The average business loses approximately 5% of revenues to employee fraud. The employees are running off with money, fixed assets, and business opportunities. They are taking kickbacks from suppliers who overcharge for their products and services, and pushing contracts toward friends and relatives. Executives are manipulating financial statements to increase stock prices and impress lending institutions.
These types of dishonest activities can be decreased, however, by companies that take action to prevent and discourage fraudulent behavior. An extensive fraud prevention program might be the most effective way to reduce fraud opportunities, but following a recent flurry of regulatory requirements, many companies aren’t willing to invest more in revamping policies and procedures.
Activities that were traditionally thought to deter and detect fraud, such as independent audits and internal examinations, have been found to be less effective than previously believed. Those types of procedures may still provide some valuable business benefits, but they should not be relied upon as a primary tool for detecting and preventing fraud. Continue reading
Remember Roca Labs? The company that is suing all sorts of meanies who said mean things about the company and its jars of goop? Well, Marc Randazza (counsel for Opinion Corp and a defendant in a separate lawsuit Roca Labs brought against him) unearthed some interesting public records regarding Roca Labs:
Ladies and Gentlemen, I’m just gonna leave these right here for any of the people out there who have felt the victimizing thwack of Roca Labs’ censorious sting. You see, Roca Labs is very very very upset if you say anything bad about them.
So upset that they file legal claims and bar complaints to try and shut you up if you dare speak out.
Meanwhile, feast your eyes on this stuff.
This Roca Labs user got sick from the product (Roca User got sick)
Here is a complaint about their deceptive trade practices (Deceptive trade practices)
Here is another Roca Labs user who got sick and complained about their trade practices (Sick and trade)
Here is a report from an FDA Special Agent documenting a consumer report about Roca Labs’ product allegedly being packaged in a garage with cockroaches on the floor, with no gloves or protective gear (spcial agent)
If you’re being sued by Roca Labs (or if you’re handing cases or complaints against them) please enjoy these documents with my compliments.
I can see why they might have very hurt feelings.
Written by Tracy L. Coenen, CPA, CFF
White collar government investigations almost always have one thing in common: They rely heavily on an analysis of financial information. This often includes going through banking documents with a fine tooth comb, and can also involve scrutinizing accounting records.
While the task of accumulating this data and examining it seems basic, there is much work involved, and expertise in financial and accounting crimes is necessary to fully understand the issues and the potential criminal or civil charges that the government brings against the company or individual. To properly defend such a case, it is necessary to have a financial investigator involved to help filter the data and the issues the government will raise. Continue reading
In 2013, Nevada enacted an anti-SLAPP law… something all states should have, but only 28 do (and those laws vary in quality). SLAPP stands for “strategic lawsuit against public participation.” It’s basically the type of lawsuit that is filed in order to get people to shut up.
I am no stranger to such suits. I was sued in this fashion by Medifast Inc. (aka Take Shape for Life) in 2010, and it took over five years for me to be dismissed, have the dismissal affirmed, and have the court order Medifast to pay my attorneys’ fees. The whole point of the Medifast lawsuit was to make me stop saying unflattering things about the company. And to scare anyone else who might dare to say bad things about the company…. the cost of litigation is tremendous, and companies like Medifast use the threat of litigation to shut up their critics. Continue reading
It’s taken more than five years and hundreds of thousands of dollars to dispose of the frivolous and unethical lawsuit Medifast Inc. (aka Take Shape For Life) and their dishonest attorneys filed against Tracy Coenen and Sequence Inc.
You will recall that I won my anti-SLAPP motion to dismiss, and Medifast appealed, ensuring that the suit would drag on for years. In June 2014, the appeals court affirmed my dismissal and told Medifast to suck it. But of course, Medifast STILL wanted to fight… this time about the attorneys’ fees they were legally obligated to reimburse.
Yesterday the court ordered Medifast to pay nearly $200,000 and never darken my door again:
In accordance with those orders and decisions, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that:
(1) This action is dismissed as to defendants TRACY COENEN and SEQUENCE, INC., and judgment is hereby entered in their favor;
(2) Plaintiffs BRADLEY MACDONALD and MEDIFAST, INC. shall take nothing by way of their First Amended Complaint against defendants TRACY COENEN and SEQUENCE, Inc.; and
(3) Judgment is entered in favor of defendants TRACY COENEN and SEQUENCE, INC., and against plaintiffs BRADLEY MACDONALD and MEDIFAST, INC., jointly and severally, in the amounts of $190,520.50 for attorney’s fees, $7,502.00 for nontaxable costs related to the proceedings in the District Court, and $855.00 for costs in the Ninth Circuit (for a total of $198,877.50).
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that plaintiffs, jointly and severally, shall be obligated to pay defendants TRACY COENEN and SEQUENCE, INC. the aforesaid sums, each with interest accruing at the legal rate from the date of entry of judgment until paid in full.
IT IS SO ORDERED.
DATED: April 20, 2015
Frauds committed by employees can have devastating effects on businesses. The company’s finances suffer, employee morale may drop, and the company’s reputation could be affected by negative publicity.
Following the investigation of an internal fraud, owners and managers of companies need to rethink how they do business. It is the perfect time to carefully analyze the operations and create procedures and an environment in which ethical behavior thrives.
A fraud by a trusted employee is often devastating to management, both financially and emotionally. A company can be thrust into turmoil because of a significant theft, and it’s important to approach the situation methodically in order to mend the damage and prevent future occurrences. Companies can recover from an internal fraud by focusing on three key areas, in addition to completing a thorough investigation of the fraud. Continue reading
The dreaded expense reports. Employees hate preparing them. Companies hate reviewing them. They seem to be painful for everyone involved, yet companies can’t get away from them all together.
You’re asking yourself why this might be an important topic. Expense report losses are really a minor expense for most companies, aren’t they? Yes, they are.
However, the problem with them is what they stand for in other areas of the company.
Cheating on expense reports is one of the most common thefts perpetrated by employees. While the amounts lost to expense report abuse may be small, condoning this unethical behavior can lead to bigger problems. Continue reading
The last thing you want to discover is that one of your employees is stealing from your small business. Not only is it a total violation of your trust, but internal fraud also has the potential to put you out of business.
According to the Association of Certified Fraud Examiners, businesses lose an average of 5% of revenues each year to fraud. Could your company survive if an employee stole 5% of your revenues? Continue reading
People who steal from their employers often exhibit telltale characteristics that could tip off management that they’re likely to commit fraud. These characteristics include attitudes on the job, daily work habits, and personal lifestyle issues. A few of these traits alone do not indicate fraud, but the potential for fraud to occur rises with more of the characteristics in an employee.
Often when a victim of occupational fraud reflects on the work history and personal life of the perpetrator, a light bulb comes on. The perpetrator exhibited many of these characteristics, but those things were overlooked in the normal course of business. Awareness of these characteristics can help reduce internal fraud. Continue reading
Tracy Coenen talks on CNBC about the top five tax scams that consumers should be aware of. Continue reading