What type of fraud(s) could be or is/are being committed (Be Specific)? What procedures could have been implemented to prevent this frauď? What procedures could have been used to detect this fraud?
What type of fraud(s) could be or is/are being committed (Be Specific)? What procedures could have been implemented to prevent this frauď? What procedures could have been used to detect this fraud?
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
Section: Chapter Questions
Problem 1CE
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Transcribed Image Text:Cedar Hospital Systems Fraud
Hospital administrator Jake Rosen was recently convicted for fraud he committed against his
employer, Cedar Hospital Systems. Over a period of six years, he allegedly made payments to a
dummy company for maintenance charges while simultaneously running a scheme with
maintenance contractors where he either paid them for work never performed or overpaid them
for work. The skyscraper where Jake worked was only 10 years old. Maintenance charges rose
from $5.2 million in 1994 to $16.4 million in 2000. It was worth noting that the judge on the case
questioned whether Cedar Hospital Systems deserved less than full restitution for failing to
notice the problem. However, it was determined that federal law on restitution does not allow
such charges, so Jake Rosen will be making monthly payments towards the alleged $8 million he
stole until he makes full restitution after leaving prison. He was able to quickly repay $3.2
million of the theft with assets recovered by the government, including two homes and a nice
yacht. Not bad for a man who was supposed to be making $90,000 per year.
1. What type of fraud(s) could be or is/are being committed (Be Specific)?
2. What procedures could have been implemented to prevent this fraud?
3. What procedures could have been used to detect this fraud?
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