A number of recent cases have resulted in respected names within financial services making it into the news – for all the wrong reasons. These firms had all employed people in positions of responsibility who had then committed varying degrees of fraud, resulting in them being placed behind bars.
These financial services firms include:
Principality Building Society
Claire Free was a business operations manager who stole over £187,000 from various accounts, moving money on 140 occasions through bank transfers and paying in cheques over a 10-year period. She had worked for the building society for 23 years and was a trusted employee, but was caught when she forged a letter from a deceased customer and used this to take his savings of £9,170. The customer’s son noticed the account had been emptied and the fraud came to light. It is understood Free primarily gave the money to family members, who understood it was from “bonuses”. Following Free’s trial in August, she was jailed for 30 months.
WD Denis Financial Services
Financial adviser Joanne Holliday was given a six-month jail sentence in September for defrauding her employer of more than £10,000. She was struggling to meet gambling debts and tried to cover these by arranging for customers’ premiums to be paid into her bank account. The theft was revealed at the Leeds firm when insurers asked for the premiums and Holliday was revealed as the culprit even though she had deleted emails to try and cover her tracks. The judge described the crime as a “serious abuse of trust” and said her actions had resulted in a “serious detrimental effect on the company.”
A former claims handler for AIG was jailed for two years in August for defrauding the insurer, while working at its office in the City of London. James Beaver stole almost £400,000 to pay for his £500 a day cocaine addiction. The crimes took place both when he worked for AIG and after he was dismissed. He made 91 payments to his own bank account totaling £345,235 by creating fake claims and putting the client bank details to his own.
He was then dismissed for gross misconduct, not connected to the fraud and left the business. However, he later stole a further £45,243 from the company by making a further three fraudulent payments to himself and these took place when he gained access to the insurer’s Croydon office, pretending to be another employee.
Fraudsters in plain sight
While drug problems or a gambling addiction can be a driver for fraud, employee dishonesty may occur if there are no such problems and simply take place because the business has lax processes.
There is no cookie-cutter fraudster, and this is why firms must take the risk seriously. Defenses include having the issue on the board’s radar, investing in the latest training in addition to having clear whistle-blower processes. While being named in a fraud case can provide unwelcome publicity, there is also an argument to say it acts as a powerful deterrent.
Measures to counter internal fraud can be built in at the recruitment stage and then must remain a priority. This should include regular assessments with full awareness of which parts of the business are most vulnerable, knowledge of the legal processes and who has responsibility for investigations are also essential – with specialists appointed if necessary, to provide extra resource in this area. This could include advising what witness information is required and if surveillance is permissible. Meanwhile computer forensics is another, often crucial, part of a fraud probe as is being able to discover pertinent material through social media.
Securing a conviction is not a straightforward process with detailed information needing to be prepared before it can be passed on to the police. Overall realizing that internal fraud can happen to any business and seeing it as an active threat is the way to reduce risk and will also act as a deterrent to both existing and any future employees.