cardinals wholesaler case

In consequence of an anonymous phone call stating that a vendor scheme was costing the company, Cardinals Wholesalers, millions of dollars an investigation was started. A vendor scheme is a company that was created to pay vendor invoices for which it receives nothing in return. Based on evidence found Tri-State Trucking was identified as a shell company. A shell company is a fictitious vendor scheme. Tri-State Trucking was owned by Bill Carter, a former employee, and Mike Smith, a current employee who took over Bill Carter's position.

The fraud triangle is helpful in explaining motivation for employees to defraud the company: Motive, Opportunity, and rationalization are the trigger for employees to perpetrate any company.
Motive-incentive or pressure that drives an individual to commit fraud. This is caused by life pressures, illicit activities or lifestyles needs that create personal financial problems.
Opportunity-a condition or situation that allows fraud to occur. Both the design and effectiveness or internal controls play a key role in this regard.
Rationalization-is the attitude or mindset that enables the individual to rationalize the fraudulent act.

Bill Carter- an angry, ex-employee that felt unfairly fired. Bill felt pressure from financial obligation and the need to support his family after being fired. With debts totaling $38,000 and educational expenses for his oldest son, Bill felt desperate about his financial situation and grew angrier giving him a motive to commit fraud. Bill was the purchasing department manager and was aware of the weak internal control that existed in the company. He knew that there was no segregation of duties in the company because as a former manager he knew that the person who approved vendor list also approved the payment. With this in mind we can see how opportunity to commit fraud is present. His rationalization was that the company owed him for using him as a scape goat to prove their point and he