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    Fraud Awareness Week Lesson Plan - Rita Crundwell: Video

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    Chess Nuts
    Rita Crundwell was the city treasurer and comptroller of Dixon, Illinois. Over 22 years, she stole over $53 million from the city. She accomplished this through poor internal controls that allowed her to divert funds without detection. Most fraud is committed by otherwise honest people when there is motivation, opportunity, and rationalization - the "fraud triangle". Employers can help prevent fraud by focusing on strong internal controls to reduce opportunity and empowering employees to report irregularities and red flags.

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    Fraud Awareness Week Lesson Plan - Rita Crundwell: Video

    Uploaded by

    Chess Nuts
    63 views3 pages
    Rita Crundwell was the city treasurer and comptroller of Dixon, Illinois. Over 22 years, she stole over $53 million from the city. She accomplished this through poor internal controls that allowed her to divert funds without detection. Most fraud is committed by otherwise honest people when there is motivation, opportunity, and rationalization - the "fraud triangle". Employers can help prevent fraud by focusing on strong internal controls to reduce opportunity and empowering employees to report irregularities and red flags.

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    Rita Crundwell was the city treasurer and comptroller of Dixon, Illinois. Over 22 years, she stole over $53 million from the city. She accomplished this through poor internal controls that allowed her to divert funds without detection. Most fraud is committed by otherwise honest people when there is motivation, opportunity, and rationalization - the "fraud triangle". Employers can help prevent fraud by focusing on strong internal controls to reduce opportunity and empowering employees to report irregularities and red flags.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    63 views3 pages

    Fraud Awareness Week Lesson Plan - Rita Crundwell: Video

    Uploaded by

    Chess Nuts
    Rita Crundwell was the city treasurer and comptroller of Dixon, Illinois. Over 22 years, she stole over $53 million from the city. She accomplished this through poor internal controls that allowed her to divert funds without detection. Most fraud is committed by otherwise honest people when there is motivation, opportunity, and rationalization - the "fraud triangle". Employers can help prevent fraud by focusing on strong internal controls to reduce opportunity and empowering employees to report irregularities and red flags.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
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    Fraud Awareness Week Lesson Plan – Rita Crundwell

    Video: Rita Crundwell Steals $53 Million from Dixon IL (3:25 min. total video length)
    Video: Rita Crundwell Steals $53 Million
    Produced by NBC Rock Center with Brian Williams

    Video Synopsis:
    Rita Crundwell was the city of Dixon Illinois treasurer/comptroller and owner of a nationally famous quarter
    horse farm. She was convicted of stealing over $53 million from the city over 22 years. She is now serving 20
    years in prison.

    Background and Fraud Theory:


    Fraud is a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to
    his or her detriment (Black’s Law Dictionary).  

    Most people who commit fraud are not career criminals and are often trusted staff with no criminal history.
    Usually, something in the person’s life motivates or prompts him or her to commit fraud. The situation could be
    lifestyle related, such as lavish spending or addiction problems, or could be outside of the person’s control, such
    as a family member’s catastrophic illness or job loss. These motivations can make an honest person turn to
    fraud.

    Basically honest people who contemplate fraud must be able to justify their actions. Rationalization can include
    feelings of overwork and lack of appreciation, belief they are acting in the best interest of their family, or intent
    to make restitution. Rationalizations allow fraudsters to knowingly and intentionally commit a dishonest act and
    function in the work environment.

    Finally, for fraud to occur, there must be opportunity. Opportunity to commit the fraud occurs through poor
    segregation of duties or other weak internal controls. Ineffective or absent controls allow people to believe they
    will not be caught.

    The three fraud factors, motivation (or need), rationalization, and opportunity, are often present when ordinary
    people commit fraud. Together, they form the “fraud triangle.” The goal of a strong internal control system is to
    break the triangle and remove one factor. Employers’ cannot significantly influence people’s motivations or
    rationalizations. To deter fraud, employers should focus on opportunity to commit fraud and implement and
    maintain a strong internal control structure.

    Employers can also watch for red flags for fraud. One red flag is a set of unusual circumstances or a variance
    from normal activity. This could mean something is amiss and require further inquiry or investigation. Red flags

    Fraud Awareness and Prevention Week 2017 1


    are not absolute indicators of guilt or fraud but merely out-of-the-ordinary warning signs fraud might be
    present.

    Employers should establish a strong agency culture where employees are encouraged to watch for irregularities
    and red flags. Empowering employees to raise questions and irregularities is one of the most effective strategies
    an organization can use to reduce fraud. It is equally important employees, particularly supervisors and senior
    management, receive regular fraud training. The training should include common fraud indicators, what to look
    for, how to respond, and how to follow-up. Employers detect or prevent fraud sooner when they respond
    appropriately to use warning signs. This early detection or prevention reduces losses and associated costs.
    Internal Control Bulletin Volume 3, Issue 9: The red flags are for a reason)

    Potential Discussion Questions:

    Content related:
     How did Rita Crundwell conduct the fraud against the city of Dixon?
     What pressures do you think Rita Crundwell may have experienced, that could have led her to become a
    fraudster?
     What impact did the fraud have on the citizens of Dixon? What impact did the fraud have on the city
    employees and the city itself?
     What internal controls appeared to be lacking, giving Rita Crundwell an opportunity to perpetrate the
    fraud?
     Do you think a similar fraud could be possible in your agency/department/city? Why?

    Theory related:
     What part of the fraud triangle can we control?
     What are some potential “red flags” for fraud?
     Have you seen red flags within your workplace?
     Who is damaged by the fraud?
     What are the damages caused by a fraud?
     Have you seen instances of poor internal controls which could provide an opportunity for theft or fraud
    to occur?
     Would you be comfortable coming forward to report potential fraud in your workplace?
     What are the ways to report a potential fraud in your workplace?

    Add additional discussion questions here:

    Closing Remarks:
    Globally, fraud costs organizations up to five percent of their annual revenue. The government sector is the
    second most victimized by fraud. It is an expensive burden on taxpaying citizens. It results in losses of public

    Fraud Awareness and Prevention Week 2017 2


    funds. It increases the cost of government services. It also decreases confidence in public officials and
    government. It affects all of us.
    Each agency needs a policy for worker conduct under the statewide code of conduct policy. Statewide policy
    requires agencies to have designated channels for reporting misconduct. The policy also requires employees to
    report suspected fraud. Do you know your agency specific reporting channel?
    An employee must also report certain cases of suspected fraud to the Office of the Legislative Auditor. The law
    protects any employee from retaliation who reports suspected wrongdoing in good faith. You can reference
    statute, policy, OLA contact information, and whistle-blower protections below. 
     Minnesota Statute, Section 43A.38, Code of Ethics for Employees in the Executive Branch
     MMB Statewide Operating Policy, Code of Conduct
     Report to the Office of the Legislative Auditor (OLA)
     Whistleblower Protections

    Fraud Awareness and Prevention Week 2017 3

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