Living the Good Life! Case Study of Another Authorized Maker Scheme, Part 2

A staffer at the local bank informed the town mayor about inappropriate charges for women's clothing that the clerk-treasurer made on the city's credit card account. In addition, an external auditor who was reviewing city financials discovered the clerk-treasurer had issued unauthorized checks to herself for almost $80,000 in a three-year period. This column brings you the conclusion of this case study.

An authorized maker scheme is a type of check-tampering fraud. In the ACFE's Fraud Tree, the crime is a subset of fraudulent disbursements, which is a subset of cash schemes. (We dissected another authorized maker scheme in the November/December 2010 and January/February issues.) In this scheme, the perpetrator physically prepares a fraudulent check and/or causes the organization to issue an unauthorized check, which is then converted to personal use. This scam has the potential to drive small businesses into bankruptcy. A trusted employee who perpetrates this fraud must have access to the checkbook and bank statements and the opportunity to forge signatures and alter accounting records to perpetrate this crime.