Herbalife Charged Criminally for Bribery

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This morning Herbalife (NYSE: HLF) was charged criminally for paying bribes to Chinese officials. The action is related to criminal liability under FCPA (U.S. Foreign Corrupt Practices Act).

The company disclosed in an SEC filing today:

  • Herbalife violated the books and records and internal controls provisions of the FCPA
  • The company will pay $123 million as a settlement with the SEC and DOJ, and this amount has been included in current liabilities on the June 30, 2020 financial statemetns
  • If the company doesn’t have any other violations for 3 years, this deferred charge will be dismissed

Herbalife disclosed in May that it had entered into a settlement agreement with the government. Today’s court proceedings make it official.

It’s fun to see pyramid schemes being held to account, even if it doesn’t happen often enough.

No Collar Fraud: White Collar Crime Committed by Millennials

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If you try to research fraud by millennials (those born between 1980 and 1994, currently 26-40 years old, also referred to as Gen Y), most everything you find will be about them being victims of fraud. It appears that millennials are the age group most likely to fall for financial scams, falling victim to consumer fraud twice as often as senior citizens.

But what about millennials as perpetrators of occupational fraud?

They’re at an age where they are moving into management, and may be at the beginnings of the executive ranks.

Wouldn’t it be important to know how likely this group is to commit fraud? Continue reading

Kevin Trudeau Has Learned Nothing

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Does anyone remember Kevin Trudeau? He’s been in prison for the last six years, so you may have forgotten about him.

Kevin Trudeau used to be called the “infomercial king” because he did a bunch of wildly successful infomercials selling “natural cures.” Between the natural cures and the weight loss cures he peddled, he made millions off unsuspecting consumers.

But Kevin Trudeau was a special kind of criminal. He was a repeat offender who didn’t learn anything from his many legal troubles..

He did time in the early1990s for credit card fraud. The FTC went after Trudeau in 1998 for false and misleading information in the infomercials, and he had to pay a $500,000 fine. Then in 2003 they went after him for violating the order in the 1998 case when he made claims that Coral Calcium Supreme cured cancer. In 2004, he had to pay a $2 million fine related to this violation. Continue reading

Financial Analysis in White Collar Crime Cases

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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. Continue reading

IRS Expenditures Method to Determine Income

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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.

The Most Common Money Scams and Schemes in 2018

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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. Continue reading

Doing Criminal Defense Work

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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.

Behavior of Upper Level Executives Who Commit Fraud

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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).