Financial Loss 
It can be as quick as the loss of your initial investment, or as draining as large legal fees incurred over several years.  

• The President of a telecommunications company was approached by an investor.  The investor at first offered the money with few strings attached, other than one-third of the voting stock and a percentage of the return.  The President began trusting the investor, who became increasingly interested in the company, and gave him access to a wide variety of information.  Later, the President found out the investor had illegally transferred stock out of the name of the President and into his own name, and then used his new stock to launch a hostile takeover of the company; he then took the company into bankruptcy.  After months of litigation, the President agreed to pay the investor $3 million to get the company back.  Although the President has now regained control of his company, he has paid the $3 million to the investor plus $3 million in legal fees, and the litigation is ongoing.  The company is still under Chapter 7 bankruptcy.
  
  
• A start-up company seeking financing met with several venture capitalists.  Three of the firms were well-known and well-established; the fourth was a young company staffed by individuals who had worked for the more established companies, but which did not yet have a track record.  The start-up was attracted to the young capital firm because it agreed to better terms than the competitors and because they liked the idea of helping another young firm.  The capital firm first requested $5,000.00 in application fees from the start-up, explaining that it was a customary part of conducting business and that the up-front money would be "rolled in" to the amount provided to the start-up.  The young venture capital firm continued to ask for application fees and processing fees, always providing documentation from the bank or other investors.  The start-up also funded several trips for the principals of the capital venture firm.  After the start-up paid almost $50,000.00, the venture capital firm disappeared.  It later turned out that none of the individuals in the venture capital firm had any financing experience and (of course) none of the money ever went towards raising capital.  The principles in the start-up were forced to take second mortgages on their homes to keep the company alive.  
  
  
• A perfume company executive received an anonymous tip saying one of the high-ranking individuals in the company was stealing inventory and reselling it to a discount perfume outlet.  The President hired CTC to look into the possibility of theft.  Several months later, CTC found a small discrepancy in an inventory list for a particular warehouse, which led us to larger inventory problems.  Ultimately, CTC uncovered the theft of large amounts of perfume from the warehouse by one of the Vice Presidents who had been hired into his position after the perfume company acquired his smaller perfume company.  The President estimated the cost of the loss in the several millions of dollars.  
  
  
• A pharmaceutical company which had spent millions of dollars and more than six years developing a drug hired a research scientist when the project was in the final stages.  The scientist was US-educated and was considered well-respected in his field.  Shortly before the drug was scheduled for large-scale production, South Korea announced it had developed a similar drug and would be going into production one week before the US firm.  The pharmaceutical company later learned that the research scientist had provided all the proprietary information on the drug to the South Koreans for $75,000.00. 

Reputational Destruction 
A damaged reputation is at least as devastating as financial loss, and it can be much more difficult to recover.  

• A high-tech company hired a Vice President who came with stellar recommendations.  Approximately six months after he was hired, the VP announced a large sale to a Japanese company and an extensive partnership with a European company.  To fill the Japanese order, the VP rushed production and ordered workers to skip steps, resulting in a product with several problems.  The Japanese returned the products and issued scathing statements about the company.  At the same time, the European company announced that it had no knowledge of a partnership.  Because of the poor quality of the sale to the Japanese, the company lost its existing contracts and had to file for bankruptcy protection.  The company was further hurt by a federal investigation into stock manipulation as a result of the European announcement.  Although the other executives in the company were found innocent of all charges, the top three individuals have been unable to find employment elsewhere or obtain funding to start another company because of their association with shoddy workmanship and stock manipulation. 
  
  
• A cleaning company won a contract to clean the offices of a computer company that had several government contracts.  The computer company received a telephone call from the US government saying someone had attempted to access a secure government website from the computer company offices.  CTC's investigation revealed that a member of the cleaning crew had "hacked" into a relatively unsecure website which contained a list of passwords, and then had attempted to use the passwords to reach other, more classified sites.  Because of the breach of security, the computer company lost its government contract, and has been told "off the record" that it will not be considered for future contracts.  
  
  
• A medical company hired a new president.  He had 25 years of experience in the medical field, and was a specialist in medical implants.  Five years after he had been employed, one of the implants produced by the company caused severe damage in a patient, and the AMA launched a large-scale investigation of the company.  The investigation found that the president had attended only one year of medical school, and had actually falsified his credentials and his experience; because he had claimed to graduate fro medical school in the late 1950s, it had been difficult to track his claims.  The medical company suffered serious financial losses due to malpractice suits, but more devastating was the loss of all credibility in the field of medicine.  Even products not associated with the new president were taken off the market because of their association with the disaster.   

Lost Opportunities 

• A utility company learned that the Government of Mexico was looking for a US partner.  The utility had little experience in Mexico, so they hired a Mexican consultant whose résumé included ties to the Mexican ruling party and a high-ranking position in the state-owned utility company.  The consultant was paid a salary plus a bonus if the US utility won the contract.  After six months of intense negotiations, the Mexican government decided to work with a different US company.  Although disappointed, the US utility company believed their consultant had negotiated in good faith, to the best of his ability, and that the Government of Mexico simply chose someone else.  Several months later, the US utility company learned that the Government of Mexico had never even considered them, because the government had never received their proposal.  The consultant had provided written reports and other extensive documentation that made the company believe he was actively pursuing their interests, but he was actually using the trips as paid vacations and had taken the salary without conducting any business for the utility.  Despite the loss of funds paid to the fraudulent consultant, the executives at the US utility believe that the largest cost was the lost opportunity of the contract with Mexico.
  
  
• A more common example involves interviewing two strong candidates for an important position.  The company hires one, without doing their due diligence.  At a later point, the new employee causes some problem and his résumé falsifications are uncovered.  The company would like to go back and hire the other candidate, but he has already been acquired by another firm and is no longer looking to leave his current employment.        

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