Supply-chain fraud is alive and escalating

The last time you probably thought about supply chains was during the early days of the COVID-19 crisis when the toilet-paper shelves were empty. But that TP had to wend its way through a complex journey from pulp mills to your home that involved many parties and chains of events. Disrupt just one step — say because of pandemic fears or fraud — and the chain breaks. Here’s how to help prevent supply chains from fraudulent acts and mitigate them when they do break.

Supply-chain fraud is prevalent throughout the world in most segments of the economy. For example, in March 2018, a truck driver in the U.K., while parking overnight, was drugged with sleeping gas in the cabin of his truck so thieves could steal his cargo that included industrial equipment valued at  more than 70,000 pounds sterling. (See New Cargo Theft Method Threatens Supply Chain Security Across Europe, DHL RESIDENCE360, August 2018.)

On Aug. 14, 2017, jurors awarded plaintiffs, Milan Supply Chain Solutions, more than $30 million in damages in a suit against Navistar alleging that it misled them when the company sold them heavy-duty trucks and engines by failing to disclose that the Maxxforce 13 liter engine was launched with serious known defects. (See Navistar Hit With $30.8 Million Judgment in ProStar/MaxxForce Lawsuit, Aug. 14, 2017, BigMackTrucks.com.)

In 2013, Michelle Myrter, president of Castle Cheese, pleaded guilty in a fraud case for selling fake 100% Romano and 100% Parmesan cheese products that fraudulently contained zero percent of either. Instead, the products consisted of cheaper cheeses and fillers, including wood pulp — cardboard — to increase weight volume. (See the U.S. Department of Justice release, and Castle Cheese and President/Co-Owner Michelle Myrter Plead Guilty, by Jessica Donnel, “Deli Market News,” Feb. 29, 2016.)