A new bill is making its way through Congress, and it’s titled “Anti-Pyramid Promotional Scheme Act of 2016.” What’s it all about? It is an attempt by the Direct Selling Association and multi-level marketing companies to make sure that their pyramid schemes are never shut down. It is a bunch of fluff that is designed to look like it protects consumers, while the bill is really protection for MLMs. It makes inventory loading (getting recruits to buy inventory to “qualify” for commissions, regardless of the fact that they will likely never be able to sell that inventory) perfectly legal under basically all circumstances.
Attorney Douglas Brooks has analyzed the bill and dubs it the “Pyramid Legalization Act of 2016.” This is his analysis:
In the guise of an “anti-pyramid” bill, the proposed legislation would more accurately be called the “Pyramid Legalization Act of 2016.” The bill would make it extremely difficult if not impossible to prosecute the most pernicious forms of deceptive multi-level marketing programs and product-based pyramid schemes.Continue reading
Companies devote significant time and money to the task of making sure that their customers don’t steal from them. But how much time do they spend considering the risk that their own employees are stealing from them?
That risk is great, so great that the annual internal fraud losses in the United States total an estimated $652 billion, according to the most recent study completed by the Association of Certified Fraud Examiners.
Each year, the average company loses 5 percent of revenues to internal fraud. This adds up quickly, especially for companies that are operating with little or no profit margin. Five percent of that company’s revenues can mean the difference between being in business or filing bankruptcy. It pays to implement aggressive fraud prevention techniques because they can save the company significant money in the long run.
The cost to implement procedures to monitor and restrict activities is far less than the fraud risk that companies face each day.Continue reading
FOCUS – Newsletter of the AICPA Forensic & Valuation Services Section
Forensic accounting and fraud investigation are hot specialties in the accounting world. Experts agree that the need for fraud detection services is growing, creating opportunities for small and midsized firms that are looking to start or expand a forensic accounting practice. Building a stable forensic accounting practice takes time because the services and clients are unique. The key to becoming a real competitor in the area of fraud investigation to focus your firm’s strengths on the right quality services and clients to enhance your brand.
Forensic services are usually divided into two subsets: fraud investigation (financial statement fraud, corporate embezzlement, bribery, and insurance fraud) and litigation support services (contract disputes between corporations, shareholder divorces, intellectual property infringement, business insurance claims, bankruptcy consulting, business valuation, and family law issues). Within both service areas exists a variety of potential clients, including attorneys, corporations, government agencies, non-profit organizations, and individuals. Those clients can be divided further according to the industries in which they specialize or the types of matters in which they’re involved.Continue reading
Private and public records offer a wealth of information to fraud investigators
On Balance – The Magazine for Wisconsin CPAs
Without information, a fraud investigation goes nowhere. There are abundant sources of information on people and companies, and as the Internet continues to expand, so does the accessibility of the information.
Doing a thorough fraud investigation often goes beyond just analyzing documents produced by the client. The best forensic accountants and fraud investigators are able to find additional sources of information to help crack the case. There is plenty of art to finding clues in an investigation, and it all starts with knowing what to look for and where to find it.
Private records Fraud investigations rely heavily on the availability of private records. In the typical business fraud case, helpful internal records could include financial statements, tax returns, sales and receivable records, expense documentation, proof of payments to vendors, or other information from a company’s accounting system.Continue reading
One of the biggest mistakes small business owners make in relation to fraud prevention at their companies is doing nothing. They often think that fraud prevention is too extensive and too expensive, so they opt to do nothing proactive to reduce fraud. The idea that fraud prevention is too difficult or too costly is simply not true.
While it is true that a full-blown fraud prevention plan at a company can be expensive to develop and implement, there are many inexpensive things small business owners can do to reduce their risks of fraud. So even if they can’t afford the best or most expensive fraud prevention solutions, there are still steps they can take to improve.Continue reading
Why should a taxpayer use the services of a forensic accountant when being audited or under criminal investigation? Tracy Coenen talks about the expertise a forensic accountant can bring to the case, specifically in evaluating the methods used by the IRS for determining income.
Ask a random group of attorneys what they think of social media, and you’ll get some funny looks. Several of them will turn up their noses, while an equal number will have only a vague idea of what you’re talking about. Although more attorneys are participating in social media, there is still a good bit of reluctance to get involved.
The phenomenon called social media is simply a category of online resources used by people to communicate with one another, research topics of interest, stay on top of current events, and market their businesses. It includes blogs, which may be used by professionals to write about news affecting their industries, promote their businesses and expertise, and engage in dialogue with others in far away places.
Sites like Facebook, LinkedIn, and Twitter are considered to be more pure social media than blogs. A blog can be created and maintained without interaction with other people, if that’s what the writer chooses. Facebook, Twitter, and other social media sites require interaction with others to make them worthwhile. On these sites, you will “connect” with people you know or are interested in, and you’ll be able to see updates they post about themselves and their companies, articles they’ve written, and articles they find interesting. You will be able to “like” or comment on their updates, and often engaging discussions follow.Continue reading
In November 2014, Marquette University professor of political science Dr. John McAdams criticized the instructor of a philosophy class (graduate student Cheryl Abbate) for allegedly shutting down discussion of a student’s negative opinion of gay marriage. Dr. McAdams wrote:
Abbate explained that “some opinions are not appropriate, such as racist opinions, sexist opinions” and then went on to ask “do you know if anyone in your class is homosexual?” And further “don’t you think it would be offensive to them” if some student raised his hand and challenged gay marriage? The point being, apparently that any gay classmates should not be subjected to hearing any disagreement with their presumed policy views.
Dr. McAdams opined:
Abbate, of course, was just using a tactic typical among liberals now. Opinions with which they disagree are not merely wrong, and are not to be argued against on their merits, but are deemed “offensive” and need to be shut up.
According to the Association of Certified Fraud Examiners, the overwhelming majority of frauds against organizations are committed by insiders.Yet, it would be a mistake to assume that most employees who steal are experienced criminals.
In fact, many, if not most, employees who defraud their employers are fundamentally honest.They just get themselves into difficult predicaments or have personalities that are more prone to breaking the law if given the opportunity.
There are hundreds of kinds of personal problems and personality traits that can cause a normally honest employee to “cross the line.” While the existence of one or two or even just a few such indicators doesn’t necessarily mean that a person is stealing, understanding the common behavioral red flags of internal fraud can be extremely helpful in protecting the organization from a variety of frauds.
IN A JAM Among the most common personal problems that can present red flags of fraud are substance abuse, gambling habits or other addictions.Continue reading
A few months ago, I was asked to beta test PerfectAudit software by Ocrolus.The software has used other names such as AuditGenius (auditgenius.com now forwards to perfectaudit.com) and Medicaid Genius. Promotional emails are being sent from the domain perfectauditpreview.com, which forwards to perfectaudit.com. The company is currently marketing to service providers in the divorce arena, and they say that firms such as Met Life, RGL, and Duff & Phelps are using the site for divorce cases.
The website bills Perfect Audit as a “game changer” for those who depend on data from bank statements and credit card statements. It’s a great concept! PerfectAudit will use OCR technology to pull the data off the statements, put the data into a searchable database, and you have access to data that is guaranteed to be 100% accurate.
But the product is terrible and doesn’t even come close to doing what they say it does. Here is what they say it does: Continue reading