Occupational Frauds and Money Laundering

Mayur S. Joshi

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Negotiable Instruments Alteration

It is a general practice among the paper crashers to buy a small amount Draft or the Pay order from the bank. The initial buying becomes essential to know who is the authorized signatory. The banks clearing the draft reconcile the signature. Hence the signed draft or the pay order is obtained and scanned.

The amounts and the names of the payees are altered subsequently using the software tools. What requires is simply the printout. However it is not sufficient enough to scan and alter the drafts. The banks also send the draft sold advices. These advices are very difficult to be obtained by the outsiders, which makes the forgery task a bit difficult.But to reiterate what Kautilya said “It is just as difficult to detect an appointed official’s dishonesty,As it is to detect how much water the swimming fish drinks”.  

Case study

In the case of Mr.A.K.Shah, ingenious facts came out from the exposed fraud. Mr. A.K.Shah was the manager of the Pethapur Branch in Ahemdabad.He played rather simple technique to receive the proceeds of the draft. Just before he was transferred from Pethapur to another local branch, he stole the draft and draft sold advices book. With these weapons he forayed into the share market. He made exorbitant purchases of equity shares and very soon also booked the losses. Anyways he was not the loser. Whenever he incurred the losses he issued the demand draft. The draft issuing branch was not aware of the theft and the paying bank never had the doubt since the branch always received the draft sold advice beforehand and the signature on the draft tallied with the signature in the specimen signature book. In this fashion approximately 96 drafts worth Rs.88 lacs were issued to the brokers for compensating the losses. But looking at the serial numbers on the drafts the share broker in Mumbai had some doubts. He received all the drafts from the same Draft book. The CBI exposed the scam and the perpetrator was behind the bars. No forgery, No counterfeit still a big fraud.

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