Profiling The Fraudster: Removing the Mask to Prevent and Detect Fraud

Chapter 15Profiling the Consequences

ANOTHER IMPORTANT CONSIDERATION in the identification of fraud is what can be described as the impact or consequence of the fraudulent behavior.

An analysis by KPMG of fraud consequences or case results in its 2011 study found that fraud investigations had resulted in

• Disciplinary action in 40 percent of cases.
• Enforcement action, including regulatory, legal, and police involvement in 45 percent of cases.
• Civil recovery in 23 percent of cases.
• Resignation or voluntary retirement in 17 percent of cases.
• Out-of-court settlements in 6 percent of the cases.
• No action or sanction in 3 percent of cases.

To most organizations the obvious consequence of fraud is the financial loss. Some victim organizations go under and some start a slow death as credit is withdrawn or recalled due to apparent lack of controls to safeguard the lender's investment. A business may have to sell assets in order to keep its head above water. The National Institute of Justice in the United States has found that 20 percent of victims suffered severe financial loss or credit problems as a direct result of fraud.

Legal Proceedings and Loss Recovery

ACFE research indicates that 40 to 50 percent of victim organizations do not recover any of their fraud losses. Questions were asked in the 2012 survey about the legal proceedings and loss recovery efforts in fraud cases to help understand what happens to perpetrators and their victims in the aftermath of fraud.

As shown in ...