Case Study
On a weekday morning in 1975, there was an anonymous phone call to a cash teller at one of the nation's largest national banks. The anonymous caller stated that an employee had just stolen $$100,000 from an electronics supply subsidiary of the bank. The Financial VP of the bank was notified; he called in one of the internal auditors and assigned him to solve the case. The auditor, working in conjunction with a retired FBI agent, employed a secretary and immediately set up an office at the electronics supply plant. An analysis of the accounting records showed that the theft involved inventory. The first step was to interview many of the 100 employees of the plant including all plant officers. None of the employees knew anything about the inventory.
Second, an analysis of the Accounts Receivable records showed that a major building construction firm only owed $9.54, though its supply trucks were always picking up large amounts of electronic inventory. He immediately became unavailable for questioning! Several days later the auditor was contacted by an attorney representing the building construction firm for an appointment for his client and himself. When the auditor arrived, the attorney stated, "I want you to know that my client has done absolutely nothing wrong! But here is some information you might like to know." The attorney then explained how the 30-year-old son of the president of the electronics supply plant would sell inventory at one-half price if the construction firm made out the checks to the son personally. They had, in effect, purchased $200,000 of inventory for only $100,000.
This information of the theft was immediately supplied to the Financial VP and the bank's attorneys. Within 48 hours, the president of the electronics supply plant retired. His son had fled the state and $100,000 in cash was returned to the bank.
Questions:
A. Did the employees know of the lost inventory?
B. If they did, why didn't they tell more?
C. Were the president of the construction firm and his employees honest?
D. Had they done anything wrong?
E. Could they be sued?
F. Why did the father retire?
G. What was his responsibility?
H. Should the bank's corporate officers go to the police and indicted the son on grand theft?
I. The bank received back $100,000 from the theft. Where from?