I recently joined the Trading Challenge being being run by Tim Sykes. I introduced you to Timothy Sykes in 2008 when I reviewed his book An American Hedge Fund. He took about $12,000+ that he got for his Bar Mitzvah, and turned it into $1.65 million as a young high school and college student.

And then he did it all over again… Starting with the same amount in 2008, and growing it again just to prove that he can profit from the stock market without a huge capital base to start.

For several years, Tim has been teaching students how to trade using his core strategy. The strategy involves short selling  penny stock pump and dumps. He finds penny stocks (defined as trading at less than $5 per share) that are worthless at the core. The companies are shams, which generally tout some amazing product or service, but have no revenue, no profits, and often no real operations.

This article was originally printed in the ABA Section of Family Law eNewsletter, March 2013.

Experienced family lawyers are familiar with the common ways spouses attempt to commit financial fraud in divorce: hiding or undervaluing assets, overstating debts, concealing income, and inflating or fabricating expenses. All of these are done in an attempt to get more than the spouse’s fair share in the property division, and to influence the amount of support that will be paid or received.

Successfully advocating for your client involves more than just knowing that these things occur during the divorce process. You must also be able to identify the red flags that indicate the financial issue(s) must be investigated further. Some are easier to spot than others, but once you have identified two or three red flags, it is time to get a forensic accountant involved. The financial analyst’s experience with fraud and deception will be invaluable in evaluating the red flags and determining if there is something of substance to investigate further.

This article was originally printed in the On Balance, the magazine of the Wisconsin Institute of CPAs, March/April 2013.

Divorce and child support cases often are highlighted by disputes over money. One party may be accused of artificially depressing earnings, hiding assets or manipulating the finances to lower the financial obligation to another party. Understanding the complete picture of the finances is necessary before a fair settlement can be reached.

Chicago divorce attorney Jeffrey Knipmeyer, partner at Nottage & Ward, cautions that spouses of individuals hiding income and assets rarely have the financial sophistication to recognize that manipulation is occurring. He adds that during the marriage, they typically have been hands-off, and their only knowledge of the finances depends on what the spouse has communicated.

Readers of the Fraud Files are familiar with the story of Jennifer McKinney – - mommy blogger who calls herself MckMama – - who is prone to lies and exaggerations. She and her husband Israel were accused of  lying to and manipulating readers for financial gain. What began as a touching story of a family with a very sick child turned into a long-running gravy train, from which Jennifer and Israel McKinney profited handsomely.

But making hundreds of thousands of dollars from gullible sheeple reading a blog wasn’t enough for the McKinneys. No, they had to run up over $725,000 of debts and attempt to have them discharged in bankruptcy. Fortunately, bankruptcy trustee Gene Doeling caught on quickly, and accused them of attempting to defraud their creditors by failing to report tens of thousands of dollars of income per year.

Several readers have posed questions to me recently about house fires and land contracts, and I will attempt to address them in this article. Remember: I am not an attorney, so the information I am providing here is only a product of my research and my experience as a forensic accountant.

I have been retained by insurance companies in the past to investigate cases of suspected arson. My role was to determine whether there was a financial motive for arson. That is, was the financial condition of the person or business such (high debts, failing business, etc.) that there may have been a motive to commit arson to collect money under an insurance policy?

I receive many requests for information on the field of forensic accounting, including questions on courses of study, certification, job opportunities, and preparing for a career. Over four years ago I wrote this article for students and job seekers, and I thought it was a good time to update the information.

The first three bullet points of the article still hold true. If you want to work in the area of fraud investigation and forensic accounting, make sure all of your education and job choices put you on that path. Even if you can’t get started as a forensic accountant right away, make sure you’re doing everything you can to at least get a little bit of experience in the area. The more experience you have, the more attractive a candidate you will be for future jobs.

Jennifer McKinney – - former mommy blogger nicknamed MckMama – - has good news for the many creditors that she owes hundreds of thousands of dollars…. SHE CAN PAY THEM! This month’s issue of Xyngular’s Momentum magazine featured Jennifer Howe Sauls McKinney on the cover.

Publications like this are purely recruiting tools. While 99% of people participating in multi-level marketing will lose money, there are a few at the top of the pyramid who will make big money (only because many below them are losing money). Companies like Xyngular parade around the big winners, hoping to continuously recruit new victims into their schemes.

Milwaukee Mayor Tom Barrett is somewhat infamous for denying that voter fraud occurs in Milwaukee, telling constituents “give me one name” of a person committing voter fraud. Names have been given over and over and over again.

Now there are ten more people charged with voter fraud in Milwaukee County. Among the fraud allegedly perpetrated are the following acts:

• Felons ineligible to vote casting ballots
• Double voting in the 2012 elections
• Providing false information to an election official

Recently the AICPA published an article on its Journal of Accountancy website regarding private investigator licensing rules across the country. There is a concern that forensic accountants may be subject to private investigator regulations since they are doing investigative work. The AICPA has drafted a grid outlining the regulations by state, but you should do further research on your own because it does not tell the whole story.

The grid provides the following information on private investigators in Wisconsin:

Jon Taylor, PhD has written a thorough and excellent book about multi-level marekting: The Case (For and) Against Multi-Level Marketing: The Complete Guide to Understanding the Flaws – and Proving and Countering the Effects – of Endless Chain “Opportunity” Recruitment, or Product-Based Pyramid Schemes.

If you’re not familiar with MLM, you can see some interesting statistics here. Basically, the odds of a distributor losing money in multi-level marketing are greater than 99%.  Despite the fact that participants are almost guaranteed to lose money in MLM, these scams are marketed as business opportunities with the potential for unlimited earnings.