Monthly Archives: February 2019

27 Feb

Almost Everyone Loses Money in MLM

Don’t let your Facebook friends fool you: They’re not making money in the multi-level marketing company they keep pitching to you. And you won’t either. Multi-level marketing is not a business. More than 99% of participants in multi-level marketing (MLM) lose money. Companies like Mary Kay Cosmetics promote the “income opportunity,” but when the vast majority of MLM distributors say they lost money, the story changes to “they didn’t really want to make money,” or “they just did it for fun,” or “they didn’t try hard enough.”

The truth is that MLM is not a “business opportunity.” Almost everyone who participates is guaranteed to lose money. You can follow all the instructions, talk to everyone you know, invest money in the scam, and you will still lose money. Why? Because MLM is nothing but a pyramid scheme in which all the people at the bottom of the pyramid will lose money.

This video was published in 2016, but the information is still very relevant. It features victims of the Herbalife “business opportunity.” They put lots of money, time, and effort into their “businesses” and ended up losers.

The fact remains that all multi-level marketing companies are abusive systems which take money from the participants, offering them the (false) opportunity to earn money, knowing that they are virtually guaranteed to lose money.

26 Feb

Forensic Accounting Certifications

Lately I’ve been thinking about professional certifications. A financial expert on the opposite side of a case came to the table with 10 certifications listed on his curriculum vitae (CV). And I had to wonder what was the purpose of that?

There was lots of overlap. Three of the certifications were of the “CPA” variety. Three of them were related to forensic accounting. A couple of them were related to bankruptcy consulting. And a couple other miscellaneous ones were thrown in for good measure.

This gentleman has been in the industry for a long time, so he certainly has established a reputation by this point. When an accountant is younger and less experienced, certifications might help him or her look like a stronger witness. But as you mature in the field, multiple certifications just seem like a waste of money.

There are so many certifications out there these days. Running membership organizations is big business. Some of these organizations exist only to turn a profit. They come up with a cleverly named certificate that sounds fancy, charge a fee to get it, charge annual fees to renew, and charge for “necessary” continuing education. Read More →

19 Feb

The Most Common Money Scams and Schemes in 2018

Every second of every day millions of humans and machines use the internet for both personal and business transactions via thousands of websites. Sadly, even with advanced security, there are those who try to fraudulently obtain other peoples hard earned cash or even their identities.

Being aware of the type of scams happening on the net and the tell-tale signs can help individuals and organizations prevent becoming cybercrime or scam victims.

As the saying goes, forewarned is forearmed and the number of people now taking up careers as CPAs (Certified Public Accountants) has dramatically increased as businesses are more aware than ever of their need to have auditing and investigative accounting as a security measure. This article ‘43 of the most commonly asked questions about CPAs’ highlights the role of a CPA in more detail.

Below are 3 of the most common money scams of 2018 to give an overview of what you should be paying attention to if you want to avoid being a money scam victim. Read More →

14 Feb

A Simple Anti-Fraud Training Outline

Education is a highly effective fraud prevention technique for companies. Studies have shown that companies with anti-fraud educational programs in place can cut their fraud losses in half. By educating employees, management is giving them the tools to help look for and stop fraud. This information helps them know what behavior is acceptable and not acceptable.

The training does not have to be elaborate. It simply has to show employees what to look for, highlighting the most common areas of abuse.  A company’s training session could (should?) include things like this:

  • Introduction to fraud: Provide the basics about fraud, how it is committed, and how it affects the company.
  • Areas of the company most vulnerable to fraud: Tell employees about the most at-risk areas and assets of the company so they can be on the lookout.
  • Common ways that fraud could be committed at the company: Give concrete examples of some of the most common frauds that employees might witness.

Read More →

12 Feb

Multi-Level Marketing is Not Like Corporate America

Fans of multi-level marketing (MLM) often say that it is just like corporate America! There are levels of employees and managers… Corporate America is a pyramid and MLm is no different. That’s a faulty analysis. When I call MLM a pyramid scheme, I am not calling that because the management structure looks like a pyramid. I am calling it a pyramid scheme because of how it functions.

A pyramid scheme is a pay-to-play scam. People pay to become a part of it, and they pay continually through minimum purchases that are required to remain a qualified member of the scheme. MLM is based on the continuous recruitment of people into the scam using the promise of making money, despite the fact that more than 99% of participants in MLM actually lose money. MLMs sell a fake opportunity. While they appear to be focused on selling products or services, those things are simply a front to make the “opportunity” look like a legitimate business. Sadly, MLM is not a business. Read More →

04 Feb

Evaluating the Income of a Business

It’s not unusual to want to confirm the income of a business in litigation. Whether it’s a divorce, a business breakup, a wage claim, or other matter that involves accurately reporting business income, it may be necessary to attempt to verify that income.

I frequently work withe clients who claim that the reported income of a business is artificially low. For example, a spouse who runs a small business may make the income of the business look lower than reality in order to reduce spousal support payments and/or reduce the value of the business for the division of assets.

In a business divorce, a party may falsely report lower income to reduce the value of the business and therefore the amount necessary to buy out the other owner(s). A wage claim involving commissions and bonuses that relate to sales volumes may need a verification of income if the company is accused of underreporting sales.

How do we do this? Read More →