Fake invoicing

October 26th, 2012 at 1:00 pm by David Farrar

The Herald reports:

Six people have been arrested over a $1.6 million invoice scam which involved the sale of advertising in magazines that did not exist or were not as widely circulated as claimed.

The arrests follow a five-month operation involving more than 60 staff from multiple agencies – the first of its kind to crack down on invoice scams in New Zealand.

Police arrested six people in Auckland, Port Waikato and Picton after search warrants were executed at more than 25 locations throughout the country.

All are facing charges of participating in an organised criminal group, while five are also facing charges.

The Serious Fraud Office () alleges the group sold advertising in magazines that did not exist or had “grossly exaggerated” circulation figures.

The magazines had general titles that suggested links with worthy causes like road safety, parenting or drug addiction.

The SFO alleges the invoice scam generated up to $1.6m since 2008.

These sort of scams have been going on for decades. They’re sort of cunning. They rely on the fact that large companies will just pay a $250 bill without bothering to trace down which ad appeared and who authorised it.
Small companies will go back and say they didn’t place an ad, be told it was a mistake, and generally not worth their time to follow up and expose it as a scam, if they even realise it is.

Acting SFO chief executive Simon McArley said high-volume, low-value fraud was particularly difficult to address.

But the operation was completed in a relatively short timeframe because of the multi-agency approach.

“The agencies were able to each contribute specialist skills and achieve a result that none working alone would have been able to,” Mr McArley said.

“Invoicing scams cost New Zealand businesses hundreds of thousands of dollars a year and small businesses and charities are often the target.

Will be interesting to see the names of the accused.

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7 Responses to “Fake invoicing”

  1. scrubone (3,099 comments) says:

    Good.

    One does wonder how many of these small scam scammers get away with it for years – and then get only trivial sentences when they do get caught. Yet they might be making good money from their crimes.

    One of those tricky things.

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  2. Michael (909 comments) says:

    I was working at a large corporate who prided themselves on not paying an invoice unless it was genuine – a very specific process to add a new supplier that weeds out scammers like this. Mostly using the internet to check various official registers. We had an external audit covering all data for 5 years – they found no known fraudulent invoices.

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  3. IHStewart (388 comments) says:

    Just finished printing off 6500 invoices for $250.00 for advertising on Kiwiblog. Recon I am on a winner.

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  4. berend (1,709 comments) says:

    DPF: large companies will just pay a $250 bill without bothering to trace down which ad appeared and who authorised it.

    Really? Just paying an invoice without a matching purchase order? If we’re talking about small/medium companies, perhaps.

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  5. lastmanstanding (1,297 comments) says:

    You would be surprised at the companies that have no formal creditors matching systems. And the bigger are often the worse. As a former auditor it never ceased to amaze me the lax processes and procedures around accounting systems.
    Some of the scamers will call up a company and seek to find the name of the person who places advertising and put that name on their invoice as the reference.
    When the invoice arrives at accounts payable the person there sees the name and bingo pays the invoice.

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  6. peterwn (3,271 comments) says:

    I have not known any of my employers to pay on an invoice without some sort of checking. Same in my role as treasurer of some organisations. Got an invoice for a tonne of cement – I did not recollect receiving it – no order number (were not allowed to get anything without an order number) – Office with my agreement refused to pay. refused to pay. Firm wanted order numbers thereafter – suited me. We let go an employee for stealing – I figured later he got the cement in the work truck when on an errand and off loaded it somewhere.

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  7. Pauleastbay (5,035 comments) says:

    Its called Proforma Invoicing been around for years.

    One very very well known New Zealander got his financial start doing this.

    These guys send out thousands and thousands of invoices, they usually print a magazine that has all the ads they bill for printed in it, but the magazine normally sits in their garage but it gives them some sort of protection in criminal proceedings.

    You send out 5000 invoices for $100- you only need 10 to pay and its not a bad days work.

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