Why are Certain Frauds Called Ponzi Schemes?

John Merchant, CPA, CFE

As you read about unscrupulous people defrauding investors through pyramid schemes, have you ever wondered why they are called Ponzi schemes?  The answer is that over 80 years ago a man named Charles Ponzi created a multi-million dollar pyramid scheme that became so famous that it has forever linked his name to this type of fraud.  CNN has created an interesting article (follow the link below) that gives readers a look into the life of the man […]

February 16, 2009 Accounting, Audit, Forensic Accounting Read more...

Management Fund Sues Auditors for Negligence for Not Discovering Fraud

John Merchant, CPA, CFE

Maxam Capital Management LLC, an investment fund, has filed suit against its auditors, McGladrey& Pullen, LLP and Goldstein GolubKesssler LLP for professional negligence.  Maxam apparently invested all of its assets with Bernard Madoff and alleges that its auditors were negligent in accepting documents created by Madoff rather than seeking independent confirmation of holdings and trades when performing the audit of Maxam’s financial statements.

February 4, 2009 Accounting, Audit, Forensic Accounting Read more...

Florida Fund Manager Faces Multiple Fraud Charges

John Merchant, CPA,  CFE

In a case similar to that of Bernard Madoff, Reuters reports that Arthur Nadel, a Florida hedge fund manager has been arrested and will be transported to New York to face charges of both securities fraud and wire fraud.  Investigators allege that Nadel who disappeared on January 14th, but later surrendered to the FBI, holds only about $1 million of a reported $300 million.   At age 76, Nadel potentially faces 40 years in prison and millions […]

February 4, 2009 Accounting, Audit, Forensic Accounting Read more...