Several years ago, I got called for jury duty. Unlike almost everyone else who complains when called for jury duty, I was thrilled. I wanted to be on a jury.
If I was going to have to do my civic duty, I wanted to get something out of it, rather than just sit in the jury pool room all week. After spending time testifying as an expert witness in front of juries, I would now have a chance to be the jury and get a real-life look at what happens in the jury room.
My wish was granted and I was seated on a jury for a misdemeanor criminal case that lasted about a day, then came the moment of truth. The jurors sat down in the jury room and looked at each other. It was clear that at least 10 of the 12 had no idea what was supposed to happen next.
I appointed myself foreperson and began leading the discussion. The facts of the case were pretty clear. The evidence was somewhat limited, and the case really came down to the testimony of the defendant and one witness. The defendant had almost no credibility.Continue reading
GoFundMe scams seem to be growing by the day. While the GoFundMe fundraising site can be a great resource for people who need to raise funds for legitimate charities and needs, it has also become a hotbed of fraud. And with the site taking a nice 5% cut of every dollar that is donated through GoFundMe, it seems the company’s motivation to shut down fraudulent campaigns may not be too high. After all, the site makes money whether or not a campaign is legitimate.
One of the key parts of Sarbanes-Oxley, the legislation created to address the problem of massive financial statement fraud at public companies like Enron and WorldCom, was the increased prison sentences for executives participating in fraud.
Supporters of the legislation cheered harsher potential punishment for executives as one of the keys that would help prevent fraud.
Others weren’t so sure that longer prison sentences would really do anything to deter executives who want to commit fraud. If you’ve studied corporate fraud for any length of time, you have seen that fraud by executives is often fueled by feelings of arrogance and entitlement. These are important pieces of the fraud puzzle for executives, and they are part of the reason why executives may be unphased by penalties for committing fraud.Continue reading
There are two inexpensive and simple steps that can be taken to provide more oversight for the disbursement function at a law office. First, a partner needs to be actively involved in the process of issuing checks and payments. It’s not enough to simply glance at checks to vendors and immediately sign them.
Before any check is signed or sent out, it should be compared to an invoice, credit card statement, or other documentation that will help verify the legitimacy of the payment. This reduces the risk that an employee pays a personal credit card with company funds or otherwise improperly issues a payment from the firm’s checking account.
The second step to increase oversight at a law firm is involving at least one other person in some of the functions. If the office manager is disbursing funds, another employee should do the bank reconciliation. This provides a natural checks-and-balances situation, in which the second employee is verifying the work of the office manager.Continue reading
Tracy Coenen discusses the early stages of a financial investigation related to a divorce. When couples are divorcing, it is not unusual for a business to appear to decline. Tracy talks about the types of things she looks at to determine whether there is evidence of hidden income or other manipulation of the finances.
When we think of fraud in governmental agencies, we often think of the sleazy-sounding bribery and corruption. Maybe you think of the bribe paid to secure a contract, or a kickback to an official for pushing a large project toward a friend’s company. Things like illegal gratuities and extortion are also perceived as occurring in governmental agencies more often than in the private sector.
While those things do happen in governmental agencies, it may surprise you to know that they’re not necessarily the most common or the most costly types of fraud occurring in the public sector.
Government fraud happens the same way fraud occurs in the private sector. You might hear the phrase “waste and abuse,” and that’s probably a pretty accurate way to view the bulk of fraud committed against governmental entities. Government agencies rely on funds from the public to carry out their work, and when that money is used for illegal purposes, taxpayers feel that their money has been wasted and their trust abused.Continue reading
When the IRS believes a taxpayer has unreported income, they will use alternative methods to attempt to determine the true income. One of those methods is the Expenditures Method. Tracy Coenen explains the basic methodology in this video. Note that this method of calculating income can be used in a variety of cases that involve allegations of hidden income including divorce, money laundering, and income tax fraud.
The unthinkable has happened. We have good employees. Our people are honest. They don’t steal from us. They’re like family. We trust them. So it goes when a company discovers a fraud from within.
Then what happens?
After the initial shock wears off, it’s time to start investigating the situation. The company must know who did it, how the fraud was committed, and what controls can be put in place to stop fraud from happening again. This is all accomplished with an effective fraud investigation.
Companies should have in place a standard set of guidelines for managers to follow when fraud is suspected. Most supervisors and managers have not dealt with on-the-job fraud, so they need guidance when evaluating fraud allegations. Fraud investigation guidelines may also help guard the company against employees’ claims of selective treatment.Continue reading