LifeLock sucks. When I first heard about LifeLock a few years ago, I was very intrigued by its service. I was especially interested in how it advertised the services: With the company’s CEO telling everyone his social security number.

The company “guarantees” that your identity will never be stolen, and it offers a “$1,000,000 Service Guarantee.”

Multi-level marketing companies (MLMs) like to refer to themselves as “Direct Sales” companies, because this puts the focus on the sale of the product or service, and takes focus off the business of recruiting.

I’ve been researching MLMs for years, and I’ve found that companies use the product or services simply as bait and a cover. It is “bait” for recruiting because it looks legitimate to a potential recruit. (How many people would join MLMs if they were truthful and told you that what you really had to do was constantly recruit new people?)

It is a “cover,” since it is what makes the schemes legal under state and federal laws. Pyramid schemes (which are simply a transfer of money up a pyramid-like structure) are illegal. But if you use a legitimate product or service as your cover and your reason for transferring money up the pyramid, you can successfully claim that your company is not a pyramid scheme. Again, the product or service takes the focus off recruiting.

Yesterday Reuters Insider published a video of an interview with Sam Antar, former CFO of fraudulent Crazy Eddie, talking about the efforts of the FBI to profile white collar criminals. The starting point for the interview was this article about the FBI applying techniques which were successful in profiling serial killers to profiling white collar criminals.

It’s a good idea, and it is true that there are some distinctive characteristics that white collar criminals exhibit, especially upper management defrauders. I discuss “People Who Commit Fraud” in my book Essentials of Corporate Fraud, and you can see a few examples on this webpage.

When under scrutiny for potential Foreign Corrupt Practices Act violations, how does a company prove that it was doing the right thing? The memories of your employees, along with their narratives of what happened will not be persuasive. Sure, interviewing them can uncover helpful information. But nothing is so compelling as documentation that supports the company’s position.

Your company must be able to document several things as it relates to possible FCPA violations:

1. The existence of a compliance program, and details about what that program actually entails
2. How the company evaluates employees, vendors, customers, and business partners that may pose FCPA-related risks.
3. The details surrounding potential violations and actual violations (Receipts, agendas, business operations, background investigations…. all the types of things that show what the company did to ensure compliance and fully investigate any potential sources of problems.)

Sam Antar, former CFO of massive fraud Crazy Eddi talks on Fox Business Network about how the U.S. government uses accounting tricks to conceal the reality of the federal budget.

The Unsecured Creditors Committee in the bankruptcy filing of the Archdiocese of Milwaukee has filed a petition with the court to authorize the hiring of Berkeley Research Group LLC, a forensic accounting firm with bankruptcy expertise, to examine the financial details of the Archdiocese. The experts identified for this matter formerly worked for LECG LLC, and their practice has been transferred to Berkeley.

The Archdiocese filed a petition for relief under Chapter 11 of the Bankruptcy Code, and continues to operate as a debtor in possession. The committee is interested in the creation of at least 5 trusts, which allegedly were formed in the four years prior to the bankruptcy filing and contain funds that are now not available to pay creditors.

From my Thought Leadership series at Securities Docket:

Nearly every lawsuit has a financial component to it. In many cases, the issues surrounding the numbers have high stakes.  Cases involving securities fraud, money laundering, tax fraud, investment fraud, and Ponzi schemes rely on an accurate tabulation and evaluation of the numbers. To take the numbers as provided by the other side at face value, however, would be a huge mistake.

In fact, there is almost always a story behind the numbers. A case may very well be won or lost based on the ability to find out the story, which is often hidden from view.  How, then, can a party best get to the truth?

Perpetrators of fraud have plenty of schemes to choose from when cooking up their crimes. The fraud schemes range from petty theft by lower-level employees, all the way up to management cooking up stellar financial statements to dupe investors and lenders.

Fraud prevention policies and procedures sometimes have a tendency to focus on the smaller thefts. While those types of defalcations occur most often, they are not the most expensive. The financial statement frauds are the most devastating monetarily, and therefore must be fought aggressively.

Are people really making money from all this recruiting of FHTM Independent Representatives? The vast majority aren’t.

An income disclosure statement for Fortune Hi Tech Marketing from January 2010 shows exactly how dismal the financial results are for its representatives:

• 54% of representatives who qualified for commissions got an average of $93 per month
• 41% of representatives who qualified for commissions got an average of $256 per month

These figure are before all business expenses. Those who have been involved with multi-level marketing know that there are plenty of expenses, including fees for meetings, travel expenses, promotional materials, sign-up fees, renewal fees, and marketing costs.  I doubt many of these 95% of representatives receiving commission checks actually turn a profit.