Fraud Examination Casebook with Documents

CHAPTER 5Case 5: Tracing Data Analytics Red Flags Back to Source Documents Using Subpoenas

5-1 ANDERSON INTERNAL MEDICINE AND LARSEN CONVENIENCE STORE (CONSPIRACY AND LOAN FRAUD): TRACE TRANSACTIONS DISCOVERED DURING DATA ANALYTICS BACK TO SOURCE DOCUMENTS USING SUBPOENAS

Learning Objective

After completing this case, you should be able to:

1. Take red flags detected from using data analytics (i.e., suspicious deposit and related disbursements) and trace those transactions back to the source documents (loan documents in this case).
2. Prepare subpoena wording for attorneys to obtain additional bank documents.
3. Review loan documents and determine whether the loan documents (credit applications and supporting documents) contain material misstatements.

 

HISTORY BEHIND THE FRAUD CASE

Father and son were targets of an arson‐for‐profit investigation. The father was gambling at a casino at the time an incendiary fire destroyed his business. Data analysis of the primary business bank account detected a large deposit, which was significantly larger than any prior deposits associated with the business. Using first‐in, first‐out (FIFO) analysis, the recent deposit was matched with funds used to pay a casino, other financial institutions, and a construction company. A second round of subpoenas was served to the source of the large deposit and the entities that received the checks associated with the deposit. It revealed, among other things, that the large deposit was partially used for payment ...