29 Oct

Everest College Fraud in Milwaukee?

Today I got a call from Everest University, asking if my company needed any interns. I let them know that I was aware of the Everest College fraud, that we are fraud investigators, and that no, we would not do any business with them. What am I talking about?

The State of Wisconsin has sued Corinthian Colleges Inc. for defrauding students in an effort to enroll them in their for-profit schools. For-profit colleges and universities tend to prey on young adults who are unsophisticated financially. They talk the students into taking out loans to pay outrageous tuition (high tuition, poor quality education). The students are happy because they have a chance to get a degree without paying much out of  pocket now, not realizing that the crappy degree will never pay for itself (they will never earn enough at a job in their field to pay off the loans).

The complaint in this case provides interesting information on how Everest College ran its scam: Read More

27 Oct

Things I Have Learned About Fraud

For more than 17 years, I have been conducting fraud investigations, and I have learned a lot about fraudsters, their methods, and the companies they work for.

Hotlines cut fraud losses in half.
Anonymous reporting mechanisms like fraud hotlines decrease the cost of internal fraud. Employees are excellent watchdogs, and are more likely to report wrongdoing if they have a confidential way to report the information they possess. Research shows that companies with hotlines discover fraud schemes sooner and therefore lose less to internal fraud.

Sarbanes-Oxley has mandated anonymous reporting mechanisms like hotlines for public companies. Private companies should follow suit, since the hotlines have been proven to be effective. However, companies should not get a false sense of security from a hotline. There are many other fraud-prevention measures that companies should also implement.

Employees are very receptive to anti-fraud training.
As I’ve mentioned, employees are typically very good watchdogs. They don’t like to see someone else on the take while they are putting in honest work. If they know what to look for, employees are likely to report misdeeds to management. Read More

20 Oct

Surviving an Income Tax Audit

Income tax audits are intimidating whether you are being audited personally or as a business owner. There is a right way and a wrong way to handle an audit by a state or federal taxing authority. It is easy to dig a hole for yourself, but awfully hard to get out of that hole.

Whether you attempt to handle an audit on your own, or opt to involve a professional who is experienced in these matters, there are some things you should know as you embark on your journey. I don’t ever suggest that a taxpayer submit to an audit alone. It is very helpful to have an experienced professional along for the ride. Not only can the accountant or attorney help you complete records requests, she or he can also act as a buffer between the taxpayer and the IRS.

The process of an audit is often one big negotiation. It is a give and take between both sides. Ultimately, both sides want the case closed, and the faster we can get to that point, the better. (Preferably with the least amount of pain for everyone involved.) Read More

17 Oct

Finding and Utilizing the Best Expert Witness

More than ever, competent and dynamic expert witnesses are critical to winning legal cases. Even if a case doesn’t go to trial, a credible expert can be the key to settling the case for your client. I believe that an expert witness has the opportunity to make or break a case. We all know that there are few chances to fix a bad opinion when you go to court. There is one chance to express the correct opinion and support it fully. A faulty opinion, or one with little reliable support, can doom a case.

Some attorneys have their preferred experts, while others get referrals from colleagues. Each attorney works with an expert witness in the way that she or he is comfortable. However, it never hurts to hear about it from the other side. This is my perspective on best utilizing your expert witness to her or his full value.

Finding the Right Expert
The most critical part of working with an expert witness is finding the right one. Naturally, the selection of an expert involves the evaluation of education and credentials. The examination of an expert’s credentials is a particularly critical process. Read More

10 Oct

Video: Multi-Level Marketing is NOT Like Corporate America

One of the common statements made by people in favor of multi-level marketing is that it is just like corporate America. We call MLM a pyramid scheme, and corporate America is a pyramid too! That’s simply not true.

While the SHAPE of the hierarchy of people looks like a pyramid in MLM and in corporate Amercia (one person at the head of the company, a few below, managing several below them, and so on)… that is where the similarities end. Read More

06 Oct

Avon is NOT a “Good” MLM

avon-mlmLast week I wrote about Good MLMs Versus Bad MLMs. The truth is that there is no such thing as a “good” multi-level marketing company. Oh sure… MLM supporters will tell you that some “direct sales” companies are doing it right, and some are doing it wrong. They will tell you that every company has “bad apples,” but that you have to look past those and see the good people.

These arguments are all false. Companies call themselves “direct selling” in order to direct attention away from the fact that they are recruiting schemes. MLMs are all endless chain recruitment schemes in which 99% of participants are guaranteed to lose money. That is not a business… it is a game rigging in favor of the owners of the company, and participants are guaranteed to lose no matter how hard they try. Promoting this as a “business opportunity” is unethical and immoral.

It therefore follows that if the company and the opportunity are unethical and are not a business, the people promoting the company and opportunity cannot be good. A horrible, deceitful “opportunity” does not change into something right, moral, and ethical, no matter how “good” the person promoting it is. Read More

03 Oct

Good MLMs Versus Bad MLMs

pyramid-selling-scamDefenders of multi-level marketing (MLM) will tell you that some companies “do it” right, while some companies “do it” wrong. One such example is John Hempton, a clown who thinks that Herbalife is the greatest thing since sliced bread. He says the following in an article about Nu-Skin:

Disclosure: I am predisposed to believe that multi-level-marketing schemes like Avon, Herbalife or Nu Skin are likely to be good cash generative businesses. I have done much looking at Herbalife and got very long. I do not think a negative interpretation of Herbalife is sustainable. Herbalife’s business is legal, sustainable and will generate vastly more cash in five years. Nu Skin does not lend itself to such definitive opinions. History is littered with MLMs that no longer exist – and a few like Avon, Nu Skin, Herbalife, Amway and Mary Kay which have lasted decades.

The fact that a multi-level marketing company like Mary Kay Cosmetics has been around for more than 50 years does not define whether it is a fraud or scam. Remember Enron (in business more than 15 years prior to the fraud being discovered) and Bernie Madoff (whose investment firm was in business for more than 40 years before his Ponzi scheme was revealed)? Length of time in operation has nothing to do with whether something is a scam or a fraud. Being traded on the New York Stock Exchange is not an indicator of legitimacy either. Read More

02 Oct

Why Products Offered by Multi-Level Marketing Companies Are So Expensive

usana-health-sciences-chinaMulti-level marketing companies (MLMs) are nothing but legalized scams. Make no mistake… they are pyramid schemes, but the government allows them to operate. Why are these obvious Ponzi schemes (which, by the way, the MLMs will swear up and down they are not… thou doth protest too much) allowed to operate? Who knows why the government will not crack down on this massive consumer fraud. The best thing we can do is educate consumers about the evils of multi-level marketing so they can avoid these companies… that means NOT becoming a distributor and NOT buying any of their products.

MLMs use products to make their companies look legitimate. They can’t be a scam if they are selling an actual product, right? WRONG. They absolutely can be a scam, because the product is simply a “front” for the scheme they are running. The product is meant to make the company look legitimate and hide the fraud.

The products from nearly every MLM are overpriced. That is, they cost more than comparable products available through legitimate channels (i.e. real retailers). The distributors will tell you it is because the products are very high quality!!! The magic juice has vitamins that are more bio-available! The make-up has better ingredients! The clothes are made better! The pills have super secret magical powers that cure all illnesses! These are all lies. The products are not better. Read More

01 Oct

Cary Spivak Working With Elite Protection Specialists

Cary Spivak, investigative reporter at the Milwaukee Journal Sentinel, joined Elite Protection Specialists earlier this year. While he is still employed with the newspaper full time, he is working as a private investigator part time and building his client base. Spivak is doing background investigations, and a press release from the company notes the importance of doing them:

Unfortunately, many people who ask for your trust are not trustworthy.  Everyday we all see media reports about employees, teachers, caregivers and others abusing the trust they were given. These “trusted employees” are caught stealing or committing worse offenses.  Often it turns that unsuspecting employers unwittingly hired people who had criminal records or a history of problems.

Spivak is a respected colleague, and I have seen him be fair and thorough time and time again. He has mentioned me a number of times in his articles. I would highly recommend Cary Spivak and Elite Protection Specialists if you are in need of a private investigator!