Tis the Season for Gift Card Fraud

John Merchant, CPA, CFE

As holiday shopping escalates during the period between Thanksgiving and New Year’s Day, so does the potential for gift card fraud.  Gift cards have become a convenient and popular method of gift giving in recent years and sales of these cards are clearly on the rise.  While there is absolutely nothing wrong with purchasing gift cards, you must be careful to avoid being defrauded if you do.

Most gift cards carry both an identification number and a […]

Fraud Schemes Expand to Prescription Drugs

John Merchant, CPA, CFE

The Federal Bureau of Investigation warns that anyone purchasing prescription drugs over the Internet faces an increasingly high probability that they will be the victims of fraud.  Internet sales of counterfeit or ineffective drugs has become big business over the past two years and has now become the focus of international efforts to curtail the activities of scam artists who have found a new and very effective way to make money at the expense of innocent […]

Owner of Money Store in Maryland Convicted of Fraud

John Merchant, CPA, CFE

The Federal Bureau of Investigation reports that Joy Jackson of Greenbelt, Maryland has been sentenced to more than 12 years in prison and ordered to make restitution for nearly $17 million in losses created by a fraudulent scheme that she ran through her company, Metropolitan Money Store of Lanham, Maryland.  According to the FBI report, Jackson took advantage of the current economic downturn to prey on desperate homeowners who had significant amounts of equity in their […]

Where is Fraud Likely? – Part 1: Almost Anywhere

Lawrence R. Beebe, CPA

Where is fraud likely to occur in an entity?  The answer is that fraud can occur anywhere in an organization.  All it takes is someone to determine how the internal controls in the organizations can be circumvented and how to undertake the fraudulent conduct (usually the theft of assets).

For internal control to function properly there needs to be separation of the responsibility for custodianship of the assets and the record keeping for those assets.  Many small […]

Madoff’s Auditor Pleads Guilty on Multiple Charges

John Merchant, CPA, CFE

David Friehling, CPA has pled guilty to various charges stemming from his service as independent auditor for Bernard Madoff’s investment firm.  Friehling, who served as the Madoff firm’s auditor for nearly 18 years, issued audit reports indicating that he had performed his work in accordance with generally accepted auditing standards. He now admits that he did not conduct appropriate audits. He acknowledges that the primary flaw in his procedures was that he accepted assertions by Madoff […]

Supreme Court to Consider Honest Services Convictions

John Merchant, CPA, CFE

A federal fraud statute known as the “honest services” statute, enacted in 1988, establishes that it is a crime for officers of a corporation to cause losses for shareholders by depriving them of their right to honest services by those officers.  Defense attorneys have argued that prosecutors have obtained convictions under this statute because it is too vague and, therefore, easy to charge and hard to defend.

Earlier this year, the former CEO of Enron, Jeffrey Skilling, […]

Judge Jed Rakoff – Protector of the People?

John Merchant, CPA, CFE

In August 2009, the SEC sued Bank of America, claiming that Bank management had lied to its shareholders in order to complete a $50 billion acquisition of Merrill Lynch, an investment company that was nearly bankrupt, while secretly paying several billion dollars in bonuses to Merrill Lynch executives.  In short, the Commission contended that the shareholders of Bank of America were the victims of fraud. The SEC action appeared to be an effort to enforce the […]