Accounting fraud is a deliberate manipulation of accounting records in order to make a company’s financial performance or condition seem better than it actually is.
A bank soliciting public deposits may be uninsured or not licensed to operate at all. The objective is usually to solicit for deposits to this uninsured “bank”, although some may also sell stock representing ownership of the “bank”. Sometimes the names appear very official or very similar to those of legitimate banks. For instance, the unlicensed “Chase Trust Bank” of Washington D.C. appeared in 2002, bearing no affiliation to its seemingly apparent namesake; the real Chase Manhattan Bank is based in New York. Accounting fraud has also been used to conceal other theft taking place within a company.
Demand draft fraud
Demand draft (DD) fraud typically involves one or more corrupt bank employees. Firstly, such employees remove a few DD leaves or DD books from stock and write them like a regular DD. Since they are insiders, they know the coding and punching of a demand draft. Such fraudulent demand drafts are usually drawn payable at a distant city without debiting an account. The draft is cashed at the payable branch. The fraud is discovered only when the bank’s head office does the branch-wise reconciliation, which normally take six months, by which time the money is gone.