How the Behavior of Rita Crundwell Fits Within the “Fraud Triangle”
The second element of ‘Opportunity’ could be a potential weakness in the system that the precise person could exploit.
Others thought she inherited her wealth. The citizens of Dixon were shocked by the scandal and felt the city council should have known what was going on. The media blamed the city’s commission form of government. Subsequent to the fraud, the city changed its form of government and had significant turnover on the city council including the election of a new mayor.
During the following year, investigators discovered the extent of her fraud; Rita had embezzled money from Dixon, IL for 22 years, her theft totaled over $53 million (Carozza, 2018; Janssen, 2017). This embezzlement case resulted in the largest municipal monetary loss, nation-wide, in U.S. history (Daigle et al., 2017). Citizens, employees, and fraud investigators have questioned how she was able to perpetrate her crime for that amount of time (Carozza, 2018). Because Rita was the comptroller and the treasurer, she performed the majority of the town's financial duties including: maintaining custody of checks, signing checks, keeping invoice and bank records, performing reconciliations, and picking up the mail (Udeh, 2013). This severe lack of segregation of duties enabled Crundwell to control every aspect of her crime. The element of opportunity was strengthened with the lack of due diligence by auditors and bank personnel (Hancox, 2014).
While there is no action that can completely eliminate fraud, implementing policies that address the three arms of the Fraud Triangle will not only help to reduce the risk of fraud, but will also aid in detecting fraud if it does occur.
Hancox, D. R. (2014). How a $53 million fraud went undetected for 22 years. The CPA Journal, 84(5), 65-68.
Udeh, I. A. (2013). Near-unsophisticated fraud: the case of former Dixon’s comptroller. Journal of Business Cases & Applications, 8, 1-9.
Carozza, D. (2018). Small town, huge fraud, insightful documentary. Fraud Magazine, 33(1).