26 Jul

Financial Analysis in White Collar Crime Cases

White collar crime cases tend to focus on the flow of money. Government investigators analyze the finances of a company or individual to determine where money came from and where it went. It is this trail of money that leads to evidence of a crime.

Sometimes the financial evidence is direct, but often it is indirect. Consider a case of alleged tax fraud, in which the government is trying to prove that a person or business had unreported income. The evidence may be large unexplained deposits to a bank account. If the source of the funds is unknown, the government may consider the deposits indirect evidence of unreported taxable income. Making such assumptions is often necessary when investigating financial frauds, as those committing fraud deliberately try to hide the true sources and uses of funds. Read More

07 May

IRS Expenditures Method to Determine Income

When the IRS believes a taxpayer has unreported income, they will use alternative methods to attempt to determine the true income. One of those methods is the Expenditures Method. Tracy Coenen explains the basic methodology in this video. Note that this method of calculating income can be used in a variety of cases that involve allegations of hidden income including divorce, money laundering, and income tax fraud.

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

08 Oct

Doing Criminal Defense Work

Defendants in criminal cases such as tax fraud, money laundering, or embezzlement often need forensic accountants to help evaluate complex financial situations. Should you provide expert witness services to criminal defendants? Tracy discusses the work and some of the issues that should be considered.

08 Aug

Behavior of Upper Level Executives Who Commit Fraud

A while back we talked about behavioral red flags of fraud, which are the signs that someone might be involved in a fraud at work. Some of the most common red flags are living a lifestyle that exceeds a person’s earnings and unusual attitudes on the job (being combative, possessive of their work, etc.)

The same red flags don’t necessarily apply to upper-level executives, or they’re just not as easy to spot. In this video, Tracy talks about some of the warning signs we might see with top executives who are committing fraud. Most commonly, we see a higher level of greed and arrogance when committing fraud (which, coincidentally, may lead to the person’s downfall).

24 Jul

What is Money Laundering?

Money laundering is fun to talk about. It just sounds cool to begin with. And the whole process is fascinating to me.

It is important to know that money laundering is not a fraud scheme. It is a crime that is committed to cover up other crimes, but it is not the same thing as fraud. The primary purpose of money laundering is to take money that has been received from criminal activities (dirty money) and make it appear legitimate (clean money).

Dirty money can come from illegal activities such as drug dealing, prostitution, robbery, bribery, illegal political contributions, tax evasion, or fraud. The laundering process hides the real origin of the money and makes it look like it came from a legitimate source. Read More

14 May

Finding Hidden Income in a Cash Business

I love working on divorce cases where one spouse is trying to hide money.

When a business owner has a cash business and is getting divorced, sometimes the income coincidentally (or not so coincidentally!) drops dramatically.

What can we do to investigate that? It’s hard. The business owner knows that cash leaves no paper trail and is difficult to prove.

But all is not lost. There are techniques we can use to find indirect proof of the amount of cash a business should be generating (even if the owner isn’t reporting all of it). Read More

20 Feb

Signs of Fraud

There are many signs of fraud occurring within companies or with individuals. What are some of the signs we may see that indicate fraud is occurring? During a fraud investigation I am looking for signs that things are wrong. What clues may exist that things are not as they seem? Are there deceptions or misdirections that seem unusual that an honest person wouldn’t engage in? Are things set up in a way such that the environment is ripe for fraud to occur?

Apparent Control Weaknesses

When readily apparent major deficiencies in a company’s control procedures are identified, they should be considered warning signs that fraud could be occurring. All companies have some things that are not as secure as they should be. However, when the controls over a company’s assets and data are severely deficient, that is cause for alarm.

Some of the most common characteristics that might be considered severe deficiencies include: Read More