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This post addresses contractor fraud with Frank Lou and Bo.

Frank Lou had recently been promoted to construction manager at a development firm. He was responsible for dealing with contractors who were bidding on a multi-million dollar excavation job for the new high-rise. Times were tough, several contractors had gone under recently, and the ones left standing were viciously competitive. That morning, four bids were sitting on Frank's desk. The deadline was midnight, and the bids would be opened the next morning. The first bidder, Bo Freely, was a tough but personable character that Frank had known for years. Frank had lunch with him today, and after a few beers, Bo hinted that if Frank "inadvertently" mentioned the amount of the lowest bid, he'd receive a "birthday card" with a gift of cash. After lunch, Frank carefully unsealed the bids and noticed that another firm had underbid Bo's company by a small margin. Frank took Bo's bid envelope, wrote the low bid amount in pencil on it, and carried it downstairs where Bo's son William was waiting. Later that afternoon, a new bid came in from Bo's company. The next day, Bo's company got the job, and Frank got a birthday card in his mailbox.

1. Was Frank's company hurt in any way by this fraudulent action?

Although Frank's company will not be badly hurt by this fraudulent action it still violates the law and could create a legal problem for the company. Moreover, if the public were made aware of this un-ethical behavior it could harm the reputation of the development firm and pose a risk to future and current businesses. I believe that even though this un-ethical decision did not damage the company originally, Frank still needs to know the damage it can cost the company later on if he thinks he can get away with it again.

2. How could this action hurt Frank?

I believe the un-ethical action can hurt Frank in the long run, if he continues to think he can get away with decisions like that he is wrong. It can also get out to potential employers and his co-workers that would lead people to distrust him. He can also lose a job and probably go to jail and never work again because of his un-ethical decision making.

3. How can a business protect against this kind of fraud?

One of the most common fraud has to do with accounting. In order to protect any business against any kind of fraud is to make sure you can trust your employees and employers. Also knowing and being involved in the business can help you oversee areas in the business that might feel strange right away. Keeping control of what is going on with the accounting is very important, making sure the balance statements and other paper works are done right, that is also another common mistake business owners make is that they leave their bank accounts in control of another person. I honestly feel that if a business owner had an outsider review all the balance sheets and accounts after it is filed by someone at work can also help out to see if anything changes or looks odd at all, this will surely help the business owner save thousands of dollars instead of losing it.

Solution Preview

1. Frank's company will be hurt, as they can be subject to legal action from the other construction companies. Because Frank is an employee, he is considered as acting on behalf of his employer. Frank opened up the extreme possibility of legal action for his employer because he committed fraud while working for the company. As mentioned, ...

Solution Summary

This solution addresses the contractor fraud case of Frank Lou and Bo. The questions answered in detail include:

Was Frank's company hurt in any way by this fraudulent action?
How could this action hurt Frank?
How can a business protect against this kind of fraud?