It’s Not Personal, It’s Only Business…Identity Theft

TASA ID: 2346

(For purposes of privacy, the names have been changed)

For three years a fraud was perpetrated upon A2G Company Inc. of Los Angeles. The company's real name is being withheld because the fraud almost destroyed it.  The crime was finally discovered when a tax department levied the corporate bank account for three years in back payroll taxes.

The company president (name withheld) couldn't understand what was happening.  He had signed all the tax payment checks himself and they had been prepared for timely submission by the company's CFO.

Little did the president know that the CFO would turn out to be a corporate I-D thief. As the president was to discover, corporate I-D theft would threaten the company, its staff, its lenders and its very owner.

The goal of a corporate I-D thief is to defraud the company through various methods including embezzlement, diverting company revenue or masquerading as a signing officer to cause financial and legal damage.

The Potential Victims

Thousands of companies could be victimized: Privately owned companies present the largest number of potential victims.  The more recognizable the name, the less likely it is to be a target.  It takes ego and daring to tell a banker that you represent General Motors and you need to open another bank account.

The corporate I-D thief is likely to come from the inside. The person might be a senior executive -- someone with intimate knowledge of the company's finances.  He or she may be a highly trusted individual with virtually unlimited access to the books and money.  This could be the financial controller or the CFO.  Even a 100-percent owner might be abusing corporate I-D in an effort to evade taxes, hide assets from lenders and investors or even conceal them from a spouse's divorce attorney.

Methods Used

A corporate I-D thief will use a variety of methods to steal money from the company.  The thief can open a secret bank account under the corporation’s name and deposit the company’s revenue into it. The thief could also create a new company with a name that loosely resembles the one now in existence.  For example: An existing company is called A2G Company, Inc. The new look-alike can be called simply A2G Company.

How is corporate I-D theft discovered?  Undetected, the crime is rarely apparent until it is too late.  Leaving the company to chance, this type of fraud becomes detectable if a company falls into financial straits, there's a mistake in the cover-up or other unplanned occurrence.

Proactive Forensics

Companies must conduct independent operations examinations for suspicion and detection of potential fraudulent activities.  Not performing such a study is like not buying liability insurance because you have not yet had a claim. The most difficult part of the discovery is to accept that someone who is respected and trusted may be behind the caper.  The lesson here?

No one should ever be above oversight.

This article discusses issues of general interest and does not give any specific legal or business advice pertaining to any specific circumstances.  Before acting upon any of its information, you should obtain appropriate advice from a lawyer or other qualified professional.

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