It’s bad enough that Allen Stanford can’t get out of jail in order to properly prepare his defense but now he’s dealing with what may be a preview of what happens if he’s found guilty of running a Ponzi scheme.
It’s bad enough that there isn’t any cricket coverage in prison but the walking gun show has complained about day to day annoyances like the lack of air conditioning in his prison cell, which he shares with 8 to 10 of his closest friends and also a power outage which likely prevented him from reading How to Win Friends and Influence People (The Prison Edition).
Sir Allen discovers there’s no air conditioning in jail [FT Alphaville]
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Report: Accountants Responsible for Two-thirds of Embezzlements
Okay auditors. No more excuses. You should already be giving everyone the stink-eye the second you walk in the door but now we’ve got a REPORT about embezzlement in the US of A that gives you all kinds of hints on who you should suspect — provable or not — of being the next Sue Sachdeva.
The Marquet Report on Embezzlement is an annual report put out by Marquet International, Ltd., a “an independent investigative, litigation support and security consulting firm” according to the company’s website.
Here are some of the key findings in the report:
• Women are more likely to embezzle than men.
• Men embezzle significantly more than women.
• Perpetrators typically begin their embezzlement schemes in their early 40s.
• By a significant margin, embezzlers are most likely to be individuals who hold
financial positions within organizations.
• The two broad industry categories that have the highest risk for a major
embezzlement are Financial Services and Government Agencies/Municipalities.
• The Financial Services industry suffers the greatest losses from major
embezzlements.
• On average, major embezzlement schemes last about 4½ years.
• California and Florida are consistently the states that experience the greatest
losses from major embezzlements.
• The vast majority of major embezzlements are caused by sole perpetrators
• Gambling is a clear motivating factor in driving some major embezzlements.
• Fewer than 10 percent of embezzlers have a criminal record – less than expected, but enough to suggest that pre-employment screening has merit.
Some takeaways: 1) Immediately suspect anyone that gambles. Even if it’s bingo games in the church basement; 2) If you’re in California or Florida you’ve got your work cut out for you; 3) By “a significant margin” they mean accounting/finance personnel were responsible in 67% of the cases. Executives were second, in 13% of the cases.
Annnnd since we know you’re wondering: the largest embezzlement case in 2009 was none other than our Suz. Based on the criteria above, it appears that she should have been under suspicion from day one but you can’t fault Grant Thornton too much. This is only the second report that Marquet has issued so chances are she still would have made off with $20 million. Oh well, you’ll get ’em next time!
The top ten from 2009:
Report On Major Embezzlements 2009.pdf
At Blackwater, Strippers and Hookers are Legitimate Expenses
Allegedly of course!
It’s bad enough when even the Iraqis are saying GTFO but that’s exactly what’s happened to about 250 ex-Blackwater employees still lingering around Iraq. “I don’t think the Iraqi government is willing to have any Blackwater member, even if they are working in other companies,” government spokesman Ali al-Dabbagh told CNN in January.”
But it isn’t just the Iraqis with a Blackwater bone to pick – former Blackwater employees allege the security firm hired strippers, prostitutes, and “incompetent personnel” to defraud authorities while working security details in Iraq and Afghanistan, as well as in post-Katrina Louisiana.
WTF is going on here? If you’re going to rip off the federal government, I guess it’s good to get your money’s worth, especially if you know their internal controls are for shit.
CNN:
Melan Davis, who was involved in record-keeping, said Blackwater billed the government for prostitution services in Afghanistan from a Filipino female, whose name was on Blackwater’s payroll roster under a category called “Morale Welfare Recreation.”
She said Blackwater billed the woman’s plane tickets and monthly salary to the United States.
The lawsuit also said a vendor being paid for “cleaning services” in Louisiana was providing strippers.
Blackwater spokespeople (the company is now known as Xe, though we won’t pontificate as to why another rebranding might be appropriate at this time) claim Davis must be trippin’. Strippers? Hookers? Fake receipts? No way!
“The allegations are without merit and the company will vigorously defend against this lawsuit. It is noteworthy that the government has declined to intervene in this action,” Xe told CNN.
This is not the first time Blackwater has been accused of defrauding the government; California’s Henry Waxman (D) accused the contractor of running a tax scheme to avoid paying what his staffers estimated as $15.5 million in Social Security and Medicare taxes, $15.8 million federal income tax withholding and $500,000 in unemployment taxes between May 2006 and March 2007.
So? What’s worse? Not paying taxes or expensing “Morale Welfare Recreation” on Uncle Sam’s dime?
Cooked Books Du Jour: Home Solutions of America
In today’s edition of “They just made the numbers up,” the SEC has charged Home Solutions of America, Inc. with inflating revenues based on phantom business deals related to restoration projects after Hurricane Katrina and other weather-related disasters.
According to the Commission’s complaint, Home Solutions issued several “materially false press releases” bragging about their kick ass results after doing work related to the damage caused by Katrina.
The scheme wasn’t exactly rocket science, as the former, CEO, CFO and one Director created phony invoices in order to record fake accounts receivable. They also decided that cash basis accounting was more their speed, expensing bonuses when they were paid rather than earned, in order to inflate their earnings.
All this hocus-pocus led to a run up in the stock price, which in turn, resulted in the former CEO, Frank Fradella selling over $6 million in shares based on the inflated price. The stock later tanked after massive insider stock sales, the filing of the lawsuit alleging fraud, and the Company’s announcement that they had to restate their financial statements.
And because we know you’re wondering, the most recent auditor we can find for Home Solutions is KMJ Corbin & Company LLP. We left a voicemail seeking comment but so far our calls have gone unreturned.
SEC Charges Hurricane Restoration Company and Executives in Post-Katrina Accounting Fraud [SEC Press Release]