FRAUD SCHEME - HEALTH INSPECTORA city health inspector threatens to close down a restaurant by issuing afake health violation notice if the owner does not make a financial payment to the inspector. If the restaurant owner does not cooperate, hewill not be able to open for business and the publicity will drive away hiscustomers permanently. Faced with a threat of economic loss, the ownermakes the payment. RequiredWhat type of fraud is this, and what controls can be implemented toprevent or detect the fraud?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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FRAUD SCHEME - HEALTH INSPECTOR
A city health inspector threatens to close down a restaurant by issuing a
fake health violation notice if the owner does not make a financial

payment to the inspector. If the restaurant owner does not cooperate, he
will not be able to open for business and the publicity will drive away his
customers permanently. Faced with a threat of economic loss, the owner
makes the payment.

Required
What type of fraud is this, and what controls can be implemented to
prevent or detect the fraud?

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