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.

Email Scams

Various email scams have shown their faces in 2018 but there are some types of email scams that seem to have been around repeatedly in one form or other over the years. Many of these include overpayment fraud, advanced fee fraud and loan scams, for example.

Email scams are very easy and cheap for fraudsters to execute. Luckily for potential victims of this type of fraud, scammers do not seem to have improved their approach with these types of schemes. Most of their email content is very poorly written, some even still use email addresses that clearly do not relate to the company that is supposedly e-mailing you. Some, however, are more advanced and convincing which is why the best prevention is to double check all their information externally.

Fake Checks

There are a variety of check scams around now, but one of the most well-known is an overpayment to a person or business with a check. The sender makes some sort of excuse as to why the check was for more than the amount due, and creates a sense of urgency for the business or individual to either give them the overpayment back in cash or send a bank transfer for the difference. The check is fake, but it will take several days for the individual or business to find that out and in the meantime, they have sent the refund out of their own funds.

Some fake check can be easily identified; however, there is plenty of advice out there and security measures to take when it comes to transactions of this nature.

There are also many scams out there where attempts are made to find out intricate details about your checking account. If you feel your checking account has been compromised, you should call your bank immediately and shut it down. There are many companies offering free checking accounts as an alternative that are very easy to set up and will allow you to carry out business as usual.

CEO Scams

This scam is particularly related to businesses. The fraudster acquires the name of the person in a company that has the responsibility for business funds. They then pose as someone senior in the company like the CEO or chairman. With social media sites like LinkedIn, it has never been so easy to find out about the identity of those in senior positions.

The scammer, posing as the senior member of the business will contact someone in the finance department and apply a sense of urgency to a request for them to move money into a designated account. This scam is classed as a form of ‘phishing’ and the scammer usually looks for the most inexperienced or new person in the finance department to approach as they may not be fully aware of security protocol.

Enlist A Professional

If you are  are worried that you may have been the victim of any of these types of scam or some form of fraud or would like to identify any areas where you can increase protocol and preventative measures for these type of scams, engage the help of a consultant experienced with fraud and scams to help dig into the situation and give you peace of mind.

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

22 Jan

Financial Statement Fraud in Public Companies

How prevalent is financial statement fraud in public companies? In this video, Tracy Coenen talks about the most recent COSO report on fraudulent financial reporting at U.S. public companies. The most common financial statement fraud that companies engaged in was improper revenue recognition, followed by the overstatement of asset or the improper capitalization of expenses.

What benefits do companies and their executives receive from financial statement fraud?

  • The stock price goes up because the company is more profitable.
  • The company’s debt rating goes up.
  • The company is likely to be able to refinance its debt and therefore can reduce its interest expense. The company may also have fewer debt covenant restrictions associate with its debt.
  • Executives win because they will probably get higher bonuses that are tied to the profitability of the company, and their stock options will be more valuable.
14 Nov

Financial Statement Fraud: How It Is Done

Financial statement fraud happens is one of the most costly types of fraud. It is a significant problem because people inside and outside the company rely on the information provided in the financial statements. They assess the financial results and make predictions and decisions about the future of the company based on those results.

Upper management or company owners are the ones who are usually responsible for financial statement fraud. Executives are entrusted with entire companies. They have access to nearly all data and employees, and they can exploit this access to commit and conceal fraud.

The power the executive has by virtue of her or his position in the company is closely linked with the high cost of financial statement fraud. Power and access within a company make it possible for larger frauds to be committed and covered up. Read More

27 Sep

Fraud in Churches

There may be nothing more disheartening in the world of fraud investigation than a church employee caught embezzling. Unfortunately, there are fairly regular news reports of financial fraud at churches. Fraud hits churches hard. Many churches operate on shoestring budgets to begin with. A sizable fraud can put a church on the brink of financial collapse.

And it’s appalling to think this is happening in a place that many view as the most sacred and the most likely to attract honest people. Unfortunately, churches and other non-profits aren’t immune to fraud. In fact, they often set themselves up to be even more vulnerable to fraud than your average business.

Diverting Donations

Historically, churches were often run largely by pastors who had little to no business training. But the time has come for churches to get serious about operating like real businesses. Read More

24 Aug

Conducting Internal Fraud Investigations

Fire drill training in grade school always included the mantra, “Stop, drop and roll.” This was the prescribed course of action if you were on fire. Professionals sometimes refer to tragedies in companies as fire drills. When a major internal theft occurs, it is akin to catching on fire, and needs to be met with swift action.

Where there is smoke, there might be fire. There are numerous potential red flags that might point to internal theft – things like missing or altered documentation, numerous unexplained accounting entries, excessive customer complaints about account balances, and disregard or override of procedures.

While one red flag alone does not necessarily mean a fraud has occurred, the presence of numerous red flags increases the suspicion of internal fraud. It is important to quickly identify the red flags, determine who might be responsible, and take quick action to extinguish the problem. Read More