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Third Case for Week 3: The Dude  Previous Next  This page automatically marks posts as read as you scroll


Third Case for Week 3: The Dude Next

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Here is an interesting case. Maybe you’ve worked with someone like this!

In his own words, Daniel Jones was “The Dude.” With his waist-long dreadlocks, part-time rock band, and well-paid job managing a company’s online search directory, he seemed to have it all. Originally from Germany, Jones, earned his doctorate and taught at the University of Munich before coming to the U.S. where he started his career in computers. In 1996, Jones started working with the company as a director of operations for U.S.-Speech Engineering Service and Retrieval Technology—working on a new, closely guarded search engine tied to the company’s .NET concept. 

The company allows employees to order an unlimited amount of software and hardware, at no cost, for business purposes. Between December 2001 and November 2002, Jones ordered or used his assistant and other employees (including a high school intern) to order nearly 1,700 pieces of software. He then resold them on the street for reduced prices—reaping more than $9 million. When items with a cost of goods sold of more than $1,000 are ordered, an e-mail is sent to the employee’s direct supervisor, who must click on an “Approve” button before the order is filled. If no individual order was the cost of goods more than $1,000—he made sure none of the orders required a supervisor’s approval. The loosely controlled internal ordering system reflects the trust the company puts in its employees.

In June, FBI agents said they saw Jones exchanging a large box of software for cash in a department store parking lot in Bellevue. The FBI contacted the company’s security and began monitoring Jones’ bank accounts. Previously, one account with his bank had an average balance of $2,159. In a short time, however, the average balance ballooned to $129,775. Another account with a different bank showed irregular deposits totaling $500,000 - none of which appeared to be from any legitimate income or other legitimate source. 

Investigators also noted that Jones purchased a $95,000 Ferrari F355 Berlinetta, a $36,000 Jaguar XJ6, and traded in lesser vehicles for a $37,000 black Hummer, a Mercedes 500SEL, and a $21,900 Harley Davidson. He also bought an $8,000 platinum diamond ring, a $2,230 Rolex wristwatch, and a $4,000 bracelet. “You figured that I like big boy’s toys by looking at some of my pictures,” Jones wrote on his personal Web page. “I just can’t resist.” The Dude’s Web page includes a camera for monitoring his cat and his photos of his yacht, cars, and other treasures. For a relatively low-level manager it was an impressive collection. But at his company, where teenage software engineers can earn more than company directors, no one batted an eyelid. 

A neighbor, who lived across the street from Jones, said his neighbor was clearly wealthy, but not flamboyant with his money. He described Jones as an intelligent man who didn’t flaunt his education, would loan neighbors tools and was always friendly. The neighbor was surprised to hear the accusations against someone he called his friend. All he knew about Jones was that he was a good neighbor who loved cars. “He was very, very helpful. The few times I had problems with my PC, he’d come and help straighten them out,” the neighbor said. “They are just ideal neighbors. I feel terrible for him and his wife.” Jones and his wife lived in a modest 1960s split-level home. 

In 2001, he joined the city’s Rotary Club where he seemed more outgoing and personable than the stereotype techie said a local jeweler and immediate past president of the club. “He seemed like what I would expect a genius computer software developer to be.” 

The Dude was fired from the company in December 2002, shortly after the fraud was discovered. He has been charged with 15 counts of wire, mail, and computer fraud—with each count carrying a maximum of five years in prison. He is expected to remain in custody until a preliminary hearing. 

Class, assume that you are a co-worker of Jones’ at his company. What symptoms of fraud might be evident to you? Explain why you think so.

Also, as discussed in Chapter 2, all frauds involve the following key elements: perceived pressure, perceived opportunity, and rationalization. Choose one of these key elements and describe in detail how you think it contributed to the Jones fraud.


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