Shell Company Schemes

D

The answer to this question is D. Pass-through scheme.

In a pass-through scheme, a shell company is used as an intermediary to sell actual goods or services to the victim company. The shell company acts as a middleman, adding little or no value to the transaction. The victim company is not aware that it is dealing with a shell company and believes it is doing business with a legitimate supplier.

The shell company buys goods or services from a legitimate supplier and then resells them to the victim company at an inflated price. The difference between the price paid to the legitimate supplier and the inflated price charged to the victim company is the profit earned by the fraudster.

Pass-through schemes are often used to launder money or to embezzle funds from a company. The fraudster may use the shell company to make it appear that the money is coming from a legitimate source, when in fact it is being diverted from the victim company. The scheme can be difficult to detect because the victim company is receiving actual goods or services, and may not realize that it is being overcharged.

In contrast, a maintenance scheme involves the creation of a fake vendor that bills the victim company for services that were never provided. An allocation scheme involves overcharging the victim company for goods or services that were legitimately provided. A distribution scheme involves creating a fake vendor and billing the victim company for goods that were never received.