16 Aug

Fraud at GE Alleged by Harry Markopolos

Harry Markopolos, the whistleblower in the Madoff case (who was telling people for NINE years that a fraud was in progress), just released a report on General Electric (GE) saying that it is a bigger fraud than Enron.

It’s a massive (175 page) report that highlights problems with:

  • hiding $400 billion of losses in the insurance business
  • accounting in the oil and gas unit
  • liquidity

A web page set up to feature the GE report highlights the work and the findings:

  • The investigation of the financial statements and the accounting practices of General Electric has been in process for more than a year
  • 17 years of 10-Ks (2002 to 2018) were analyzed cover-to-cover
  • GE’s approach to business is called “Enronesque”
  • The accounting fraud has been going on for decades, with the company providing only top line revenue and bottom line profits for its business units (not reporting all sorts of expense line items)
  • GE changes financial statement formats every few years so people can’t compare numbers across multiple years

Read More

10 Aug

Wisconsin’s Lieutenant Governor Lies About College Degree

Mandela Barnes, Wisconsin’s Lieutenant Governor, has been lying about his college degree for¬† a long time. In May 2018, he tweeted a picture of himself at graduation at Alabama A&M. Except he didn’t actually graduate, despite what appears to be a diploma in his hand.

When caught in the lie, Barnes’s spokesman said that he has “been up front” and said that he “attended Alabama A&M, not graduated.”

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09 Aug

Ocrolus Software Review

Ocrolus PerfectAudit SoftwareA few years ago, I reviewed data analysis software sold by Ocrolus called PerfectAudit. The software captures data, analyzes the data, and assists with fraud detection

Recently the company abandoned the Perfect Audit brand, and now just calls the product Ocrolus. The old website www.perfectaudit.com forwards to the Ocrolus website. PerfectAudit as a brand has essentially been scrubbed from the internet. This might correspond with a recent round of venture capital that was raised.

My unfavorable review of Ocrolus was met with requests from company representatives to remove it from my site. They were disappointed that my review of the Ocrolus software ranked well in Google searches.

Some improvements have been made to the Ocrolus investigative software, but some of my concerns are still valid. Have a look at my PerfectAudit software review if you want all the details, but here’s a summary of the concerns I still have: Read More

26 Jul

Financial Analysis in White Collar Crime Cases

White collar crime cases tend to focus on the flow of money. Government investigators analyze the finances of a company or individual to determine where money came from and where it went. It is this trail of money that leads to evidence of a crime.

Sometimes the financial evidence is direct, but often it is indirect. Consider a case of alleged tax fraud, in which the government is trying to prove that a person or business had unreported income. The evidence may be large unexplained deposits to a bank account. If the source of the funds is unknown, the government may consider the deposits indirect evidence of unreported taxable income. Making such assumptions is often necessary when investigating financial frauds, as those committing fraud deliberately try to hide the true sources and uses of funds. Read More

24 Jul

Analyzing Tax Returns in Divorces

Income tax returns are an important piece of financial information in a divorce or child support case. There is so much information that can be obtained from the tax returns, and if we have several years of data, we can make comparisons from year-to-year. In the video below, Tracy talks about the financial data she analyzes on the income tax returns and what these items may tell us about the financial situation of the family.

17 Jul

Claimed Income Versus Documented Income in Divorce

claimed income documented incomeChild support, spousal support, and property division are often evaluated in light of the income of the each of the parties to a divorce.The parties fill out financial disclosure forms and purport to tell the court and the spouse the truth about their income. If one spouse is not truthful about his or her income, this can provide a great opportunity for the other side.

The spouse immediately appears to not be credible, and this can affect the entire case. If he or she is lying about income, he or she may be lying about other important things in the divorce.

The first step in evaluating claimed income is comparing it to documents that can confirm or refute the claims. This may include: Read More

11 Jul

Follow the Money, Find the Fraud

Forensic accounting existed quietly for a long time before the general public started to become aware of it. Twenty years ago when the frauds of Enron, WorldCom, and Tyco became big news, the work of forensic accountants was finally given the spotlight. It has been a slow evolution, but the general public is becoming more and more informed about what we do.

Would it surprise you to know that many of the techniques used by forensic accountants to investigate fraud and analyze the numbers are the same today as they were decades ago?

Computers have made things easier, as we can track, sort, and manipulate data faster. While software solutions for analyzing data, managing documents, and following the money are being used in investigations, they’re not being used to their full potential. This is obviously a missed opportunity for clients. Read More