ACC 425 Module 3 Legal Elements Assignment Example

From Facts to Elements: Legal Theories in a Produce Kickback Case

[Student Name]

Southern New Hampshire University

ACC 425: Interview Techniques and Legal Aspects of Fraud

Module Three Assignment

[Instructor Name]

[Date]

The organization, setting and figures below are a composite written as a model document. No real employer, client, colleague or patient is described.

From Facts to Elements: Legal Theories in a Produce Kickback Case

Introduction

The investigation at the Iowa grocery wholesaler has found that the produce buyer shifted purchases to one Texas broker, whose prices ran roughly seven and a half points over the terminal market, and that the broker paid $9,500 a month for about 30 months, $285,000 in total, to a consulting company owned by the buyer's brother-in-law. Before the remaining interviews, counsel has asked which legal theories the evidence supports and what is still missing. This assignment organizes the facts by legal element. It supports counsel's analysis and is not legal advice; the forensic accountant's role is to gather and present evidence, while lawyers and courts decide what it proves (Kranacher & Riley, 2019).

Four Possible Theories

Civil fraud by concealment. Fraud can be committed by hiding a material fact when there is a duty to disclose it. The elements generally are a duty to disclose, concealment of a material fact, knowledge, intent that the victim act on the incomplete picture, reliance and damages.

Breach of the duty of loyalty. An employee acting as an agent may not accept secret benefits from those the employer deals with. The elements are the employment relationship, receipt of a benefit from a third party in connection with the employee's duties, and the absence of informed consent from the employer.

Commercial bribery. Many states, including Iowa, criminalize conferring or accepting a benefit to influence an employee's conduct in the employer's affairs without the employer's consent.

Honest services wire fraud. Federal law makes it a crime to use interstate wires in a scheme to deprive another of the intangible right of honest services. The Supreme Court has limited this theory to schemes involving bribes or kickbacks (Skilling v. United States, 2010), which is precisely the conduct alleged here.

Matching Facts to Elements

Table 1. Elements, Evidence and Gaps

The table shows that the strongest documentary evidence concerns the payments and their timing, and the weakest concerns the buyer's knowledge and benefit. Payments to a relative's company are not automatically payments to the buyer. The interviews with the brother-in-law and the buyer, and any bank records counsel can obtain, must establish whether money flowed from the consulting company to the buyer or his household, or whether he otherwise directed and benefited from the arrangement.

Burdens of Proof

The company's civil claims would generally be decided by a preponderance of the evidence, more likely than not, though some courts require clear and convincing evidence for fraud. A criminal prosecution for commercial bribery or wire fraud would require proof beyond a reasonable doubt and would be pursued by prosecutors, not the company. The investigation's findings can support either, but documentation standards should assume the higher burden, because evidence gathered carelessly may be excluded or discounted later (Association of Certified Fraud Examiners, 2023).

Remedies

In a civil action, the company could seek damages for the overpayments, estimated at about $2.9 million over three years, from the buyer and potentially from the broker. Under the duty of loyalty, it could also seek disgorgement of secret profits, the $285,000 paid to the brother-in-law's company, if those payments can be tied to the buyer. Its employee dishonesty insurance may cover part of the loss, subject to the policy's terms. A criminal case could lead to restitution orders but would proceed on prosecutors' schedule.

Defenses to Anticipate

An investigation should also anticipate the explanations a defense might offer, because they define what the remaining evidence must rule out. The buyer might say the broker offered more reliable year-round supply, which would justify some premium; the receiving logs and store complaints will test that. He might say the consulting payments were for real services his brother-in-law provided to the broker, unrelated to the wholesaler; the brother-in-law's records and any work product will test that. And he might say the purchasing director approved every decision; the director's interview will show what he was told. Each defense, if supported, would weaken a different element in Table 1, so the plan addresses all three before the buyer is interviewed.

Implications for the Investigation

Three steps follow. The purchasing director's interview should establish reliance: what the buyer told him about the broker and what he approved because of it. The brother-in-law should be asked, through counsel, what services his company provided and where the money went. And counsel should consider seeking the consulting company's bank records. Each step targets a specific gap in Table 1.

Conclusion

The evidence already satisfies several elements of all four theories: the buyer's duty to disclose, the payments' timing, the interstate wires and the company's lack of consent. The central gap is proof that the buyer knew of and benefited from the payments to his brother-in-law. Breach of the duty of loyalty may be the most straightforward civil theory, while honest services wire fraud fits the scheme if that gap is closed. The next interviews and document requests are aimed directly at it, and the table will be updated after each one so counsel can see which elements remain open.

References

Association of Certified Fraud Examiners. (2023). Fraud examiners manual (2023 ed.). Author.

Kranacher, M.-J., & Riley, R. A. (2019). Forensic accounting and fraud examination (2nd ed.). Wiley.

Skilling v. United States, 561 U.S. 358 (2010).