Page 670 - The Case Lab Book

auditors that £11 million was a genuine market value. In addition,
Ibbotson and Wrekin’s managing director Greenwood approved

Wrekin’s accounts to December 31, 2007, which included the gem as an
asset worth £11 million without checking the reliability or authenticity
of the Italian valuation report.

By including the gem as an £11 million asset in the accounts, Wrekin
gave the impression that it had a financial surplus of £6.3 million,

whereas its true position was an insolvent one. This was Fraud
perpetrated to hide that it was a company on life support and had been

acquired at zero cost.

FRAUD 2: A total of £1,285,136 was embezzled from Wrekin

Construction by Unwin. Unwin’s motivation for taking the money was
probably his feeling that the company was failing and had decided to
syphon off funds to his other companies. Furthermore, he already had

a track record of failed or liquidated companies so clearly knew the ins-
and-outs of a failing company. In addition the phony purchases helped
reduce taxable income by £1,285,136. Part of the motivation for this

fraud was therefore tax evasion.

It is noticeable that the Unwins gave up their directorships in the month

prior to the liquidation.

Question 2

It was inevitable that the fraud would be found out?