Fraud Identification Training Sept-Oct 2022

CASE STUDY 9

President Taylor provided AE Hoover with a list of the insiders’ account numbers. He told AE Hoover of his personal account but did not disclose his interests in four other accounts. (AE Hoover learned of the four other accounts when the bookkeeper asked which account summary screen Hoover wanted to review.) EIC Clark reviewed the line sheet and credit file of Mr. Kruger, age 74. In the most recent FS in the file dated 3-4-X6, Mr. Kruger reported total assets of $123M consisting of cash ($2M), personal effects ($15M), vehicles ($11M), and real estate holdings ($95M). Liabilities totaled $14M owed to this bank on the real estate. The overdraft report obtained during the preplanning phase of the examination showed Mr. Kruger’s account was overdrawn $1M and he had not made a deposit for over five months.

IDENTIFY THE RED FLAGS

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What actions should bank management take to prevent this situation?

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