Fourteen People Who Inspired Future Tax Criminals in 2022
The IRS Criminal Investigation unit has released its top cases for 2022 and in it we get reality TV personalities, a rogue tax preparer, some garden variety PPP fraud, and even a former decathlete with his own Wikipedia page. Pretty sure some of these people showed up in Accountants Behaving Badly, an irregular feature we […]
Friendly Reminder: If You Are Going to Commit Fraud For Clients, Charge More
Remember the Chrisleys? The flamboyantly wealthy TV couple Todd and Julie Chrisley of Chrisley Knows Best? On Monday, Todd was sentenced to 12 years in prison and Julie to seven years for an assortment of crimes like fraud, tax evasion, and conspiracy to defraud the United States. Also tied up in this bonanza of federal […]
Accountant Behaving Badly: There’s a Special Place In Hell For Someone Who Steals $800,000 From an Elderly Client With Dementia
Hey! Have you guys listened to “Oh My Fraud” yet? It’s a new podcast on the Earmark CPE platform hosted by our good friends Caleb Newquist and Greg Kyte. And Earmark CPE was created by another pal of Going Concern’s—Blake Oliver. The latest episode of “Oh My Fraud” is about the massive fraud in Dixon, […]
Accountants Behaving Badly: Fraud Isn’t All It’s Cracked Up to Be
I never thought I’d ever write the words “egg accountant busted in embezzlement scheme” but here we are. The egg accountant, Jonathan Weston, was indicted by a federal grand jury in Pittsburgh June 3 on charges of fraud conspiracy, money laundering conspiracy, and tax fraud. According to the U.S. Attorney Office for the Western District of […]
Accountants Behaving Badly: E Is for Embezzlement, This Lady Is a Wreck, Records Destruction!
Plus, a U.K. accountant is going to spend some time in jail for stealing money from two nursery schools, which she used to treat herself to a new kitchen. Accountant arrested for embezzling $1.2 million from furniture firm [Woodworking Network] Manuel “Mendy” Goldring was arrested on Feb. 18 for allegedly embezzling $1.2 million from Academia […]
Number of the Day: 43%
The Anti-Fraud Collaboration—a partnership between the Center for Audit Quality, Financial Executives International, The Institute of Internal Auditors, and the National Association of Corporate Directors—sifted through more than 530 SEC Accounting and Auditing Enforcement Releases (AAERs) filed between 2014 and 2019 for its newly released report, Mitigating the Risk of Common Fraud Schemes: Insights from […]
Accountants Behaving Badly: E Is for Embezzlement, Probation for Thief, Jailed for Bank Fraud
Also, a Texas accountant was sentenced to 10 years of probation for stealing money from a charity, and a U.K. accountant sentenced to three years in jail for defrauding a company pension scheme of £292,000 must repay that money. Kissimmee Accountant Pleads Guilty To Embezzling Funds From Two Different Employers [Justice Department] Kavita L. Harack, […]
Big 4 Lawsuits: Ex-PwC Partner vs. PwC, Deloitte Partner vs. Deloitte Australia, EnviroNet vs. EY
Plus, two Deloitte partners implicated in U.K. insolvency lawsuit, and KPMG gets out of $1.1 billion suit in Oceanografia scandal. A former PwC partner who sued the firm for $15 million just had a major setback in his case, pushing the pay spat behind closed doors [Business Insider] Big 4 firms salivate when a lawsuit […]
Accountants Behaving Badly: KPMGer’s Racist Facebook Rant, Wife Killer Charged Again, Thankful For the Rona
Plus, serial embezzler sentenced to nearly three years in prison, and United Arab Emirates accountant jailed for money laundering. KPMG distances itself from manager’s ‘racist’ Facebook rant [Trinidad Express] Sachin Boodram, an audit manager at KPMG in Trinidad and Tobago, probably should’ve just stuck to posting selfies, inspirational quotes, and recipes on his Facebook page. […]
Accountants Behaving Badly: Jail Time for Filing False Tax Returns, and BDO Malawi Given Stiff Fine
Plus, accountants in India got into trouble for fraud, duping investors, and forgery, while an accountant in Australia was charged for allegedly defrauding a business out of $200,000. Delaware County business owner sentenced to 4+ years in prison for stealing funds from clients, filing false forms with the IRS [Justice Department] Accountant Myles Hannigan was […]
Accountants Behaving Badly: Ex-Marks Paneth Partner Going to Prison, Duluth Chamber Thief Faces New Charges, Selling Unregistered Securities
Plus, an ex-IT accountant in Tokyo was arrested for allegedly embezzling more than 10 million yen, and a Portuguese accountant is accused of having aided illegal immigration and falsified documents. Prison sentence for $2M Westchester fraud marks former Stamford CPA’s fall from grace [Westfair Online] Steven L. Henning, a former partner-in-charge of a litigation group […]
Accountants Behaving Badly: Jailed Over Child Porn, Andersen Alum Fired By Law Firm, Nursery Thievery
Plus, ex-Las Vegas CPA pleads guilty to bribery, and a bookkeeper is accused of stealing $400,000 from two family businesses. San Rafael accountant, ex-Boy Scouts volunteer gets prison for child porn possession [KPIX] John Blecka, CPA, was sentenced in federal court in San Francisco on Jan. 14 to two years and nine months in prison […]
Platinum Hedge Fund Investors Aren’t Big Fans of CohnReznick
CohnReznick is being sued by 49 investors of an ill-fated Platinum Partners hedge fund who claim the accounting firm is complicit in and benefited from a fraud that doomed Platinum. Institutional Investor reported: The group of investors, who collectively sunk $63 million into the Platinum Partners Credit Opportunities Fund, filed a lawsuit against CohnReznick in the […]
Accountants Behaving Badly: Too Many Pints, Fraudster Gets 18 Months In Jail, Egypt Tax Authority Chief Arrested
Plus, a couple of tax preparers thought they could get away with defrauding the IRS. They were wrong. Drunk trainee accountant crashed car after Leeds night out [The Yorkshire Post] Archie Scott was banned from driving for 20 months and was sentenced to 12 months of community order with 50 hours unpaid work after he […]
Accountants Behaving Badly: Discrimination at EY U.K., Jail For Cancer Center Embezzler, Client Scammer Gets Prison Time
Plus, ex-accountant for city of Dunbar, WV, gets one year in prison for embezzlement, and former Suzuki accountant faces a seven-year jail sentence for stealing $1.8 million. EY deals partners accused of bullying and discrimination [Financial Times] Current and former staff in the Transaction Advisory Services team at EY U.K. described a culture they claimed […]
Accountants Behaving Badly: Sexually Assaulting Children, Guilty Plea In Visa Fraud Case, A Roudy Theft
Plus, U.K. accountant charged with misleading pensions regulator, and an Isle of Man chartered accountant is banned. Accountant, 57, and his boyfriend, 56, are jailed for total of 30 years after sexually assaulting children as young as 11 while they filmed their sick acts [Daily Mail] Asswipes. Richard Townsend, 57, abused children as young as […]
Accountants Behaving Badly: Retirement Fund Theft, Defrauding Nursing Home, Fraudster Going to Jail
Plus, two tax preparers, who as it turned out weren’t registered tax preparers, are sentenced for filing false tax returns. Plymouth accountant charged with stealing from county retirement board [Wicked Local] Paul Hurley, the former accountant of the Plymouth County Retirement Association, is accused of stealing money from the fund. He was arrested on Nov. […]
KPMG Takes Victory Lap In Merrimack College Financial Aid Fraud Case
Merrimack College suffered two defeats on/in court yesterday. Its men’s basketball team got blown out by the Providence Friars 93-56. And it lost a case in a courtroom in Massachusetts to KPMG, although the jury found that KPMG wasn’t completely blameless in the student loan fraud case. Law360 reported: A Boston jury said negligence by […]
Accountants Behaving Badly: Ex-KPMG Auditor Detained, Stealing From Clients, Ripping Off Boss
Plus, healthcare accountant sentenced to two years in jail for embezzlement, and tax preparer gets three years for filing fraudulent tax returns. Auditor detained after saying devil told him to kill his sister [Metro U.K.] Khalid Ashraf, who had worked as an auditor for KPMG for eight years until October 2018, pleaded guilty to manslaughter […]
Accountants Behaving Badly: Defrauding the IRS, Stealing From School, Drunken Leadfoot
Plus, an accountant allegedly stole thousands from an ice rink construction company, and a male tax preparer who pretended to be a woman named Alyssa Jean Pipes is accused of screwing over his clients. Former state senator’s accountant convicted of tax fraud [Justice Department] John Nardozzi, an accountant for former Massachusetts senator Brian A. Joyce, was […]
Accountants Behaving Badly: Train Station Turd, College Crook, Fake CPA’s Fraud
Plus, a New South Wales accountant got jail time for stealing moola from clients, and a Texas tax preparer is going to prison for a while for defrauding the U.S. Drunk trainee accountant who pushed man onto Tube tracks has sentence increased [The Times] Mathuram Muthuraja, a trainee accountant who drunkenly pushed another man onto […]
Accountants Behaving Badly: Big 4 Scammer, Dude Got His Nads Cut Off, Refund Stealing
Plus, accountant sentenced to seven years in jail for fraud, and church-swindling accountant gets sentenced to three months in prison. Accountant tricked girlfriend out of thousands in cancer scam [Accountancy Daily] Badal Arun Hindocha, who cheated his Internet girlfriend out of £4,300 by claiming he was dying from stomach cancer, received a suspended jail sentence […]
Accountants Behaving Badly: Naughty Kitty, Fancy Fraud, Cokehead Jailed
Plus, Colorado accountant arrested in child sex sting, and a UNLV accounting grad student is accused of killing ex-girlfriend. Essex accountant admits fraud against Cats production firm [BBC] Scott Hiskey, a U.K. accountant who worked for Monumental Pictures, pleaded guilty on Sept. 17 to a charge of fraud by abuse of position after admitting to […]
Accountants Behaving Badly: PwCer Fired for Upskirt Pics; Liar, Liar, Pants on Fire; Grand Theft Guilt
Plus, wrongful death lawsuit filed against TV show accountant. PwC accountant fired after 1,700 upskirting images [Financial News] The peeping PwC pervert who Adrienne told you guys about last July no longer works for P. Dubs: An accountant at PwC has been dismissed from the Big Four auditor after he was caught with 1,700 upskirting […]
Accountants Behaving Badly: Defrauding Clients, CPA Ponzi Scheme, Wire Fraud Is a No-No
Plus, accountant jailed for lavish lifestyle fraud, and life in prison and hard labor isn’t a horrible enough sentence for one Zambian accountant. New Mexico CPA suspected of defrauding couple out of $1 million [Las Cruces Sun News] Thomas Laws was arrested on Aug. 26 for allegedly defrauding two clients of more than $1 million […]
Accountants Behaving Badly: Deadly Lunch Breaks, Embezzler Gets 10 Years, Church Swindler
Plus, tax accountant pleads guilty to scamming clients and a movie production accountant is accused of stealing money from his employer. Police: Lindenwold man’s ‘demeanor’ changed after co-worker’s murder [Cherry Hill Courier-Post] Kenneth Saal, a staff accountant at Engine Group in Princeton, NJ, since July 2016, was taken into custody on a murder charge at […]
Accountants Behaving Badly: Stealing From Nonprofit, Stealing From Restaurant, Stealing From Furniture Business
Plus, CPA for reality television stars indicted and accountant arrested for stalking woman. Accounting coordinator at non-profit facing fraud charges for embezzling $321K in organization funds [Justice Department] Danielle Strother-Rush, an accounting coordinator at a Pittsburgh-area nonprofit organization, was indicted by a federal grand jury in Pittsburgh Aug. 6 on charges of bank fraud and […]
Accountants Behaving Badly: Fraudsters Go to Court and Prison Time For Stalking Ex
Plus, a Maryland CPA and a California CPA both get jail time for embezzlement. Newton accountant charged with wire fraud and filling false tax return [U.S. Justice Department] Jeffrey Kellem, an accountant from Newton, MA, was charged with four counts of wire fraud and one count of filing a false tax return on Aug. 5 […]
Accountants Behaving Badly: Ex-CFO Busted For Embezzlement; Fraudulent Timesheets; Ripping Off Client
Plus, an accountant is accused of keeping a domestic slave at his house and an accounting officer is going to jail for swindling his firm out of £3 million. Former Walton Beverage financial officer sent to jail for embezzling company funds [The Bellingham Herald] David McLeod, CPA, the former CFO of Walton Beverage in Ferndale, […]
Accountants Behaving Badly: Form 941 Shenanigans, Embezzlement, Stealing From Mom
Here are some accountants who failed badly at being a trusted advisor. Delaware County accountant charged with multiple tax offenses [Justice Department] Myles Hannigan, an accountant from Newtown Square, PA, was charged by the U.S. Attorney’s Office for the Eastern District of Pennsylvania on July 3 with one count of obstructing the due administration of […]
Have You Been Approached By a Colleague to Participate In a Fraud?
Good morning, GCers. Some friends of ours at the University of Illinois at Urbana-Champaign and Queen’s University in Kingston, Ontario are conducting research on group fraud and other highly unethical acts, and we’re hoping you can do them a solid and help them with their project. While I’m sure they wouldn’t pass up an opportunity […]
Accountants Behaving Badly: X Factor Winner’s Ex-Accountant Banned, Drunk Driving, Theft
Yes, there actually are accountants who behave badly who don’t work at KPMG U.S. or Deloitte U.K.: X Factor star’s accountant is banned from his profession [Essex Echo] Here’s an update to an article Adrienne wrote earlier this year: A south Essex accountant who defrauded X Factor winner James Arthur of almost £600,000 has been […]
Gambling Addict Accountant Who Expensed Fake Uber Receipts Thought He Could Pull a Fast One on Deloitte
A former Deloitte accountant in the U.K. pulled a Houdini and somehow escaped prison time after he tried to screw the firm out of £95,540 ($121,202) by expensing bogus ride-share receipts over a three-year period to fund a secret gambling addiction. Gurgyan Singh Kaley pleaded guilty to two charges of fraud by abuse of position. […]
Accountants Behaving Badly: Lots of Theft, Ponzi Scheme, Tax Evasion
Here’s a roundup of some bad stuff accountants did or were accused of doing over the past week or so. Auto shop accountant charged with stealing over $175K from employer [Chicago Sun-Times] Rungnapa Correia is accused of stealing more than $175,000 from a Bensenville, IL, auto repair shop she used to work at as an […]
Brother of Beloved Chicago Meteorologist Tom Skilling Is No Longer In Federal Custody
To me, WGN-TV in Chicago is synonymous with three things: the Chicago Cubs (sadly, only for one more year), Bozo the Clown, and Tom Skilling. For more than three decades, Skilling has been chief meteorologist at WGN, and he celebrated his 40th year with the station last August. While other meteorologists in Chicago get three- […]
Ex-NBA Star Kevin Garnett Believes His Former Accountant Helped Wealth Manager Screw Him Out of $77 Million
During his illustrious 21-year NBA career, Kevin Garnett was a 15-time all-star, named the league’s MVP in 2004, and won a championship with the Boston Celtics in 2008. He also is the Minnesota Timberwolves’ all-time leader in steals. But Garnett doesn’t take too kindly to having $77 million stolen from him. That’s what he is […]
Suspect Someone of Fraud? Give Them a Promotion
The trick to fraud is maintaining control. If you’re siphoning company funds into a bank account that you own through a dummy vendor, it’s key that you’re the person who approves those transactions and it’s even ideal if you can literally or figuratively cut the check. Yes, those are atrocious internal controls, but as we’ve documented […]
Auditors and Fraud: Where Does Responsibility Lie in the Wake of the FDIC’s Win Against PwC?
In the waning days of 2017, a judge in Alabama found PwC was negligent in its audit of Colonial Bank. The Federal Deposit Insurance Corporation had sued the firm for failing to detect the fraud at the root of Colonial’s 2009 failure. Although Judge Barbara Jacobs Rothstein denied other claims brought by FDIC and the […]
Controllers, Don’t Skim On These 6 Tips to Thwart Fraud
It’s not every day that you come across a controller who had worked on the Allen Stanford and Bernie Madoff Ponzi scheme investigations. But Bridget Meacham Kowalski, CPA, CFE, did just that. Now the controller of the Pittsburgh Symphony Orchestra, Kowalski was working as a financial and litigation consultant for FTI Consulting at the time […]
Sarbanes-Oxley 15 Years Later: Accountants Need to Speak Up Now More Than Ever
This Sunday, July 30, 2017, marks the 15th anniversary of the enactment of the Sarbanes-Oxley Act (“SOX”) of 2002. SOX emerged after the “smartest guys in the room” caused Enron to implode, and WorldCom magically erased billions in earnings overnight. The scandals shook the public’s confidence in the reliability of financial reporting and led to […]
Tesco Bank Deals with Digital Heist
Cybersecurity experts and IT auditors better saddle up — the world just experienced its first successful digital bank robbery. The Tesco heist Last weekend cyber criminals executed a sophisticated attack on Tesco Bank (subsidiary of the British grocery chain) and successfully stole £2.5 million (~$3.1 million) from customer accounts. While the money was refunded quickly […]
White-Collar Crime Watch: An Online Dating Scam, A Fake CPA, and A Tax-Evading Stripper
My grandma got wrapped up in an illegal money-making scheme once. She started taping movies off TV, editing out the commercials, hand-labeling the VHS tapes, and selling them for $3 out of a cardboard box on her driveway. When I caught her, I quickly shut her new business venture down. Luckily, it's 2016 and none […]
IRS Phone Scam Mastermind Given 175 Months to Think About His Life Choices
If you or someone you know have been thinking about getting into the IRS Crank Yanker business, you might want to be aware of the consequences should the authorities come calling: Sahil Patel was sentenced to 175 months in prison and $1 million in forfeiture for his role in organizing the U.S. side of a […]
Madoff Auditor Better at Cooperating Than Auditing, Won’t Serve Time
Auditors facing over 100 years in prison should take note: Madoff auditor David Friehling to get 2 yrs supervised release which includes 12 months home detention. So no prison time — Matthew Goldstein (@MattGoldstein26) May 28, 2015 Friehling given credit for cooperation which included days of testimony at long criminal trial last year. DOJ called […]
“Just Ask the Guy” Not Always a Futile Fraud Detection Method
Boonlomp Soonthornchai handled trustee, executor and accounting services as a partner at Yount, Hyde and Barbour in Middleburg, Virginia. In 2004, he began depositing client funds into his personal accounts, concealing the "the source of the money in his personal ledger." He then admitted to the embezzlement, "[w]hen confronted by firm board members and […]
Are You One of the 6.5 Million Americans Over Age 112 with an Active Social Security Number?
According to my halfassed research, the oldest person in the world is Jeraleen Talley. She’s 115 years old, and her hobbies include sleeping, eating hog’s head cheese, and not dying. And, as the defender of the title “World’s Oldest Person,” she’s the reigning champ in the world’s longest-running death sport. Keeping her title is […]
Man Who Lived Out Fantasy of Screwing Over a Major Airline Sentenced to Six Years in Prison
Paul Anderson, a former Delta Airlines employee, defrauded Northwest and Delta Airlines out of $36 million. In a just world, we would proclaim him a hero who sees the injustice of horrendous business practices and does right by all of us who have been fucked over by an airline. Alas, we live in nation of […]
Let’s Not Rush to Judgment Just Because a Guy Blew Off a Meeting About Accounting Discrepancies 5 Minutes Before It Started
A man who spent his entire 32-year-career in the accounting department of Frisch's Restaurants — purveyors of the iconic Big Boy — has been accused of stealing $3.3 million from the company, which he may or may not have blown at the casino. In a statement filed with the SEC, the company assured shareholders that […]
Satyam Founder Sentenced to 6 Months in Prison for Massive, Obvious Fraud
Remember Satyam? That Satyam? Yeah, it's been awhile for us, too. Satyam's PwC India auditors already received a lifetime ban, but what about Satyam's founder? Surely you've been wondering what sort of slap on the wrist he'd get for one of the largest and most blatant frauds in history? Wonder no longer: A local court […]
Old Lady Convicted of $190,000 Fraud and Doesn’t Even Have to Miss Christmas
The ACFE says 7 percent of frauds are detected by accident and only 3 percent are discovered by the external auditor, proving that fraudsters are 4 percentage points dumber than auditors are smart. That’s pretty much what happened with poor, dumb Alice Riley, the 61-year-old former clerk for the City of Auburn, Kansas, who was […]
This Massive SEC Whistleblower Award Will Make You Wish You’d Seen Something and Said Something
The Securities and Exchange Commission today announced an expected award of more than $30 million to a whistleblower who provided key original information that led to a successful SEC enforcement action. The award will be the largest made by the SEC’s whistleblower program to date and the fourth award to a whistleblower living in a […]
All These Years Later, the Fraud Triangle Is Still a Staple
Times may change and fraud schemes may evolve with those changes but for the most part, the root cause and therefore the subsequent behavior of would-be fraudsters generally remains the same. As the Journal of Accountancy wrote way back in 2000: It’s said that accountants’ predecessors were the scribes of ancient Egypt, who kept the […]
Bernie Madoff’s Former Accountant Pleads Guilty But Clueless
Paul Konigsberg is going with the guilty but ignorant and terrible at accounting defense: A longtime former accountant to Bernard Madoff pleaded guilty Tuesday to falsifying records and other charges in connection with the convicted financier's Ponzi scheme. "I'm here today to take responsibility for what I did that was wrong," Paul Konigsberg, a former […]
Ex-BDO Vice Chairman Given 16 Months to Think About His Choices
Let this be a lesson to anyone considering joining up with a "rogue group" of tax-sheltering jerks at your firm, you've been warned: Former BDO Seidman LLP Vice Chairman Charles Bee’s cooperation with prosecutors in a $1 billion tax fraud probe didn’t spare him from prison, as a judge, citing the magnitude of the crime, […]
CFO Felon Not Sure Why AICPA Didn’t Pick Up the Phone to Talk About His Fraud
Last week, ex Crazy Eddie CFO, notorious convicted felon and known Twitter troll Sam Antar tipped us off to a questionable AICPA webcast called "Voices of Fraud," which ended up on his radar likely because he has a robust Google Alert for his own name. Here's what he told us: The AICPA is offering a […]
A Tale of Barry Minkow’s Right to Redemption (or Lack Thereof)
You may have read that dedicated criminal Barry Minkow has once again been sentenced to prison, this time for ripping off a church to the tune of $3 million. A CHURCH. $3 MILLION. If that isn't the sign of large, brass cojones given his criminal past, I'm not sure what is. But you see, some […]
Man Sentenced For Fraud While Waiting To Serve First Sentence for Fraud
We all know zebras can't change their stripes, and former Crazy Eddie CFO Sam Antar has taught us not to believe criminals when they claim they are sorry and repentant. One Peter In Cho, the former head of a Chicago securities brokerage, was so repentant after he was sentenced to 5 1/2 years in prison […]
Here’s a Textbook Case of Dumb People Engaging in Illicit Sexting Spiraling into Extortion, Embezzlement
Where exactly does "sexting extortion" fall on the fraud triangle, anyway? In today's sordid tale of embezzlement gone wrong, we present Shelly Lough of West Virginia. Shelly worked as a Bethany College cashier before a single misdirected text turned her whole life upside down. Usually, the recipient of a text not intended for their number […]
CliftonLarsonAllen Settles with Dixon for $36 Million Over Crundwell Fraud
In addition to CLA coughing up their share, Fifth Third Bank will pay $3 million, and the city's auditor Sam Card will pay $1 million for a nice round sum of $40 million total, according to Saukvalley.com. CLA provided us with a statement from CEO Gordon Viere: The allegations of fraud committed by City of Dixon Comptroller […]
If You Can’t Admit You’ve Committed CPE Fraud, Then You Need to Take Another Ethics Course
Footnotes: ‘This Tweet does not constitute an offer of any securities for sale.’; IRS Nominee Gonna Get Grilled; The End of Estate Tax Planning? | 09.12.13
Siegfried Group is looking for Client Service Directors in Washington, DC, Chicago, and San Francisco. [GCJ] We’ve confidentially submitted an S-1 to the SEC for a planned IPO. This Tweet does not constitute an offer of any securities for sale. — Twitter (@twitter) September 12, 2013 Hatch: IRS nominee has 'great many questions' to answer [The […]
Let’s Watch a Vintage Crazy Eddie ‘Christmas in August’ Commercial
Some ad agency/pump-and-dumper really needs to reboot this approach
Detecting and Preventing Sex Fraud Isn’t All That Different From Detecting and Preventing Financial Fraud
Today’s Corporate Fraud Is Making Andrew Fastow Uncomfortable
“In my opinion, the problem today is 10 times worse than it was when Enron had its implosion in what was called the era of corporate fraud,” said Fastow. “The things that Enron did, and that I did, are being done today. In many cases, they’re being done in such a manner that makes me […]
Lapping Schemes Are For Stupid People and Dogs with Access to Lidless Toilets
Any licensed CPA caught perpetrating a lapping scheme should have his or her license revoked immediately and permanently — not for committing an act discreditable to the profession, but for being a giant dumbass. There so many types of fraud that are way easier than lapping. No. Wait. Every type of fraud is way easier […]
Going Concern Contributor Is a Suspect in a $60 Fraud Case
Ed. note: We welcome back Greg Kyte after a brief post-April 15th vacation. He'll join us every month in his Accumulated Deprecation column. Go here to read more of Greg's posts. Somebody stole $60 out of my desk drawer at work. Not my money. My company's money. You know, the stuff that, as an […]
Internal Controls Are of the Devil (Or: Why Stealing from the Catholic Church Is So Easy)
The other day I asked my wife if she'd be mad if I started a new religion. I clarified that she would not be required to join my new religion; I just wanted to know if I'd have her support. She didn't really answer. Not out loud. But her nonverbal message was as clear as an auditing standard that was clarified in the Clarity Project1. What she wasn't saying was either (a) she'd be pissed if I really did it, or (b) she'll tolerate my stupid questions, or (c) she'd be shocked if I could get more religious followers than I have Twitter followers2.
Bad Spelling Can Derail an Otherwise Promising Career in Fraud
For God's sake, get a good education.
Here’s Another Sad Story About a Thief Who Got Dinged By The IRS For Not Reporting Stolen Income
This poor bastard has been sentenced to a year and a day for gyping the IRS out of their chunk of the money he stole from his employer: [Jeffrey] Scher, a certified public accountant, was employed as the chief financial officer at Bodek and Rhodes, a Philadelphia-based T-shirt wholesaler. Scher received cash receipts from Bodek […]
Ernst & Young Study Finds That Fraudsters Aren’t So Creative with Code Words Over Email
If you and some cohorts are fed up with walking the straight and narrow, be advised that a recent study by Ernst & Young discovered something that may help assist you in making your future fraudulent endeavor a wild success: Phrases such as “nobody will find out”, “cover up” and “off the books” are […]
This Is Not a Good Day For South Carolina
What the heck is going on in South Carolina? First we find out last week that an "international hacker" got into the SC Department of Revenue and managed to get his or her hands on 3.6 million tax returns going all the way back to 1998. It is being called "the largest cyber-attack against a […]
Someone Is Sending Out Bogus PwC Checks, Again
Back in 2010, some criminal masterminds perpetrated a scheme where bogus checks bearing the PwC logo were sent to random people informing them that they have been selected to be "secret shoppers" requesting them to cash the checks at specific banks and then to wire them to another secret shopper. It would sound pretty good […]
IIA Chief: Resist Temptation, Would-be SEC Whistleblowers
Last week, the SEC announced that it had paid out its first whistleblower award and that the program was coming along just grand as the Whistleblower Office said that the Commission receives "about eight tips a day" since the it started last August. That's great and all, but the internal auditors might be feeling slighted […]
Note to Thieving Church CFOs: Sex Scandals Are Not a Good Excuse For Stealing
42-year-old Anita Guzzardi worked at the Philadelphia archdiocese since the ripe old age of 20, rising through the ranks to make $124,000 a year as their CFO until she was canned last year for embezzling $900,000 from the church. Her lawyer says she gave in to gambling and shopping addictions after feeling betrayed by the […]
ACFE Fraud Report Fingers You
My fraud IQ sucks. The Journal of Accountancy told me that when I took the "What's Your Fraud IQ" quiz in the August issue. I usually do pretty well. Not this month – 40 percent. I should've cheated. The answers are right there. But like you, I live my life according to a Code of […]
PwC Forensic Experts to Determine How Much Money PFGBest Customers Won’t Be Getting Back
The bright side in all this is…oh, let's face it: when your broker's auditor is in jorts, the situation is hopeless: Peregrine Financial Group's bankruptcy trustee has hired a team of forensic accountants to help figure out what remains at the failed futures brokerage after its CEO's arrest and confession to years of stealing from customers. PricewaterhouseCoopers […]
CFTC Chairman Knows PFGBest Auditors Shouldn’t Have Passed GAAS
Gary Gensler, who may or may not be aware that PFGBest's auditor preferred to don jorts at the (home) office, is familiar enough with auditing standards to know there are certain ones that always need to happen: Commodity Futures Trading Commission Chairman Gary Gensler told lawmakers on Wednesday that Peregrine Financial Group's outside auditors should […]
IRS Whistleblower Gets the IRS Audited, IRS Does Not Find This To Be Entertainment
Indianapolis TV station WTHR is reporting IRS tax examiner Howard Antelis has apparently developed some concerns about the way his esteemed employer handles Individual Taxpayer Identification Numbers and, more importantly, what possible abuse and fraud mean for the Service's flawless record. "I'm horrified and ashamed and embarrassed by what I've seen. It's not supposed to […]
Possibly Racist Georgia Accountant Forgets To Pay State Taxes But Remembers To Test Internal Controls
Alright listen, we're all busy. Sometimes I forget to scoop out the litter box or to take a shower for, you know, a few days. It's hard to balance work and your personal life and, in the case of 37-year-old Summer Payne, the work and personal life of an employee made up just so she […]
Lawyer Suing Moss Adams Seems to Have Hurt Feelings After Opposing Counsel Called His Lawsuit “Flimsy”
Anyone remember Frederick Darren Berg? He's a guy who had a thing – nay, a passion – for charter buses. It just so happens that he also was running Washington's largest ever Ponzi scheme to finance his passion. Moss Adams (who Berg says is not at fault) was the auditor for FDB's Meridian funds – […]
Is There Any Subtle Indication of the Dixon Fraud in the Names of Rita Crundwell’s Horses?
The Associated Press reports that some property of alleged Dixon, Illinois sticky fingers Rita Crundwell will be put up for sale. The property includes her four homes in Illinois, a home in Florida, and a $2.1 million motorhome. So if you're in the market for a place in the Illinois countryside or in a state […]
Chicago-based Recruiting Firm Should Keep in Mind That the City of Dixon Would Jump at the Chance to Switch Places
Shaun Horan is no Rita Crundwell (allegedly!): A former Oak Brook accountant stole nearly $300,000 from his employer by writing checks to himself over a five-year span, prosecutors said Wednesday. Shaun Horan, 31, of the 1600 block of Blackwell Lane in Aurora, appeared in DuPage County bond court on a felony theft charge. Horan is accused of […]
Dixon, Illinois Finds Itself in a Bit of Pinch Since, Ya Know, $53 Million Went Missing
Accordingly, Dixon Mayor Jim Burke is putting the brakes on any investigation because "[it] would cost the city hundreds of thousands of dollars" and the woman who had the magic credit card is in a bit of trouble. Hey, someone had to apply the tourniquet after the city bled out. [WAND]
Oh Look, the Dixon, Illinois Fraud Is Way Bigger Than Everyone Thought
How big? In the neighborhood of $53 million, according to the indictment. Earlier reports had put it closer to $30 million and change. It further alleges that Rita Crundwell stated the scheme in December of 1990 and was "[creating] fictitious invoices purported to be from the State of the Illinois to show the auditors for […]
Here’s an Ominous Statement a Former Dixon City Finance Commissioner Made About Accused Embezzler Rita Crundwell
Crundwell reported to the city's finance commissioner, a member of the City Council, but the mayor declined to comment on whether that current commissioner, David Blackburn, or former Commissioner Roy Bridgeman should have detected the alleged thefts. As Bridgeman left office last year, he praised Crundwell for being an asset to the city and said […]
Minnesota Accounting Professor’s Real World Experience Proves To Be a Double-Edged Sword
Joseph Traxler was the CFO of Centennial Mortgage and Funding Inc. in Bloomington. He helped run an $8 million fraud by misleading banks that allowed Centennial to obtain more loans. He also hid defaults and double-funded mortgages from lenders, as well as little check kiting in order to keep the business afloat (rather than enrich […]
The Dixon, Illinois Fraud Is the Latest Example of Why Reasonable Assurance Is Bullshit
As you know, the former CFO of DIxon, Illinois, Rita Crundwell, has been accused of misappropriating $30,236,503 and 51¢ from Ronald Reagan's boyhood home. It's a haul of Sue Sachdeva proportions, although it appears that obsessive shopping wasn't so much the motive as it was a My Little Pony fascination for a grown woman. ANYWAY, […]
Dixon, Illinois City Commissioners Beat a Dead Horse After CFO’s Arrest
Last week we learned that the CFO/comptroller/treasurer for the city of Dixon, Illinois, Rita Crundwell, was arrested for allegedly stealing $30,236,503 and 51¢. She also stands accused, in the court of public opinion, of having awful taste in automobiles, as federal agents seized a Ford Thunderbird upon her arrest. Regardless, these allegations came as a surprise […]
It Sounds Like the Olympus Shareholder Meeting Went As Well As You Might Expect
If you've been following the Olympus scandal, it's made for a pretty entertaining affair. It involves $1 billion+ in accounting shenanigans, two feeble Big 4 firms, selective communication with investors, a small shifty auditor, OH! and a former CEO of the company blew the whistle on the whole thing. So of course you'd expect shareholders meeting follow suit. […]
Somehow the City of Dixon, Illinois Just Noticed That $30 Million Was Missing
Rita Crundwell has been the CFO/comptroller of Dixon, Illinois since the 1980s; a typical tenure for even an unelected Illinois official. In those 30-ish years, it appears that she performed her duties adequately enough, but she was just put on unpaid leave. You see, at some point in 2006, it is alleged that Ms. Crundwell […]
This Is Your Last Chance to Own (or Gift!) a Piece of Koss Embezzlement History
As you know, convicted embezzling-mother-of-all-hoarders, Sue Sachdeva, had a bit of a shopping problem. She did her damnedest to spend all of $30+ million that she stole from headphone cobbler Koss, but now that she's resting comfortably in Danbury, all that loot needs a home. Back in December, we were tipped to an auction that […]
Vermont Is a Hotbed of Embezzling Embezzlers
Ahh, Vermont. Foliage, second-rated skiing, and, of course, hippies. But apparently, the Green Mountain should be known for something else – stealing from your employer! According to Marquet International Ltd., Vermont "Vermont topped the list of states with highest risk for loss due to embezzlement in 2011." What's the reason for this? Well, it's not […]
Get Yourself a Piece of Koss Embezzlement History
Remember the good ol' Koss fraud? It's been quite some time since we were on the Milwaukee beat but this morning we received an email informing us that a little auction is being held by Gaston & Sheehan that has several lots (97 to be exact) under "US Marshal Service Assets." Our tipster informed us […]
Costa Rican Auditor Admits To Never Actually Auditing
Provident Capital Indemnity Ltd’s former outside auditor admitted in federal court this week to participating in a $670 million fraud in the life settlement bond market, according to the Department of Justice.
56-year-old Jorge Castillo pleaded guilty Monday to one count of conspiracy to commit mail and wire fraud, U.S. Attorney Neil MacBride in Alexandria, Virginia, said in a call with reporters. He could face up to 20 years in prison.
Castillo admitted to conspiring with PCI president Minor Vargas Calvo to prepare false financial statements that reflected contracts PCI held with other reinsurance companies. Castillo admitted to prosecutors that he never audited PCI’s financial statements and that he was aware PCI did not actually enter into the contracts with other reinsurance companies listed on the company’s financials. PCI paid him about $84,000 from 2004 to 2010.
Castillo will be sentenced in a Richmond, VA federal court on May 22.
DOJ: Purported Auditor Of Provident Capital Pleads Guilty In Scheme [WSJ]
Has an Auditor Ever Been Whacked For Snitching on Fraudsters?
I’ve gotten some crazy questions over the years but this one pretty much takes the cake. I’m not saying it’s stupid, nor am I saying it’s all that crazy, it’s just… well… out there, is all. Read on.
I’m a college student at the University of North Texas. Fraud has been a hot topic in my courses this month. We covered many scandals including Crazy Eddie, Barry Minkow, NextCard, Enron, and Bernie Madoff. This has got me thinking a lot about how I would react if I was in the shoes of the auditor. The students in my class always say to just report the fraud, however they never put themselves in the shoes of the fraudster to determine how the fraudster would act nor do they think about protecting the reputation o watched enough movies to know that if a fraudster finds out that somebody knows “too much,” then that person probably won’t make it home alive that night, unless they cooperate. I remember in that movie, “The Other Guys,” the auditing partner got killed because the fraudsters didn’t want him snitching out any information to authorities.
Another thing is that if it is found out that a partner is involved in fraud, this will ruin the firm’s reputation if this gets reported to the SEC. However, if the firm handles this internally, fire the partner, admit mistake, and let the public know that it doesn’t want anything to do with the partner, then perhaps only the partner would get in trouble and not the firm.
So exactly how are you suppose to act in situations of fraud? Of course AICPA tells us to first report it to your supervisor, then to the audit committee, and then the SEC. But still though, you got to get this out before someone kills you and you’ve got to handle it in a manner that best protects the reputation of the firm. Am I right? Also, have you ever heard of any auditors that were murdered because they knew too much? When you read about Enron or the Bernie Madoff scandal, there are talks about death threats, but you don’t necessarily hear about any murders involved. So it may be something that only happens in the movies.
Well, since you brought up Crazy Eddie, my first instinct was to pose this question to Crazy Eddie’s corrupt CPA, Sam Antar. Thankfully Sam obviously checks his Twitter account every five minutes and had some thoughts for me almost immediately.
“Yes, the potential is there. Depends on the client. Have that person contact me if worried,” he tweeted. Now isn’t that sweet? If anyone out there is feeling the heat, you know who to hit up.
His thought? It’s rare, if not impossible. Why would a fraudster whack the auditor? By the time the fraud is uncovered, it’s too late. The workpapers would likely document said fraud, so the fraudster would then be forced to whack the entire chain on up to the partner and who has time to do all that killing? “No logic in whacking outside auditor unless part of conspiracy,” Sam said.
That being said, does anyone remember Allen Stanford’s sketchy auditor C.A.S. Hewlett (“C.A.S.H.” get it?!)? He apparently kicked the bucket on January 1st (a real accountant would have kicked the bucket on December 31st, pfft), just a month before Stanford was charged with fraud (though he didn’t get arrested until June of that year). The circumstances surrounding his death were, uh, weird to say the least but I don’t think anyone is going to go so far as to say he got whacked.
Or how about Ken Lay? I mean, does anyone really believe he had a heart attack? There is even an entire website dedicated to exposing Ken Lay’s post-mortem life.
Now, here’s where it gets tricky, and I don’t expect you to know this since you haven’t made it out into the real world yet. What is an auditor’s job? Is it to uncover fraud? Or is it to verify with a minimum of certainty (a.k.a. “reasonable assurance”) that the financial information presented by a company is probably legit? If you answered the latter, you win. Forensic accountants dissect fraud, auditors simply check boxes. I’m sorry if this offends any of you hardcore auditors out there but in your hearts, even you guys know I’m right. Auditing is a joke, an intricate dance (read: performance) that exists more for entertainment than functionality. If you don’t agree with me, I’d be happy to name any number of companies that prove my point for me (let’s see… Enron, Worldcom, Overstock, Satyam, Olympus…).
What do you think the odds are that a first or second year auditor would even be able to detect fraud? Don’t you think the criminals behind it are at least clever enough to hide their wrongdoing from a bunch of fresh-faced kids with their SALY checklists? Look at the lengths Crazy Eddie went to – to success until their greed got the best of them and a chick ruined the whole scam. And that’s the thing, the auditors rarely uncover fraud, it’s usually the fraudsters themselves who end up exposing themselves though greed or just plain stupidity.
Whistleblowers don’t make friends but they don’t have to hire armed guards either. Like I said, by the time the fraud is exposed, it’s too late to start killing people to hide the truth.
And thanks to SOX, it is illegal to “discharge, demote, suspend, threaten, harass or in any manner discriminate against” whistleblowers, so a more likely scenario is that revelations of fraud will come from within the firm, not from the outside auditors who are pissed off to be doing inventory counts on New Year’s Day.
You watch too many movies, kiddo. Just check the list, collect the bank recs and call it a day.
Note: The IRS Does Not Appreciate You Not Reporting Your Embezzlement Gains
Let this serve as a warning to any would-be embezzlers out there, if you steal, you better report it to the IRS.
42-year-old Collette Snyder of Timonium, MD pleaded guilty earlier this month to filing false tax returns in 2007 and 2008 after she neglected to claim over $382,000 embezzled from her former employer, Towson, MD-based Maple Leaf Title.
As part of her duties at the title company, Snyder had signature authority over the company’s operating, settlement and recording accounts, which allowed her to begin embezzling money from MLT accounts starting in 2007. She deposited company checks directly into her personal bank account, as well as made checks payable to her husband without his knowledge, forging his signature to deposit those checks in an account he was not aware of. At that point, Snyder had been an employee of MLT for two years.
Snyder took around $149,560 in 2007 and $232,968 in 2008. These embezzled funds were used to purchase jewelry, a BMW, trips, home improvements and private school tuition.
Because reporting this money to the IRS without it clearly declared on her W-2 (despite her writing “payroll” in the memo section of company checks she wrote out to herself) would have alerted authorities to the fraud, Snyder neglected to mention the ill-gotten gains. This resulted in an estimated tax loss of $115,529.37 for her 2007 and 2008 returns.
Due to the embezzlement by Snyder and MLT President Anthony Weis, MLT was unable to perform its duties as a provider of settlement services. With MLT’s escrow account drained, existing mortgage notes could not be paid off by MLT, meaning clear and free title could not be passed to the new lender and borrower of those notes. An insurance company that had issued title insurance policies to the borrowers guaranteeing clear title ultimately paid out $3.9 million to financial institutions that held mortgage notes.
Weis pleaded guilty to wire fraud, was sentenced to 78 months in prison and was ordered to pay restitution of $4,007,705, which includes the loss to the title insurance company and the expenses of the individual victims. He began his sentence in May of this year. The interesting part of this story is that Weis stole money intended for his clients’ real estate closings. And then Snyder stole from the company. Birds of a feather…
Snyder faces a maximum sentence of three years in prison and a fine of $250,000. U.S. District Judge Catherine C. Blake has scheduled her sentencing for February 3 , 2012 at 11:00 am.
“Mortgage fraud adds to the underground economy that erodes the integrity of our tax system and threatens the financial health of our communities. IRS Criminal Investigation is committed to ‘following the money trail’ to ensure that those who engage in these illegal activities are vigorously investigated and brought to justice,” said IRS – Criminal Investigation Special Agent in Charge Jeannine A. Hammett.
Muddy Waters CEO: There Are Some Big 4 Partners in China Conspiring to Defraud Investors
As you probably heard, the PCAOB officially put out a proposal earlier this week for audit partners to be named in the annual reports of public companies. It would also require “registered firms to disclose the name of the engagement partner for each audit report already require the form” and “disclosure in the audit report of other accounting firms and certain other participants that took part in the audit.”
While most Big 4 audit partners are probably feeling a little chapped by this whole proposal, there is at least one person going on record (by way of PCAOB comment letter) that feels that it doesn’t go far enough. That would be Carson Block, the CEO and founder of research firm Muddy Waters. In Block’s letter (in full on page 2) to the Board he writes that not only should the engagement partner be identified but that he or she should be putting their name on the audit opinion because “[it] will decrease investors’ future losses to fraud and gimmicky accounting by billions of dollars.”
That on it’s own is enough to get more than a few people riled up. But as we indicated, there are some conspiracy and fraud accusations as well:
Even the most reputable auditors in China seem to be in a race to the bottom. We believe that there are particularly egregious situations in which some Big Four partners in China offices have actually conspired with their clients to defraud investors. Further, it is a reasonable proposition that the conflict of interest inherent in the Chinese auditors’ business model also affects the quality of US company audits.
Now before your knickers in a twist, don’t forget that this is the guy who called Sino-Forest a “Ponzi Scheme for the 23rd Century” which more or less looks to be accurate. Further, if you consider all the trouble Big 4 firms have had with Chinese companies listed in the U.S. and elsewhere, it doesn’t seem to be that much of a stretch that some partners would just say fuck it and work with their clients to keep a lid on the shenanigans than go through the pain of actually doing their jobs.
Regardless, with these accusations the PCAOB may try to make another run at getting the Chinese to play ball.
Tax Refunds From ‘Secret Government Accounts’ Still Turning Out to Be Bogus
What’s most interesting about this particular scam is that it involved more people – 55 – than some accounting firms’ entire headcount.
A grand jury has indicted 55 people for participating in scams that tried to bilk the government out of more than $250 million in undeserved tax refunds, prosecutors in California said on Monday. Thirty-two indictments were returned by the grand jury accusing the people of various schemes to obtain the refunds. Millions of dollars were paid out, including a check worth almost $1.2 million, the prosecutors said. The owners of one California company were accused of making presentations that claimed customers could get tax refunds from a “secret government account” after making payments to the company and agreeing to pay a percentage of any refunds they received, the prosecutors said.
Grand jury indicts 55 for $250 million in tax scams [Reuters]
According To This Paper, It Takes Cojones To Commit Fraud
No, really, that's actually what the paper says. The abstract: What factors explain the behaviors of corporate leaders who engage in spectacular frauds? Is it greed? Is it power? Are these leaders, as some critics allege, simply psychopaths? Or is something else going on? In this Essay created for a symposium on the “agency problem,” […]