Investigative Services

Expense Fraud

What are fraudulent expenses?

The term expense fraud is understood to be a criminal act by an employee in the context of an expense report, which leads to a reimbursement of costs by the employer.

The employer would not be obliged to pay this falsified expense report and the employee commits a criminal act (fraud and forgery) with additional consequences under labor law.

Expense fraud and manipulation of travel expenses is punishable by law!

In many of our past cases, defrauded companies suffered damage from expense and accounting fraud more than doubling what the companies originally suspected. Company fraud in the six-figure range is not uncommon. Fraud may be committed by any employee or partner, regardless of their internal position and can usually only be prevented or proven with direct action. The typical travel expense fraudster does not exist, as the motives of the individual perpetrators differ greatly. Mostly it is simply the circumstance of opportunity and not always due to financial problems.

In general, there are four common types of expense report fraud. These types include:

Counterfeit editions

Counterfeit editions should not be confused with innocent human error. Counterfeit expenses are fictitious purchases / expenses that are secured by fictitious and often handcrafted receipts for things that were never actually bought in order to get “reimbursed” for expenses that were never incurred.

Personal expenses

Another type of fraud that should not be confused with human error is personal expenses. This type of expense report fraud occurs when employees attempt to obtain reimbursement for purchases / expenses that were personal rather than business related during a business trip. Often these expenses are framed as if they were business related.

Multiple refunds

Multiple refunds can be human error or fraud and it can be difficult to tell. This type of potential fraud occurs when the same expense is reported multiple times on an expense report. If the expenses are reported twice in a lengthy report, it can lead to human error. However, in a brief report, things become more or more suspicious.

Overrated expenses

As with the “Multiple Reimbursements” item, these may appear as human error but are actually a method of covering up fraud. Overrated expenses are when expenses are inflated when they are reported and legitimate expenses are reported higher than their actual costs.

In this situation, mileage fraud has become deeply embedded in the corporate culture. It has become common practice for applicants to routinely round up distances traveled.

A self-sustaining problem arises – the more frequent the practice, the more normal it becomes in a workplace. A typical comment from one of the survey participants was: “I’m not doing anything bad, just adding a few extra travel expenses or working hours.” Inflated mileage reports and hours billed but not worked, are things which employers rarely or never notice.

But even the smallest individual losses, which multiply within a company, place a serious strain on company resources – they stunt growth and increase the risk of compliance violations.

What can I do if I suspect expense fraud?

As mentioned earlier, most expense scammers are creative. Many are willing to go to great lengths to avoid detection and prosecution. If a person whose only investigative experience is watching police series on television tries to conduct their own investigation, they will expose themselves and often suddenly find themselves in a dangerous situation or serious legal trouble.

Only a trained expert like an experienced detective has the skills and know-how to properly conduct a fraud investigation and not be exposed in the process. An employer cannot perform such investigations, even if there is justified suspicion, simply because of the lack of know-how with regard to observation and the legality of securing sufficient evidence. An amateur will expose themselves and ruin their case nearly 100% of the time and can also run into serious problems as a consequence. The reporting takes place in written and visual documentation. All detectives involved are of course available to you as witnesses in court at any time.

Who will pay the costs of the investigation?

According to the judgment of the Federal Court of Justice, the detective costs incurred for the investigation, are part of the legal costs, which in the event of a dispute, the losing party, under the condition that the detective work was necessary for the enforcement of the law, with reference to a specific suspicion. This applies to both the economic and the private sector.

This means: The detective agency proves that a criminal offense or misdemeanor was committed by the opposing party during the investigation and surveillance. In this case the losing party has to reimburse the detective costs.

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