While the general public is seldom directly impacted (on a one-on-one basis) with revenue fraud, individuals who are investing in existing companies can lose their investments because the "books have been cooked." Also, in a roundabout way, we all pick up a small piece of the loss on this form of fraud. So let's look at it.
Here are the most common revenue frauds:


  • Sham sales. To cover up fraud, an employee might falsify inventory records, shipping records and invoices. Sometimes a company shows a "sale" when, in reality, the goods were only shipped to the dishonest employee.
  • Post dated revenues. Generally this cooks the books by recording sales before they are actually completed.
  • Conditional sales. Again, the books look healthier than they really are. Sales that are contractually conditional are recorded as if they are final.
  • Improper cutoff of sales. Another cook the books scam, imagine this one to be a Monthly Sales Report where the returns and expenses are only shown for 26 days, but the sales column includes sales for 34 days. It makes the balance sheet look way healthier than it might really be.
  • Unauthorized shipments. Monthly sales are down, but a buyer or investor is showing interest - so a company owner ships out anything and everything, including defective products, and records it all as good sales.
  • Consignment sales. The company accepts products to be sold on a consignment basis, then records the sales as pure income with no expense.


How can YOU protect yourself from becoming involved in an "opportunity" that is really only an opportunity to be victimized? Do your homework. Never think that you are smart enough, or your "partner" is trustworthy enough, that you don't need an expert involved to tell you what you are REALLY buying into.