Billing — shell company

An employee creates or controls a fictitious vendor and submits invoices for goods or services that were never provided. Payments go to a bank account or address the employee controls. In the accomplice variant, an outside party operates the shell and shares the proceeds.

Fully covered.

Starter pack: Disbursement review

Red flags

In the data

• Vendor shares an address, bank account, phone, email, or TIN with an employee
• Vendor has a PO box or mail drop only, or no phone number
• Missing, invalid, or duplicate TIN
• Sequential invoice numbers from the vendor, suggesting the organization is its only customer
• Round-dollar amounts and vague service descriptions
• New vendor paid quickly or paid large amounts soon after setup
• Vendor created by a user who also enters or approves its invoices

Behavioral

• Employee insists on being the only contact for the vendor
• Employee becomes defensive when the vendor is questioned
• Lifestyle inconsistent with known income

Internal controls

• Vendor setup without independent verification (IRS TIN matching, call-back, address check)
• AP processors can edit the vendor master
• No receiving or service confirmation required for service invoices