There is usually shock and disbelief when fraud is uncovered in a corporation. Fraud is a very general term that refers to the deliberate deception to secure an unfair or unlawful gain (Farrell, 1999). In the case of Katie Jordan, she used ghost employees to defraud her company. A ghost employee is someone recorded on the payroll system, but who does not work for the business (Wells, 2011). The ghost can be a real person who is either a current or former employee, or a completely fictitious person created by the perpetrator of the fraud. Katie's payroll scheme could have been prevented and detected at each of the stages involved in successfully utilizing a ghost employee.
The first step is creating the ghost and placing it into the payroll system. Katie used both an employee who was already on the payroll, but had quit and a fake employee. Aramis Properties could have detected both ghosts during this phase with relatively easy steps. First, had Aramis investigated the W-2 forms, social security number, or even conducted pre-employment reference checks for the assistant Katie "hired," it would have been discovered that the employee was not real before she could have even collected the first check (Payroll Fraud, 2006). Taking these steps after the fraud had been exposed would have proven the fact that the assistant was indeed bogus if Katie had not confessed. Scheduling face-to-face performance reviews with all employees on the payroll is another cheap and easy method that can be useful in preventing and detecting payroll schemes. Using these methods would have revealed that Manuel was no longer working for Aramis and that Wendy was not an actual employee.
The next step in utilizing a ghost employee is producing false time sheets. Due to the fact that Katie did not have access required to input the information herself, she had to falsify it and have it processed by the payroll staff.
