A fraud case is an investigation into the potential involvement of individuals or businesses in a deceptive practice. The fraud may be criminal or civil. In a criminal case, prosecutors must prove the defendant’s guilt beyond a reasonable doubt, and the burden of proof is much higher than in a civil case.
Financial fraud is a large category that includes everything from embezzlement and theft of company funds to insurance and credit card fraud. Criminals also steal intellectual property, which can cost companies billions each year and include anything from trade secrets to proprietary products. Fraud in the financial sector can also involve phony invoices and false payments to suppliers. Business fraud often involves staff who exploit segregation of duties and weak internal controls to steal money from their employer, which can be particularly damaging for smaller companies.
Another type of fraud is investment fraud. The Securities and Exchange Commission classifies this as a crime, and some of the most devastating examples of investment fraud occurred at Enron, where employees were stealing millions of dollars from shareholders. The company’s collapse in 2001 resulted in huge losses for investors and bankruptcies for many of its senior management. The Sarbanes-Oxley Act of 2002 was a direct response to this massive corporate fraud. Employees who commit investment fraud often lie to get access to company records and to use confidential information to make illicit investments. They might also manipulate stock prices and manipulate earnings statements. To help prevent such incidents, it’s important to secure physical and digital evidence carefully and preserve them in their original form. When conducting interviews, it’s also crucial to keep them as transparent as possible and ask open-ended questions instead of leading them.