Which scheme describes a clerk creating a fictitious company and billing the employer for services that were never rendered?

• A. A pass-through scheme
• B. A cash larceny scheme
• C. A shell company scheme
• D. A pay and return scheme

Answer: (C)

This question tests recognizing a shell company or phantom-vendor fraud. The clerk sets up a fake employer-facing entity and submits invoices for services never performed. The organization pays these invoices, and the money goes to accounts controlled by the clerk, with no real service provided. The hallmark is a non-existent or hollow company used to generate legitimate-looking bills, allowing misappropriation of funds through false billing. Other options describe different theft methods—taking cash directly, schemes involving paying and recovering cash, or routing funds through intermediaries—but none specify the creation of a fictitious vendor to bill for non-rendered work as clearly as a shell company scheme.