Former EPA employee John Beale masqueraded as a CIA spy, netting $900,000 in fraud. This is clearly a major internal control failure, and a lesson for all organizations in preventing fraud events. Fraud expert Dan Draz explains what happened and where it all went wrong on CommPRO.biz:
First, in every major fraud event there is always a “postmortem” or “lessons learned” opportunity and that is certainly true in this case. To apply lessons learned from this situation universally, the first hurdle that we have to mentally clear surrounds Mr. Beale’s (actual) employer. He worked for a government agency and while most of us don’t, that issue should not prevent us from applying the lessons learned analysis from this situation to private business. The bottom line is that the government is an employer like anyone other type of employer, and the lessons learned in this example clearly transcend to every employer, regardless of whether it occurred at a government agency or private sector employer.
So, let’s put the CIA issue into perspective here. Whether he said he was moonlighting at the CIA, or any other place, there are many things that people represent to others about themselves to bolster their ego and sense of self worth (Navy Seal, Professional Athlete, College Athlete, Olympian etc.) and not surprisingly these are all things I’ve investigated at one time or another during my career as a fraud professional. No matter how outrageous the claim, when you boil this example down to the basics, and remove the CIA issue, what you really have here are issues central to every employer: Red Flags, Ethics, Audit, Human Resources and Business Processes (Internal Controls and Accounts Payable (AP) processes). Clearly, everywhere you look across these areas there were critical employment related and business control failures which are key takeaways for all businesses.
Visit CommPRO.biz to read a full analysis, including red flags, ethics, audit, and HR failures.