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Well-known law firm feels the sting of internal fraud allegations

Business executives have reason to worry about fraud. At every point in the course of regular commerce there can be numerous opportunities for business fraud to flourish. Whether it be a business's own employees, the manufacturers of its goods or other persons and corporations with which it has contractual dealings, fraudulent activity is a risk businesses face.

Sometimes, even those at the top are accused of defrauding their own company. Though these allegations seem slightly less shocking following several large-scale schemes by executives within the last decade or so, it is still startling when someone at a company's pinnacle is accused of harming his or her own.

Most recently, Mayer Brown, LLP has felt the effects of such allegations. One of the former chief information officers at the Chicago-based law firm has been accused of enacting a fake billing scheme and fraudulently gaining more than $1 million as a result. He allegedly worked "with an outside vendor that submitted invoices for work that had not been performed," according to the Wall Street Journal.

Initially, the former executive has been charged with mail fraud and has been released on bail. If he is convicted of this single count of mail fraud alone, he could face up to 20 years in prison and $250,000 in fines.

Businesses and their executives can learn valuable lessons from this case, regardless of whether the former executive is determined to be guilty or not. When processing payments from vendors, the exec was responsible for authorizing payment after reviewing the vendor's invoices. The firm then paid the vendor through accounts overseen and maintained by the exec and his wife.

It is vital for businesses and executives placed in charge of funds and receipt review to make sure that money is not co-mingled with personal funds and that work done by vendors is confirmed before the vendor is paid. Otherwise, fraud charges may result from any negligence perceived by others on the part of the executives in charge of these functions.

Source: Wall Street Journal, "Former Mayer Brown Executive Accused of Bilking Firm," Jennifer Smith, Aug. 30, 2012

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