Cit Fraud Case Paper

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1. The three aspects of fraud - Perceived pressure, Rationalization, and Opportunity were present in the CIT case as follows: Pressure- Niakan was placed under much pressure to meet monthly targets. The senior VP Ms. Thompson had earlier criticized his performance when it fell below expectations. Niakan had also been warned in his 2002 annual review that his team needed to improve end of lease sales and inventory returns. Apart from this work angle Niakan had personal financial pressures too; he and his wife had been through several rounds of expensive in vitro fertilization treatments before they had their twins. Opportunity- Niakan was responsible for the Remarketing department that Werle managed and the End of Lease department, thereby, making him in charge of all returning off-lease assets at the Jacksonville branch and this gave him opportunity to override controls as there was nobody supervising his work and decision making. Rationalization- even after being convicted of fraud, Niakan never admitted that he had wronged. He conveyed a sense of entitlement to the stolen funds because of the financial pressures that he faced personally.

2. The first and big red flag that Werle thought back was from 2004 when she received a call from one their customers PGT Industries who called to inform CIT that they had returned the leased equipment as per CIT’s instructions. Werle was not aware of any leased equipment that was being returned by PGT and there was no information regarding the same in CIT’s inventory tracking system, letters database, or Infolease system. Another red flag was when upon further research Werle saw that there were more transactions were in Niakan had set up remarketing warehouses that were not approved by CIT and were owned by Niakan’s friends. Auditors, fraud examiners and colleagues should be alert to recognize when operations and controls do not flow as prescribed or set up. Any deviations from set...
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