IT Purchasing Scheme leads to $1.4 Million Fraud

We’re off to New Hampshire this week. In early 2019 Tod Erickson of Londonderry, New Hampshire worked in Massachusetts for a Canadian-owned telecommunication company. He was an IT manager and he had responsibility for submitting purchase requests for IT equipment like computers and hard drives.

It is alleged that from 2012 through February of 2019 Erickson submitted fraudulent requests, essentially requests for unneeded equipment. He would then sell the equipment for his personal benefit. In a twist, he is also alleged to have filed false tax returns by not reporting his illegal income.

This one could be tricky. If Erickson managed to get the computer equipment properly added to the budget, he could make a legitimate purchase request, get it approved per the budget, appropriately received and invoiced. Everything would be above board coming in the front door and then quietly walk out the back.

At least some of these items should have been treated as fixed assets. Controls over assets should have turned up a problem over the seven years of this fraud. Segregation of Duties could have helped if someone else was responsible for managing and distributing the equipment. Appropriate inventory controls over unissued equipment would also help. Like I said, this one could be tricky to catch in a small office.

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