Forgery Falsification of Documents

A forger's job is made easy with the stolen blank checks, official receipts or even land titles.

Modus Operandi

Tremendous forgery losses have been incurred by most business and government offices due to ignorance, carelessness and loose control of important blank or unused documents. Forgers can easily turn into cash the blank documents such as check, official receipt, invoice, land title or certificate of time deposit if they are stolen.

For instance, a bank official in conspiracy with others was able to collect fraudulently P17 million in taxes from a car company through the use of a stolen blank central official receipt. A truck driver succeeded in selling a tank-truck full of gasoline for personal gain by using a set of stolen blank was obtained by a realty company through fake titles stolen from the register of deeds. A salesman-collector collected large sums of money by using stolen blank official receipts. A government office had lost at least P16 million in the fraudulent encashment of treasury checks that were stolen blank and later filled in and signed by a skilled forger. The forged treasury checks were deposited in various banks and the money withdrawn after the checks had been cleared.

The most common forgery and the easiest to do involves checks. Following are typical examples. A big corporate taxpayer issued a check payable to BIR, an abbreviation of Bureau of Internal Revenue. This costly mistake gave the embezzler an opportunity to alter the check, made it payable instead to " B.I. Reyes" and cashed it. With a few strokes of the pen or typing a few additional words, the payess' name can be easily changed from Alfred E. Smith to Alfred E. Smithers or Wilson Co to Wilson Conde. The check forger is usually not content with just altering the payees' name. He may also change the amount of the check both in words and in figures. For instance, the amount of Three Hundred Only in words can be easily altered to One Thousand Three Hundred only. Accordingly, it is easy to insert the number "1" to increase P300.00 to P1,300.00. Moreover, a skillful forger can with utmost ease imitate the signature of the maker of the check.

Detection and Prevention

The fraudulent encashment of the stolen treasury checks was uncovered by the Bureau of Treasury when it paid checks are reviewed by the auditors. The illegal encashment were reported to the police authorities who caught the forger while withdrawing marked money from the bank. Several pads of blank treasury checks were found in the possession of the culprit.

In the case of the tax payment made by the car company receipted on stolen central bank official receipt, the irregularity was discovered when the Bureau of International Revenue's regional office complained to the car company of its non-payment of the tax.

The bank which loaned a huge sum of money on land titles as collaterals later fund the documents to be fake when they checked with the register of deeds.

The salesman who used stolen official receipts in his collections was subsequently caught when the customer brought his copy of the official receipt to the office showing his payment which did not appear in the statement of account sent by the company.

The diversion of he delivery of one tank truck full of gasoline was later disclosed in the monthly reconciliation of stock records with the physical inventory. The missing complete set of unused invoices taken from the booklet being used by the billing clerk was noticed when the numeral sequence of the invoices was checked.

Huge forgery losses are bound to be incurred whenever blank important documents fall into the hands of crooks or forgers. So it very important to safeguard and control these.

1. Basically, an effective control is to have all important business forms like official receipts, invoices, debit and credit memos, purchase order, land titles etc., serially numbered by the printer. This will make easier the accounting of the unused and used serial numbers. The prenumbered forms should be kept in locked drawers or containers for safety.

2. One responsible person should be appointed as the sole custodian of unused documents. Requisition for accountable forms should be authorized and receipted by the holder. The date of the withdrawal, quantity, serial numbers and the authorized holder of blank booklets should be all indicated in the control record of the custodian.

3.The date of return of the used booklet should be likewise recorded by the custodian to complete the controlling system.

4. Most people are careful if they are watched. Hence, occasional surprise audits of the blank prenumbered forms should be done by the internal auditor to promptly disclose any missing or stolen blank documents.

5. It is equally important that a full-time clerk be assigned to check daily the serial numbers of all accountable forms that have been issued or used so that any unauthorized use can be detected immediately and corrective steps taken.

6. Stolen or lost accountable documents should be voided and customers advised of the cancellation. In the case of lost blank official receipts, the public should be informed of the cancellation through the newspapers. If blank checks are lost or stolen, the drawee bank must be advised immediately to stop payment of checks. An embezzler wants to destroy all possible evidence to cover up his crime. The drawee bank should therefore be requested to mail directly to the company's auditing department all paid checks. An internal auditor should make a detailed review of the paid checks noting particularly any alternations or improper signatures or endorsements.

There are several safeguards that can discourage check crooks from altering checks. Some of the important ones are: To prevent adding letters or syllables to the payee's name, precede and follow it with asterisks or lines. In the same way, never leave blank spaces on the lines of the amount of the check both in words and figures to make it harder to insert additional words and figures to make it harder to insert additional words and figures in increasing the amount. If there are spaces, theses should be filled by lines or asterisks.

The interest of the payee can be protected by restricting the endorsement of the check. The check may be "Crossed" by the writing two parallel lines in the upper left corner of the check, making it for deposit only to the account of the payee. To forestall diversion of the proceeds of the check, the maker should write on the back the phrase. "For Deposit Only to the Account of the Payee', or "Non-negotiable and Applicable Only to the Payment of Taxes", if the check is for tax payments. Stale checks or checks not cleared within three months should be cancelled and the bank advised to stop payment on them. As additional protective measure, the expiration period and the amount limit may be written on the face of the check as for example,"Not Valid After Three Months and For More Than P700.00" if the amount of the check for instance is P695.00.

All theses precautions are aimed to make alternations on the checks difficult. Observe them and your bank account will be safeguarded.