White collar crime takes many shapes and forms and no segment of business is immune from this risk. However, procurement fraud is one type of white collar crime that is often overlooked. In its most basic form, procurement fraud exists in certain circumstances. These circumstances occur when an element picks up leverage, evades a commitment or causes a misfortune through exploitative activities of a substance, foreman, open servant or person who is included in said procurement. So why is procurement fraud grouped as a type of white collar crime?
Numerous business managers consider procurement fraud as simply stealing paper, pens, and other office supplies for personal use. They may even consider it a normal cost of doing business. But this white collar crime can be far more serious even though it is not noticed. This may be because of the way that transactions that include procurement fraud show up among numerous honest business transactions. These transactions happen between a business and sellers that are thought to be genuine substances. On top of that, numerous businesses who succumb to a procurement fraud plan, don’t report it to the higher powers, rather deciding to settle the issue in private.
The accompanying is a genuine illustration taken from a recent news distribution that highlights the way that a business of any size may succumb to procurement fraud. One case of procurement fraud is highlighted in the San Francisco Chronicle’s online news production SFGate. The story is of a little store in Quincy, Massachusetts that is called Pat’s Mini Mart. The store owner was accused of executing procurement fraud that included permitting clients to utilize their Food Stamp cards as ATM cards. He did so with a specific end goal to withdraw aggregates of money as opposed to utilizing the trusts to buy food nourishment as they were permitted to do.
The owner and manager of Pat’s Mini Mart is a man named Pat Lu. The plan was generally straightforward: A person who was a Massachusetts Food Stamp beneficiary visits Pat’s Mini Mart with their EBT (Electronic Benefit Transfer) card. They utilize the card to make purchases in the store. The unlawful component of the transaction was that Lu would charge the card for much more than the real buying cost of the items and then hand over additional cash to the customer while keeping a portion for himself as a fee for this service. Pat’s Mini Mart would receive the full finances from the transaction as payment from the government. These transactions are completely illegal despite the fact that it will appear to be a genuine transaction when the ledger shows up as payment for goods. Trust is questioned here. Altogether, Lu has been accused of almost USD 700,000 in fraudulent transactions, accordingly defrauding the legislature of well over half a million dollars. He profited an average of $30,000 per month for the duration of this scheme. Six customers have also been charged and another fifteen are being investigated.
As you can see from this example, procurement fraud can be far more serious than swiping a few pens and paper. It can also be difficult to spot when masked my seemingly real transactions. What is your company doing to protect against this very real crime?