Trustee Reports on Madoff Victims and Claims

John Merchant, CPA, CFE

On July 10, 2009, Irving Picard, the court-appointed trustee who is overseeing the liquidation of Bernard Madoff’s assets and repayment of funds to those he defrauded, officially reported what many have suspected since news of the fraud first broke.  Picard reports that it is unlikely that investors can be made whole on their losses because there simply are not enough assets to satisfy all of the claims.  Picard further reports that unraveling the mess will be […]

July 13, 2009 Accounting, Forensic Accounting Read more...

Auditor Suspicions Lead to Investigation

John Merchant, CPA, CFE

Those who question the value of independent audits and investigations by certified public accountants and certified fraud examiners may wish to consider a court case recently initiated by the SEC.  On July 6, 2009, the SEC filed a complaint in United States District Court alleging that the former CFO of UCI Medical Affiliates, Inc., a public company based in South Carolina, had embezzled nearly $3 million from the Company.  The Complaint alleges that the embezzlement was […]

July 12, 2009 Accounting, Audit, Forensic Accounting Read more...

Mad About Madoff: How Much of the Family Business Did This Family Know About?

Posting by Joel C. Susco, CPA

You would have to be living in a cave to not know about the Bernie Madoff controversy and its results.  Or perhaps you are living in the cave because you lost all your money in his Ponzi scheme, and you had to go to the public library to read this blog posting on one of their computers.  Either way, there’s no point in this blog discussing how horrible this scam was, or how it […]

July 10, 2009 Family Owned Businesses, Forensic Accounting Read more...

Rental Fraud and the Internet

John Merchant, CPA, CFE

As the economic downturn forces more individuals to look for a place to rent, it is probably inevitable that unscrupulous individuals have devised ways to take advantage of the situation and use the internet to commit fraud.  The Denver Post reports specific instances where fraudsters used Craigslist.com in their schemes.  Apparently, these individuals found unoccupied homes for sale and then listed them on Craigslist as rental properties.  Unsuspecting renters paid rent and security deposits to the […]

June 24, 2009 Accounting, Forensic Accounting Read more...

Fraud Fight Legislation Passed by Congress

John Merchant, CPA

CNN reports that Congress easily approved a bill this week to allocate more than $500 million over the next two years to provide funds specifically for the fight against fraud.  These additional funds would enable the FBI, the SEC and the Treasury Department to hire additional investigators and step up criminal fraud probes.  Noting taxpayer outrage during debate on the bill, lawmakers specifically mentioned banks and other entities that have received federal bail-out money as organizations that […]

May 11, 2009 Accounting, Forensic Accounting, Tax Read more...

Common Misconceptions About the Prevention of Occupational Fraud – Part 1

John Merchant, CPA

Occupational Fraud is defined as an employee using his or her occupation for personal gain through the deliberate theft or misuse of the assets of the employing organization (see Wells, Joseph T., Occupational Fraud and Abuse, Obsidian Publishing Company, 1997). Business owners, directors of not-for-profit organizations and trustees of employee benefit plans often have misconceptions about occupational fraud and its prevention and, consequently, leave their organization vulnerable to loss.  Over the next few weeks we will look […]

May 5, 2009 Accounting, Audit, Forensic Accounting, Payroll Audit Read more...

Stock Option Fraud

John Merchant, CPA, CFE

An ongoing problem for both the Securities and Exchange Commission and the Internal Revenue Service is the fraudulent dating of stock options by corporations.  By attaching false dates to the granting of stock options, a company may both distort its financial statements, thus misleading investors, and assist in the evasion of income taxes by those who were granted those options.

In April 2009, the SEC filed a complaint against Take-Two Interactive Software, Inc., charging that such a […]

April 30, 2009 Accounting, Forensic Accounting Read more...

IRS Dirty Dozen Tax Scams

John Merchant, CPA, CFE

Each year the Internal Revenue Service announces its “dirty dozen” tax scams, representing twelve of the most prevalent and bothersome fraudulent scams and schemes perpetrated by taxpayers, paid preparers and others.

The IRS recently announced its Dirty Dozen for 2009 and it included hiding income offshore, filing false claims for refunds, taking frivolous positions on tax returns to lower tax liability and misuse of trusts.  One of the schemes that has made the Dirty Dozen several times […]

April 30, 2009 Accounting, Forensic Accounting, Tax Read more...

FBI Going Undercover Against Financial Fraud

John Merchant, CPA, CFE

ABC News reports that John Pistole, Deputy Director of the FBI, communicated to Congress that the FBI has launched undercover investigations in response to the growing number of reports and allegations of fraud in financial institutions.  Pistole reported that this is the FBI’s attempt to be proactive in discovering fraud involving mortgage lending, securitizations, bankruptcies and other corporate and financial fraud.

 

For more information, visit http://www.abcnews.go.com/TheLaw/LawPolitics/story?id=7134443&page=1.

March 23, 2009 Accounting, Forensic Accounting Read more...

Madoff’s Auditor Charged With Securities Fraud

Lawrence R. Beebe, CPA, Principal

David G. Friehling and his firm,Friehling& Horowitz, CPAs, P.C., have been charged with securities fraud by the Securities and Exchange Commission in connection with audits of the financial statements of Bernard L. Madoff Investment Securities LLC.  The SEC charges that from 1991 through 2008, Friehling& Horowitz issued audit reports on the financial statements of Madoff’s company, indicating that the statements were fairly presented in accordance with generally accepted accounting principles, when in reality no legitimate […]

March 23, 2009 Accounting, Audit, Forensic Accounting Read more...