In a pass-through scheme, what does the employee do after purchasing through a shell company?

• A. Returns the goods to the vendor
• B. Resells the merchandise to the employer at an inflated price
• C. Creates a legitimate front company for acquisitions
• D. Siphons money from petty cash

Answer: (B)

In a pass-through scheme, the employee uses a shell company as an intermediary to move value from the employer for personal gain. After purchasing through that shell, the employee resells the merchandise to the employer at an inflated price, pocketing the difference. This creates the appearance of a legitimate procurement transaction while secretly diverting funds to the employee.

Why this fits: the inflated resale is the mechanism that converts a normal purchase into a hidden profit stream, masking the theft as part of routine purchasing.

Why the other options don’t fit: returning goods to the vendor would simply reverse a purchase and wouldn’t generate profits for the employee; creating a legitimate front company for acquisitions describes a broader setup for acquisitions rather than the specific inflated resale in a pass-through; siphoning money from petty cash is a different form of misappropriation that doesn’t involve a shell intermediary in the procurement process.