solved this mystery sooner.
In this case, the former auditors of Navistar are being sued while some of their employees are in hot water for concealing fraudulent transactions. It is said that the employee fraud was hidden in vendor accounts where it was simple to conceal from the auditors. The employees agreed to pay hefty clawbacks and fines from the years when the company’s income was falsely inflated.
Check out this article for more types of vendor fraud schemes, too.