Investigation into Ghost Employees and a Corrupt CFO
Situation:
Fraudsters often try to keep key tasks to themselves to hide their schemes. An unexpected job rotation, especially in accounting roles, can reveal such misconduct. This was the case at a company where the CFO had complete control over the payroll process, including adding employees and setting their pay. When the CFO went on medical leave, a new person took over the role. Brian Forensics was called in after the new individual noticed two payroll entries with the same last name as the CFO, receiving unusually high compensation.
Strategy:
Our first step was to establish if there was enough cause to investigate, which there was. We examined the CFO’s personnel file and found that the two individuals were covered by the CFO’s health insurance, with one listed as the CFO’s spouse and emergency contact. There were no personnel files for these “employees.” We then reviewed payroll records and discovered that these individuals had been paid for several years, but no timesheets were available for one who started as an hourly employee.
Results:
Our analysis revealed that the CFO had embezzled over $0.92 million through the ghost employee scheme. The company used our report to pursue criminal charges with the Kenyan Directorate of Criminal Investigation. Brian Forensics identified the CFO’s scheme of adding non-existent employees to the payroll to collect wages. We traced the flow of funds from payroll to disbursement using our forensic technology skills. Additionally, we recommended best practices to prevent future fraud, such as segregating duties between HR and accounting and regularly rotating sensitive accounting positions.
