30 Nov

This Is Why I Do White Collar Criminal Defense Work

I read a very interesting article yesterday on NYTimes.com, by John Kinnucan of Broadband Research. The FBI “invited” him to wear a wire and essentially entrap clients. He said no, and he told his clients about the FBI’s request. Of course, some are skeptical about his FBI story, but it makes for interesting reading and raises some good points pertinent to my forensic accounting practice.

Some may say that if Kinnucan was innocent, he should have just worn the wire to prove he was on the up-and-up. His article explains that it wasn’t quite so simple. The FBI said they believe Kinnucan and his clients were guilty, and they threatened to arrest him immediately. Read More

29 Nov

Books and Records Control Person and FCPA Enforcement

I’ve recently been looking more closely at the Foreign Corrupt Practices Act (FCPA) as I consider the types of services companies will need from independent forensic accountants. This is an area in which government enforcement is skyrocketing, and so there are lots of opportunities for me to work with companies that need investigations or ongoing compliance work.

There are significant problems with FCPA enforcement, and Mike Koehler does an excellent job of discussing the issues in his paper, The Facade of FCPA Enforcement. He makes the case that the enforcement activities are not transparent and not tested legally. He says: Read More

28 Nov

FTC Staff Take Further Measures to Protect MLMs, Making Consumers Easy Prey for False “Business Opportunity” Solicitations

From Pyramid Scheme Alert newsletter, by Robert FitzPatrick

The largest of all multi-level marketing companies, Amway, just agreed to pay $150 million in restitution and reform to settle consumer charges of fraud. The heart of the consumers’ complaints is that Amway uses false information to trick consumers into investing in its “business opportunity.” Among other reforms, Amway has agreed to change its “disclosure” of income averages. A similar lawsuit has been filed in Canada.

A front page story, USA Today on Oct. 15, 2010, entitled, “Fortune Hi-Tech: American dream or pyramid scheme?” documents widespread claims of deception, involving tens of thousands of US consumers, leveled against one of the newer and fastest growing MLMs. The MLM scheme has been prosecuted in two states and is under investigation by seven others states, according to the article. Misleading “disclosures” are at the heart of the charges and negative publicity. Read More

18 Nov

Genuine Remorse From Sachdeva? Laughable.

Yesterday, Sue Sachdeva was sentenced to 11 years in prison for her $34 million theft from her employer, Koss Corp.  I predicted a little slap on the wrist of 5 to 7 years, so she got two little slaps instead.

The Washington Post is reporting that Judge Lynn Adelman gave her less than the 15 to 20 years requested by the prosecutor because of her “acceptance of responsibility and the genuineness of her remorse.” Read More

18 Nov

Learn From the Costly FCPA Mistakes of Others

A recent Compliance Week article, An Expensive Lesson on FCPA Compliance [subscription required], provides some valuable insights on the direction that our government is taking with enforcement. Foreign Corrupt Practices Act violations are a huge focus of the feds right now. Why? Because there are plenty of violations, there is pressure on the SEC to enforce laws of some sort, and there is money to be made in fining the violators.

According to Richard Kassin at The FCPA Blog: Read More

16 Nov

Koss Fraud Coverup Deemed “Complex” By the Government

Yesterday the government’s sentencing memorandum in the criminal case against Sujata Sachdeva (the woman who stole more than $34 million from her employer, Koss Corp.) was released.  It had a number of items of interest. Prior to sentencing, the prosecution and the defense each get to make their case for a higher or lower sentence.

The defense’s arguments were absurd. They argued that Sue Sachdeva should get a lighter sentence because:

a. she’s been a law-abiding citizen until now

b. the fraud was “simple”

c. and poor, poor Sue has a “compulsive shopping disorder” Read More

15 Nov

Blog Star

The internet offers infinite space in which to carve out a piece of blogger stardom.

INSIGHT – The Magazine of the Illinois CPA Society – November/December 2010
By Christine Bockelman

When CPA and financial fraud expert Tracy Coenen started her accounting blog The Fraud Files in November 2005, she intended it to be a way to market her name and experience. Five years and hundreds of posts later, she’s getting 30,000 unique visitors a month. She also credits the blog with bringing in at least 30 percent of her firm’s annual revenue. “And when I say 30 percent, I mean actual money in pocket,” says Coenen, owner of Sequence Inc., a forensic accounting and fraud firm with offices in Chicago and Milwaukee. “Not bad for a little bean-counter, eh?” Read More

10 Nov

The Case for Independent Internal Investigations

The United States Sentencing Guidelines (USSG) continue to make life tough for those in charge of corporate compliance and ethics. Corporate attorneys, both in-house and outside counsel, must ensure that companies are following protocols set for by the USSG. Rightfully, companies focus first on profits. But where does that leave the issues of compliance and ethics?

Although the creation and maintenance of a proper compliance program is secondary to core business pursuits, wise managers and executives know how critical it is to obtain specialized outside counsel to conduct internal investigations. Read More