Elements of the Fraud Triangle

Topics: Fraud, Barry Minkow, Credit card fraud Pages: 4 (1570 words) Published: October 25, 2008
Case 1.9 ZZZZ Best Company, Inc.

Delta. Describe the elements of the Fraud Triangle that apply to this case. Assume you are the perpetrator. Is there a better way to perpetrate this fraud? If there is, describe your method. Specify practical recommendations for the client to prevent this fraud from occurring in the future.

The first element of the Fraud Triangle in the case of ZZZZ Best, case 1.9 is Incentives/Pressure.


As a result of the pressure placed on a person who is only a teenager in a tough business, one who faced a lack of working capital, the lack of assets and little profit make it difficult for a person of this stature to achieve financing to produce cash flow for sustaining of operations. One quickly realizes that through fraud a person could obtain funding to sustain operations. Through credit card fraudulent charges and check kiting and to stage theft to fleece one’s insurance company, producing more cash flow, one can raise quick and easy money. Through this experience with these types of fraud, it is realized quickly that one could bypass internal controls and create assets to bolster the company’s financial statements. From this point, with beating the system proving to be so easy, the next step is to forge friendships and acquaintances with people whom you vision could help further the cause of bolstering one’s company. Once a stable of confidantes are arranged, a gaining of trust is imperative. Through charm and charisma, not to mention financial incentives, it is not difficult to get people to do what you want them to do, exploiting their livelihoods for the betterment of one’s self. Creating fictitious contracts and having the people in your network lend credibility when being audited helps a person to generate paper profits and revenue streams to show, on paper at least, that the company is growing by leaps and bounds. The next step is to expand the initial cutthroat business to other areas, leading...
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