David Maddox Chelsea Mcgehee Charissa Shiver Jessica Story

Assignment 4: Case 5-1

1. How does Miller fit the profile of the average fraud perpetrator? Miller fits the profile of the average fraud perpetrator in that he was a knowledgeable insider and gained the trust of his employer, he did not use violence, and he spent his stolen money on a lavish lifestyle. e began to depend on the income to support his lifestyle and continued to try and pay back the money he had stolen from earlier frauds. How does he differ? Miller differed from the profile of the average fraud perpetrator because he took responsibility for his actions and believed he was going to pay back the money he had stolen. !lso, as he continued to commit fraud he became less like the everyday person without any criminal background "ust because of the sheer volume and the addiction that it became. How did these characteristics ma e him difficult to detect? #hese characteristics made it difficult to detect Miller because his white collar criminal image was so identical to that of the general public, and he was trusted and liked by all of his employers. !. "iscuss how Miller accomplished the three elements of the opportunit# triangle $commit% conceal% convert& in em'e((ling funds from Associated Communications. )hat specific concealment techni*ue did Miller use? e was able to commit the fraud by being in a high ranking position that was able to circumvent internal controls around the company$s check writing policy. e overrode the need for two signatures on checks by having another executive sign some checks before that executive went on vacation %"ust in case&. Miller concealed the fraud by intercepting the bank reconciliation and removing and destroying the cancelled checks he had written by himself. e then wrote off the amount to an expense account to make the books balance. e converted the proceeds by cashing the checks he had written to his personal bank account.

+. )hat pressures motivated Miller to em'e((le? 'inancial pressure to repay previous frauds and the pressure to continue his lavish lifestyle motivated Miller to continue to commit fraud. How did Miller rationali(e his actions? Miller rationali(ed his actions by saying he was not a bad person and that he never intended to hurt anyone. e also claimed he would repay all the money that he stole. e thought people would like him more if he spent lots of money. 4. Miller had a framed ,-shirt in his office that said% -He who dies with the most to#s wins.. )hat does this tell #ou a'out Miller? Miller$s framed #)shirt showed that he was extremely motivated by material things and needs a lot of money to support his motivation. )hat lifest#le red flags could have tipped off the compan# to the possi'ilit# of fraud? #he lifestyle red flags that could have tipped off the company were that he was buying brand new Mercedes sedans, multiple homes, and extravagant wardrobes beyond what his salary most likely could have supported. 5. /dentif# several reasons wh# companies hesitate in prosecuting white-collar criminals. )hat are the pro'lems with these reasons? Companies don$t like to prosecute employees who commit fraud because of the negative publicity that would surround the company and make it look like it does not have an effective system of internal controls. ! problem with this reasoning is that fraud perpetrators will continue to exploit a company if they know that they are not going to be prosecuted. )hat could law enforcement officials do to encourage more rigorous prosecution of white-collar criminals? *aw enforcement could create laws that re+uire companies to report and prosecute fraud and hold them responsible if they know about the fraud committed. #hey could also help to make the prosecution process more private so companies would be more inclined to report the fraud since it would not be as public. #his would also help prevent future fraud acts because employees know they will be prosecuted for committing fraud.

0. /dentif# the primar# action each of the victimi(ed companies could have ta en to prevent Miller1s em'e((lement? )hat other controls could help in preventing future fraud? ,f any of the companies had prosecuted him in the first place it would have given him a criminal record which future employers would have hopefully detected by use of a thorough background check. -heeling .ron(e, ,nc. could have better enforced proper authori(ation and approval controls around the signing of the checks which Miller forged. Crest ,ndustries could have had better controls around the receiving and viewing of the bank statement, and again controls around the check writing process. !ssociated Communications could have better enforced the separation of duties around the writing of checks and have an alternate second responsible party for signing the checks when one of the executives went on vacation. Miller had access to the checks themselves, the recording in the accounting system, and to the bank reconciliation, which should not be permitted under any circumstances.