Sam’s Electronics Universe has discovered and investigated akickback fraud perpetrated by its purchasing agent. The fraudlasted eight months and cost the company $2 million in excessinventory purchases. The perpetrator personally benefited byreceiving kickbacks of $780,000. Your boss wants to seekrestitution of what the company has lost, but is worried about theramifications of a trial and its effect on your company’s image inthe market. She is trying to decide if she should pursue remediesthrough a civil trial, or turn the case over to the districtattorney to prosecute the perpetrator criminally.
The defendants have retained Daren as an expert witness in arecent fraud case. He will be providing information concerning thedefendant’s activities, explaining why the defendant’s activitiesare in accordance with generally accepted accounting principles(GAAP) and normal business practice. Throughout the litigationprocess, Daren has been completely honest with the attorneys in hisdeposition and any other correspondence. Daren believes that theactivities of the defendant have been in accordance with GAAP. Thecase continues and is brought to trial. A few days before Daren iscalled to testify in the trial, he discovers some new documents andinformation, which could possibly represent fraudulent behavior bythe defendant.
Questions:
1. What ethical issues does Daren face in the light of this newinformation he has received?
2. What concerns should Daren have?
3. What are some possible actions Daren could take?
