An employee of JHT Holdings, Inc., a trucking company, was responsible for resolving roadway accident claims under $25,000. The employee created fake accident claims and wrote settlement checks of between $5,000 and $25,000 to friends or acquaintances acting as phony "victims." One friend recruited subordinates at his place of work to cash some of the checks. Beyond this, the JHT employee also recruited lawyers, whom he paid to represent both the trucking company and the fake victims in the bogus accident settlements. When the lawyers cashed the checks, they allegedly split the money with the corrupt JHT employee. This fraud went undetected for two years. Answer the following True or False questions concerning the fraud.

a. Frauds that are perpetrated with multiple parties in different positions of control make detecting fraud more difficult.
b. Claims should be authorized and verified before payment is made.
c. The employee made sure each claim had a phony "victim."
d. Corrupt lawyers were brought into the fraud to act as attorneys for the claimants.

Explanation:

a. Frauds that are perpetrated with multiple parties in different positions of control make detecting fraud more difficult. True

Fraudsters know that the more people and locations are engaged in their schemes, the longer is to track who was part of it.

So many people recruited by the employees' friends that made it longer it gets to catch them.

b. Claims should be authorized and verified before payment is made. True

In this case, the verifying system couldn't handle this because the 'cashier' (employee's friend) was part of the scheme and the one who authorized some payments. Other payments were authorized because through this scheme it was legit.

c. The employee made sure each claim had a phony "victim." True

When He wrote these settlement checks the recipients were the phony victims recruited to act like real ones.

d. Corrupt lawyers were brought into the fraud to act as attorneys for the claimants. True

Yes, these lawyers were paid to be the defendants of the phony victims, who claimed in the Court. They helped in the Court to give it a color of the truth.