Fraud Investigations

Fraud investigations determine whether a scam has taken place and gathers evidence to prove existence and determine victims. Fraud is misrepresentation or misappropriation with the intent to deceive usually for some unfair advantage and/or enrichment. An investigation resolves whether or not fraud existed by reaching likely conclusions after perponderence of all available evidence.

Danny F. Dukes and Associates offers many types of services to help you combat the risk of fraud and reduce the stress associated with managing the investigation and remediation process.

"There are basically three elements of fraud. The first is opportunity, the second is need and the third is morality. Everyone has needs. The key to prevention is to prevent opportunities, because you can't consistently predict morality. Even though you may use extensive backgroud checks, needs can change and with opportunities come temptation." -Danny Dukes​

During fraud engagements we typically find that there were fundamental breakdowns in internal controls and operating procedures that allowed the defalcation to occur. We won't just tell you "hey there is $10,000 missing and here is who has the money." We insist on knowing how and why the defalcation occurred and actively put preventive and detective controls in place to lower the recurrence probability. It could be deficient computer systems. If it is, we will work as a partner to correct. We also seek economic remedies and do payback analyses.

If you have a suspicion of foul play, your suspicion, unfortunately, is magnified when we discover reality. Actual fraud damages are almost always worse than the suspicions. During tough economic times, like the recent economic downturn, blue collar crime has increased dramatically. Well, white collar crime usually takes a parallel path. So it's much worse also, but it usually stays hidden under the radar unless you have taken preventive and detective measures like the ones we put in place.

Techniques used are asset tracing, kickbacks and misappropriation; bankruptcy involving fraudulent conveyance actions and preferential payments; business and shareholder disputes; fidelity and embezzlement pertaining to employee dishonesty and fidelity bonds; financial condition analysis; financial institutional bonds; occupational fraud investigations; Ponzi schemes; and Whistleblower investigations.

Vendor fraud can include contract and royalty agreement assessments for fraud and abuse; new employee background search; and vendor/contractor pre-contract due diligence.

There are many reasons why organizations choose to conduct fraud examinations. In particular, a properly executed fraud examination can address a number of organizational objectives, including:

•   Identifying improper conduct
•   Identifying the persons responsible for improper conduct
•   Stopping fraud
•   Sending a message throughout the organization that  fraud will not be tolerated
•   Determining the extent of potential liabilities or losses that might exist
•   Helping to facilitate the recovery of losses
•   Stopping future losses
•   Mitigating other potential consequences
•   Strengthening internal control weaknesses.

In addition, in some instances, a fraud examination might be required by law. A duty to investigate can arise from statutes, regulations, contracts, or common law duties. Forexample, a corporation’s directors and officers owe a common law duty of care to their organization and shareholders, and therefore, when suspicions of fraud arise, it might be necessary for them to conduct an investigation to ensure that they have full knowledge of such issues affecting the company. Likewise, some laws hold employers accountable for investigating employee complaints involving certain matters, such as retaliation, discrimination, harassment, and similar issues.

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Below is an example of how lack of controls caused a significant fraud among partners.