Some corporate fraud by employees is not premeditated. it is opportunistic. Sometimes temptation overrides common sense. It is important that businesses have in place mechanisms to prevent fraud.

In this video it explains a simple scenario. A laid off employee didn’t have his corporate credit card canceled. So he took advantage of it and went shopping and paid for a family holiday. Clearly it is illegal but the recovery of the money can be a distraction and expense your business could do without.

This video has some simple tips for companies to help reduce employee fraud. Streeterlaw's Mark Streeter has extensive experience in fraud cases.



Corporate Fraud does happen in Australia? Ask for Streeterlaw's free White Paper: Workplace Fraud Investigation. How to uncover it, prevent it, stop it

Business fraud is an increasing problem not only in Australia. In this American video forensic accountant and anti-fraud director, Lance Randolph of CBIZ MHM, discusses the two most common fraud schemes facing corporate America today. The situation in Australia is similar with corporate fraud done by a company's own staff a serious issue. Protecting your business from fraud can be a matter of having simple procedures in place.

It is amazing that simply "writing a cheque" is the easiest way for businesses to be de-frauded by their own employee(s). The second one is the use of counterfeit cheques.



Do you suspect Corporate Fraud? Ask for a free White Paper: Workplace Fraud Investigation. How to uncover it, prevent it, stop it

When USA based WorldCom Inc fell victim to an $11 billion accounting scandal it resulted in the company filing bankruptcy. In 2002 it was the largest bankruptcy in U.S. history. Corporate Fraud occurs in Australian businesses.  Most business fraud is opportunistic so could be prevented.

Some of the lessons learned in the WorldCom collapse are explained in a video called Fraud and the Tone at the Top . This is a training video designed to help business owners prevent corporate fraud.

The video includes interviews with one of those charged and sentenced to a gaol term for their role in commercial fraud.

He explains how he was able, and even encouraged to manipulate accounting records. The culture of the leaders encouraged questionable ethics and even them having a written “Code of Ethics” was seen as helping staff avoid moral analysis of their actions.

Some of the commercial fraud started seemingly innocently enough with delaying write offs of accounts receivables. As staff were remumnerated on profit and results there was incentive to make revenues look better than they actually were. Actions were justified with a belief that they could be fixed in the future when things improved.

The setting of unreasonable goals combined with poor communication is seen as partly to blame for the fraud. Where loyalty is not displayed staff can become loyal only to themselves

The video is a reminder that preventing corporate fraud is good business.

To watch the 20 minute video click here: Fraud and the Tone at the Top

Do you suspect Corporate Fraud? Ask for a free White Paper: Workplace Fraud Investigation. How to uncover it, prevent it, stop it

Business fraud costs everyone in a company. Policies and procedures for businesses help prevent and identify fraud. This American news report gives some insight into the problem.

The video includes a case of a former trusted book keeper of a restaurant who defrauded their employer of thousands of dollars.



Do you suspect Corporate Fraud? Ask for a free White Paper: Workplace Fraud Investigation. How to uncover it, prevent it, stop it

Preventing or dealing with workplace fraud or theft takes work. Preparation is a big part of this. Even just saying you will be doing background checks during an interview process may help weed out some people from ever being hired.

Business owners should consider the level of risk their business is exposed to. Always presume innocence of staff. However ensure you have policies in place. Breach of these policies may allow you to dismiss staff much easier than simply suspecting them of theft or fraud. The American video below includes some practical tips if you want to initiate an investigation. Be very careful before making accusations of staff who may have been involved in workplace fraud.

Comment from Mark Streeter Fraud Lawyer

While this video suggests a do it yourself approach to fraud investigation it is pretty easy to see how it could get complicated. Streeterlaw are experienced in investigating workplace fraud. Acting quickly is important before evidence can be tampered with. Unfortunately taking the untrained approach, or relying on HR staff as  promoted in the video can give the suspect too much time and power in the situation to cover tracks.

If you suspect workplace fraud or theft give Streeterlaw a call.



Do you suspect Corporate Fraud? Ask for a free White Paper: Workplace Fraud Investigation. How to uncover it, prevent it, stop it

Fraud can happen in any business. However non-profit organisations sometimes have looser controls so may be more susceptible to fraud. This video dramatisation below may be a little corny but the message about corporate fraud is good. The statistics about fraud are also interesting. More men commit corporate fraud than women.

The fraud video helps show how easy it can be for employees to take advantage of lack of business controls. Simple things like no double signing of cheques, not checking bank statements - or simply having too much control by only a few staff members.

Comment from Mark Streeter - Sydney Fraud Lawyer

Fraud is not always premeditated. Rather fraud can be opportunistic. Yet if fraud is not caught early employers can continue to abuse the situation and cause more damage to the business. If you suspect fraud give us a call.



Do you suspect Corporate Fraud? Ask for a free White Paper: Workplace Fraud Investigation. How to uncover it, prevent it, stop it

The Situation – Theft of Intellectual Property

An Australian company had an extremely well developed website. Hundreds of hours had gone into its development in optimising design and content to inform and direct new business. A competitor was accused of “cutting and pasting” significant portions of text from the company web site onto their own website.

The Solution

Streeterlaw wrote a letter of demand requesting the removal of the infringing text from the website. Only part of the text was removed in response to the letter of demand. Urgent proceedings were then commenced in the court seeking an injunction requiring the removal of the offending text within two days.

The Defendant provided an “enforceable” undertaking to the Court that they would remove the text. The deadline for removal of the offending text expired without compliance with the enforceable undertaking. Streeterlaw sought enforcement orders and filed an application for contempt joining the Directors of the defendant corporation as a further respondent and defendant to the action.

The Result

The situation was resolved with the offending text being removed. The defendant company paid all legal costs plus a confidential sum for damages.

This is just one example of Streeterlaw's very precise strategy for clients. Protect your intellectual property. Call Streeterlaw for a free no-obligation phone consultation.

The Australian Securities and Investments Commission (ASIC) has found a North Sydney Solicitor guilty of advising eight of his clients engage in activity which breached the Corporations Act. This significant case sends a warning to all business advisors. These two judgments of Acting Justice Windeyer are very important decisions of the Court in considering Section 79 of the Corporations Act 2001 (CTH).

The Facts - ASIC v Somerville & Ors (No 2) [2009] NSWSC 998 & ASIC v Somerville & Ors [2009] NSWSC 934 

The First Defendant was a solicitor practicing in North Sydney.  He was sued together with eight of his clients for alleged “phoenix” activity.  The solicitor had provided similar advice to each of the eight businesses (which were facing insolvency) on separate occasions. 

The effect of the advice and the transactions taken by the companies and directors in reliance on this advice was that the company would sell its “business” to a new entity in consideration for being issued “V Class” shares in the new entity which will be paid by dividends.  The debts and liabilities of the previous company stayed in the old company.  No dividends were ever paid by the new entity back to the old company.

The result of the implementation of this advice was that the purchaser acquired all the assets of the old company free of any of the liabilities of the old company leaving trade creditors, taxation debts and debts for insurance premium to sue an asset-less company.  

The Decision

The solicitor was found to be involved in the Directors’ misconduct.  The Company Directors were found to have breached Sections 181, 182 and 183 Corporations Act 2001 (CTH). In the second judgment the directors unsuccessfully sought to make an application for exoneration under section 1318 on the basis that they relied on their solicitor’s advice and should not be personally liable. The solicitor was disqualified from managing corporations for a period of six years and the other directors (of the subject corporations) were disqualified from managing corporations for a period of 2 years.  

Comment from Mark Streeter Sydney Lawyer

This case stands as a solitary warning to all participants involved in advising debtors in respect of their statutory obligations under the Corporations Act.

Luna Park Sydney has has had a long and sometimes turbulent history in Sydney. Luna Park Amusement Park is located on the north side of Sydney Harbour at Milsons Point. It's smiling face has been part of Sydney landscape for much of the park's life since it opened in 1935. When information gathered for a court case was released to Sydney's Daily Telegraph for an article it was considered to be "contempt" - a misuse of the information.

The Facts - Hearne v Street [2008] HCA 36 (6 August 2008)

After being closed for a period of time Luna Park recommenced operations in April 2004.  Local residents objected to the noise which was alleged to have included music, loud speaker announcements and mechanical noises from the rides.  Proceedings were commenced in the Supreme Court of New South Wales relying on the Tort of nuisance.

In the course of the preparation for hearing the Plaintiffs served affidavits and expert reports.  It was alleged that some of this material was then distributed by the Defendants to the Daily Telegraph and used as a basis for an article published on 18 April 2005 and also used in communication to the State Government as part of a lobbying campaign for legislation that was introduced Luna Park Site Amendment (Noise Control) Act 2005 to protect the operators of the Park from complaints of  noise and claims for nuisance.  

The Decision

An application was made by the Plaintiffs that the Defendants had improperly used affidavits and expert reports in whole or in part (with all the information contained within them) for a purpose not directly connected with the conduct of the proceedings.  It was alleged that this was in breach of an express or alternatively an implied undertaking to the Court.

An application before the primary judge was unsuccessful.  The Applicants then appealed to the Court of Appeal who upheld the finding of Contempt.  An appeal was then made to the High Court who handed down judgment on 6 August 2008.

The majority judgment in the High Court comprising  HAYNE, HEYDON AND CRENNAN JJ found that;
"The Court should not allow any party – whether a party to the proceedings or not, to use documents for any ulterior or alien purpose.  Used with knowledge of the circumstances of, and the source of the documentation would be an improper use.

Comment from Mark Streeter Sydney Lawyer

This case serves as a very useful restatement of the law of contempt.  The prosecutor of the contempt were the parties in the litigation.  It was a charge of “civil contempt”.   In this case the Applicant (one the Plaintiffs in the action) became the “prosecutor”. The burden of proof is the civil burden.

It is necessary to specifically particularise the allegations against each of the Defendants.  The Court Rules require the filing and service of a “statement of charge” setting out these details.

Parties, lawyers, their clients, experts and any other person who is provided access to documents obtained in the course of litigation should be very, very careful about how this information and documents are used and be mindful of the constraints imposed upon the parties. The documents produced in the course of legal proceedings were subject to the rule against their use for any other purposes apart from the proceedings. Once an affidavit is “read” in open court or evidence otherwise is provided through a witness, the evidence becomes “public” and accordingly the constraints described dissolve.