Question

Case 2 Your father-in-law owns a medium-sized air condition- ing company in Meza, Arizona. Because of the heat in Arizona, the company has done rather well and the business is continually growing. Your father-in-law has received tips from other employees that one of the technicians, Damon, is disgruntled and has been padding his paycheck through different internal frauds against the company. Your father-in-law noticed that while things seem to be running more efficiently, the company has not been more profitable and so you have been helping him for the last month run secret audits as part of the internal investigation. Through your investigation, you have discovered that Damon has sto- len $50,000 over the last three years through the fol- lowing methods:

1. Damon regularly uses the company gas card to fill up his personal pickup truck and his family’s minivan.

2. Damon takes A/C units from inventory and sells them to people he knows at cost.

3. Damon sells auxiliary A/C parts, but pockets the money from the sale without including the sale on the invoice.

4. Damon often goes home from a job on Fridays after lunch, but claims on his weekly report that he worked until 5 p.m.

Think of how you would confront Damon; you have known him for two years and already have a working relationship. Specifically, what types of questions would you ask while you are talking with him? The evidence you have gathered in your investigation would support your decision to fire Damon; however, a written con- fession would help your court case if you decided to charge Damon for damages.

Answer 1

In the given case, Damon who is a technician has fraudulently stolen $50,000 from the funds of the company, over a period of three years. He should be confronted in the following manner:

Since, we have a working relationship with Damon, we should deal with him in professional manner. First, we should inquire him of any incidence of fraud known to him. We should not disclose the fact to him that we have already gathered sufficient evidence of fraud against him. He should be given a fair chance of being heard. After that, if he refuses to admit the fraud committed by him, we should tell him about the evidences gathered against him and the possible consequences that may arise.

While talking to Damon, following questions should be asked:

(a) He should be told that the company is not running profitably and he should be asked the reasons for this, that he might know.

(b) He should be asked about the motive behind the misappropriation of funds of the company.

(c) Ask him to present an account of information about the sales made to his related parties.

(d) Ask him to show his attendance time log.

(e) Ask him to exhibit the information related to the use of company gas card.

(f) Question him on the ethical and moral grounds.

(g) Inquire him about whether any other employee helped him in committing the frauds.

If the company wants to obtain a written confession from Damon, he should be dealt in following ways:

(a) He should be interviewed for the fraud committed by him.

(b) He should be inquired of little amount of frauds first, and when he admits them, he should be told about the amount of fraud detected in the internal investigation.

(c) He should be told that the investigating team has gathered sufficient evidence to prove his misconduct.

(d) The company should discuss its policies related to the employee fraud and the possible actions that could be taken against him.