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Elements of the Fraud Triangle

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List the elements of the Fraud Triangle, and use this case to provide examples of each element.

"Someone's Going Straight to Hell"

Robert Riggio, 52, of Toms River, New Jersey, spent most of his life as a con man, ripping off gullible people for small sums of money here and there. But this time, he may have ripped off the wrong guy. He admitted to taking $1.4 million in church money by falsely promising he would invest it, but then lost it all gambling.

It all started in October of 1996 when Riggio approached Msgr. Frederick Valentino, pastor of St. Bonaventure Church, and pretended to be a new parishioner who was $20,000 in debt to loan sharks. After the church paid off his debt, Riggio told the priest it would be difficult to repay the money, but out of gratitude, he would get the church a great investment through a friend. The priest continued to send Riggio money until last December, when Valentino tried to withdraw $30,000 in cash from a parish account.

Riggio was eventually caught and claims he lost the money at Atlantic City casinos and at racetracks in New York.

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Solution Summary

List the elements of the Fraud Triangle providing case examples of each element.

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Elements of the Fraud Triangle

Answer the two questions below after reading the following example:

Jim was just hired as a new employee at Beehive Credit Union. Beehive was known for its impeccable controls and friendly employees. Jim was hired on as a new teller and assumed his new job with the company would help him receive a mortgage loan for his new house even though he had poor credit. Without the loan, Jim would not be able to purchase the house, and his wife and six children would be forced to stay in the two bedroom apartment that had become the constant argument of his marriage. Besides his marriage being on the line, Jim was sick and tired of hearing the children fight about the rotation of which three had to sleep on the floor and which three got the bed. No Jim was determined to keep his marriage and kids together. He quit his low-paying job in construction and accepted a lower-paying job as a teller to receive the much-needed loan.

After reviewing the paperwork for Jim's loan, the impeccable controls were implemented, and Jim's loan did not get approved by the loan committee. Everything was falling apart, and Jim did not know what to do.

Two weeks into his job, Jim found that two older ladies came around to collect and account for the cash every Thursday night. The rest of the week two younger gentlemen made the rounds. He knew the pairs made the collections together; nevertheless, he decided to test a simple plan to "approve his loan." He figured the ladies would not accurately count the money, and if they did, he could easily cover for that day. On the following Thursday before Jim closed his till, he took out $200. Although they were gathering and counting together, the ladies did not discover his scheme. He was right; the grannies were unable to accurately count the funds, and he could easily obtain his loan. Slowly but surely Jim started taking more money. He decided he would take just enough to purchase the house, and then he would start saving to pay the bank back. He figured if the bank is stupid enough to hire two old ladies to do their work, then they deserved to lose the money.


A. Are all of the elements of the fraud triangle present in the case? Which elements of the triangle are present and how are they present?

B. What could the bank have done to prevent the fraud?

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