David Anderson is principal of David Anderson & Associates, a Philadelphia forensic accounting firm that provides a full range of fraud investigation, forensic accounting, and marital dissolution services in Philadelphia and the Delaware Valley.

This blog continues my discussion of the Association of Certified Fraud Examiners (ACFE) “Occupational Fraud 2022 – A Report to the Nations.” This week I focus on how companies and organizations react after a fraud has been discovered and what their experiences are in attempting to recover fraud losses:

• 61 percent (down from 66 percent in 2020) of victim companies and organizations terminated the perpetrator while another 11 percent permitted the perpetrator to resign.
• However, 19 percent (up from 14 percent in 2020) of companies and organizations allowed the perpetrator to remain with the organization either with probation or suspension (12 percent) or no punishment at all (7 percent).
• Only 40 percent (down from 45 percent in 2020) of all owners and executives were terminated by the victim company or organization.
• 58 percent of victim companies and organizations referred the matter to law enforcement. This percentage has steadily declined from 69 percent of companies and organizations which did so in 2008.
• 29 percent of victim companies and organizations filed civil suits against the perpetrator. This increased over the 20-to-25 percent average during the past ten years.
• 44 percent (down from 56 percent in 2020) of perpetrators referred to law enforcement pled guilty or no contest while another 22 percent of perpetrators were convicted at trial.
• In 17 percent (up from 12 percent in 2020) of cases referred to law enforcement, the authorities declined to prosecute (due to either the size of the loss not being large enough or because the company or organization could not produce sufficient documentation and other evidence for the authorities to be confident that they could obtain a conviction).
• 10 percent (up from 2 percent in 2020) of cases referred to law enforcement resulted in the perpetrator being acquitted.
• 27 percent (down from 41 percent in 2020) of companies and organizations that filed civil suits received a judgment in their favor while another 39 percent of such suits were settled before a verdict was reached.
• Perpetrators obtained a favorable judgment in 29 percent (up from 21 percent in 2020) of civil cases (because the company or organization could not produce sufficient documentation or other evidence to sufficiently prove the perpetrator’s guilt).
• The overall trend over the last two years is that more perpetrators are fighting either the criminal or civil fraud charges in court, and are, unfortunately, winning more often.
• Victim companies and organizations that decided not to refer cases to law enforcement cited the following reasons for their decision:
  • A belief that internal discipline was sufficient (50 percent of non-referred cases)
  • Fear of bad publicity (30 percent of non-referred cases)
  • The company or organization reached a private settlement with the perpetrator (28 percent of non-referred cases)
  • The belief that pursuing a conviction would be too costly (20 percent of non-referred cases)
  • The lack of sufficient evidence to persuade law enforcement to pursue the matter (10 percent of non-referred cases)
• The median loss for companies and organizations which chose not to pursue the perpetrators was $50,000 for those which chose to not refer to law enforcement and $70,000 for those who chose to not pursue a civil action.
• The median loss for companies and organizations which chose to refer the perpetrators to law enforcement was $200,000 and was $300,000 for those which chose to pursue a civil action.

My next blog article, the final entry in this six-part series, will focus on how perpetrators conceal their frauds.

About David Anderson & Associates

David Anderson & Associates is a Philadelphia forensic accounting firm that provides a full range of forensic accounting services in Philadelphia and the Delaware Valley. The experienced professionals at David Anderson & Associates provide forensic accounting, business valuation, fraud investigation, fraud deterrence, litigation support, economic damage analysis, business consulting and outsourced CFO services. Company principal David Anderson is a forensic accounting expert in Philadelphia who has more than 30 years of experience in financial and operational leadership positions and is a Certified Public Accountant, a Certified Valuation Analyst, and a Certified Fraud Examiner in Philadelphia.

If you require the services of a Certified Valuation Analyst in Philadelphia or any other forensic accounting services in Philadelphia and the Delaware Valley, please contact the Philadelphia forensic accounting firm of David Anderson & Associates by calling David Anderson at 267-207-3597 or emailing him at david@davidandersonassociates.com.