Accusations of corruption are still lingering for Red Cross volunteers. They are being accused of diverting relief supplies, failure to follow Red Cross procedures for supply tracking and distributions, and use of felons as volunteers (which is against Red Cross policy).

Specific problems include the disappearance of:

• rented vehicles
• generators
• 3,000 air mattresses
• computer equipment that could be used to add funds to debit cards

Estimates of the dollar value of misappropriation are not available, but it is known that the Red Cross received about 60% of the $3.6 billion donated by Americans. The investigation is being done by the Red Cross ethics and compliance department.

Read my article about the potential for financial statement fraud related to Hurricane Katrina.

Corstan Court was the first supervisor on the scene of the October 2004 Frank Jude Jr. beating by off-duty police officers. Chief Nannette Hegarty demoted Court to officer because he failed to perform the duties of a supervisor. Namely, he left the scene without telling anyone, did not separate witnesses and suspects, did not request additional officers to the scene, and did not make any arrests. Hegarty said:

He is not being punished because he didn’t do everything perfect. He is being demoted because he didn’t do anything right at the scene that night.

Edited to add: The demotion was upheld this afternoon by the police and fire commission.

Identity theft continues to affect thousands and thousands of consumers. Some simple precautions can help stop identity thieves. If they do steal your identity, I have several tips for resolving your financial woes. Read my article in the Wisconsin Law Journal, Your Number Is Up: Recovering From Identity Theft.

I provide entertaining, interactive sessions on financial investigations, forensic accounting, fraud examination and fraud prevention. My training can be technical, for accounting managers, auditors, and CFOs. I also give lighter presentations to introduce attendees to the concept of fraud in the workplace. I travel worldwide providing continuing education and conference keynotes.

More information about my sessions can be found here. Specific topics presented to organizations are here, but I can customize a topic for your organization.

Identity theft by people posing as the Internal Revenue Service is on the rise. Hundreds of thousands of emails purporting to be from the IRS have been sent to targets, asking readers to go to a site that mimics the look of the IRS site. They are then asked to give sensitive personal financial information.

The IRS says that the phishers are generally people outside the U.S., and that they have confirmed 12 websites in 18 different countries using a scam like this.

The IRS is directing taxpayers to a page on the REAL IRS website, which gives information on the scams.

In 2003, Public Interest Watch (a group that calls itself a watchdog of non-profit groups) wrote a letter to the Internal Revenue Service accusing Greenpeace of money laundering and other crimes. The letter accused Greenpeace of laundering $24 million in tax-deductible contributions by diverting them to a related entity that held protests against the Iraq war, an oil tanker and a nuclear-power station.

In September 2005, the IRS finally began an audit of the U.S. division of Greenpeace. Greenpeace has just received a notice from the IRS, indicating that they still qualify for exemption from federal income taxes as a non-profit.

PIW has received funding from Exxon Mobil Corp, among others. Greenpeace is known for blocking the path of oil tankers, and now the speculation about the ties between the audit and the oil giant begins.

Exxon Mobil denies any involvement in the report to the IRS.

The board of directors of General Motors Corp is asking for an investigation into newly revealed accounting errors which have delayed the filing of its annual report. The SEC filing of its 10-K will be delayed because of accounting errors found in the residential mortgage business of GM’s finance arm, General Motors Acceptance Corp. In addition, other accounting mistakes have been found, and these will cause the company to restate earnings from 2000 to 2005.

The Oklahoma CPA Society recently asked me to pen a piece about the potential for financial statement fraud related to the recent wildfires. They printed it in their newsletter, OSCPA Wire.

Any natural disaster creates opportunities for fraud and that’s exactly what recent wildfires have done. Dishonest executives have a chance to manipulate their financial statements following fire losses and no one may detect it.

You can read the full article here.

Christopher Vnuk and his parents, Stephen Vnuk and Sharon Vnuk have been indicted by a federal grand jury on money laundering charges. Money from trafficking high-grade marijuana was allegedly laundered through purchases of vehicles. The parents are also alleged to have purchased items on credit cards, and used drug money to pay the credit card bills and home equity loans.

One particular incident allegedly includes a home equity loan to purchase a $66,685 Mercedes Benz for the son’s use. The bulk of that loan was paid off with drug money.

Christopher is already serving seven years in prison for drug offenses. He was arrested in 2003 after knocking on the door of an apartment which already had undercover police officers inside for an unrelated narcotics investigation. Police found 1 1/2 pounds of high grade marijuana on him, with a street value of $6,500 to $7,700 per pound. Police then went to his parents’ house and found more marijuana packaged for sale and hidden cash.

The indictment seeks forfeiture of the parents’ $400,000 home, 3 vehicles, and over $15,000 cash.

The Government Accountability Office (GAO) released a short report about the millions of dollars wasted in the government’s award of post-Katrina contracts. Included is at least $3 million spent for 4,000 beds that were never used. ($750 per bed!)

The report also speaks to the non-competitive contracts awarded and how the incompetence of FEMA contributed to waste and abuse.

From the report:

Our fieldwork identified examples where unclear responsibilities and poor communications resulted in poor acquisition outcomes. For example:

• FEMA officials stated that a contractor spent approximately $10 million to renovate 160 rooms and furnish another 80 rooms in military barracks in Alabama that a FEMA survey team identified for use as temporary housing. To renovate the facility, FEMA headquarters awarded a contract without consulting local FEMA officials in Alabama. According to FEMA officials in Alabama, however, the facility was not needed and they tried to stop the renovation. These same FEMA officials stated that few evacuees agreed to live at the facility, and when officials decided to close the facility, it had only six occupants.