Lifestyle Analysis in White Collar Criminal Defense

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Both civil and criminal cases often involve an element of proving or disproving income of an individual or business. It is not unusual for a divorce case to include allegations of hidden income or assets. In contract disputes alleging the loss of sales or profits, an accurate determination of income is critical.

In criminal cases, the issues surrounding the income of an individual or business have even higher stakes. These cases are quite often tax-related matters, but cases involving white collar crimes and drug trafficking usually include questions about income too. Continue reading

CPAs Doing Litigation Support

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CPAs doing traditional tax and auditing services are often looking for other streams of revenue to fill in the gaps outside of busy season. Litigation support work might be a great fit for them. Attorneys are always looking for expert witnesses with certain areas of expertise, and accountants doing general work might be a good option.

What is your focus? Do you specialize in a certain industry or work frequently with certain accounting or tax rules? Litigation work is often interesting, but you have to be able to explain your work to non-accountants and testify in depositions or at trial. How well do you think you would do in the hot seat?

The video below offers Tracy Coenen’s commentary on this topic.

Commit Fraud and Get Away With It

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A little tongue-in-cheek take on committing fraud at work. No, I don’t really want you to commit fraud against your employer. I’m just trying to illustrate some of the red flags of fraud.

If a fraud is worth committing, it’s worth committing right. A little extra effort in the commission of a fraud can go a long way toward profiting from it as long as possible. Follow these recommended steps to increase your chances of successfully pulling off a fraud at work.

Don’t Act Suspicious

Don’t be a complainer. Don’t blatantly fight the rules. Appear to go along with policies and procedures, and don’t cause trouble for your co-workers or supervisors. You don’t want to appear to be disgruntled or seem like a problem employee. Those types of employees cause suspicion.

Do not discuss or display any dishonest behavior. Don’t talk about how you screwed your neighbor out of some money. Do not brag that you got one over on the auto repair shop. Don’t tell people that you filed a false insurance claim. Never daydream out loud about stealing money from someone. Dishonest behavior in your personal life can make managers suspicious about your propensity to commit fraud at work. You don’t want to give them any clues.

Never make your money problems public. Don’t say that you’re underpaid, or complain about your raise, or brag that you do much more work than you’re paid for. You don’t want to make it seem like you’re unhappy or might steal money to get back at a company that treats you unfairly. Continue reading

FraudFiles Podcast with Tracy Coenen

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Every time I think I should start a podcast called The FraudFiles Podcast, I end up appearing as a guest on someone else’s show. It’s so much easier to just post all of those here and pretend it’s my own podcast feed. 🙂

I hope I haven’t missed any!

Exhibit (A)ttorney Show with Jordan Ostroff
May 17, 2021
The Ins & Outs Of Forensic Accounting & Finding Fraud

The Persuasion Pitch
April 5, 2021
Anti-MLM Fraud Investigator

1958 Lawyer Podcast (Amata Law Office Suites)
February 14, 2021
A Fraud Investigator with Investigative Intuition Tracy Coenen

Great Women in Fraud with Kelly Paxton
October 10, 2020
Tracy Coenen: Forensic Divorce Expert and Much More

The Investigation Game Podcast with Leah Wietholter of Workman Forensics
May 26, 2020
His, Hers, and Theirs – A Forensic Accounting Case Study with Tracy Coenen, CPA, CFF

The Stacking Benjamins Show
January 29, 2020
The Life of an Accountant Spy with Tracy Coenen

Bank Statements in a Divorce

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When there are suspicions of hidden income or secret investments or bank accounts, an analysis of known bank accounts can reveal helpful details. Tracy Coenen explains how bank statements and credit card statements can be used by a forensic accountant in a divorce or child support case.

Red Flags of Divorce Fraud

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The vast majority of family law cases are settled without trials. However, a client should not enter into a voluntary settlement if there are significant concerns about the truth of the financial disclosures and indications that assets or income may be hidden. The first step in determining whether a forensic accountant is needed to evaluate the finances of the parties is the identification of “red flags” of fraud. A red flag is simply a warning sign or an unusual item or circumstance.

Attorneys often use their instinct to determine when a forensic accountant is needed in a family law case. If something does not feel right, it probably should be investigated. A client is often suspicious of the spouse even before they are separated. The spouse may even be known to manipulate the money.

Beyond using intuition to determine if something is wrong, there are plenty of warning signs that indicate the finances should be evaluated carefully. These red flags by themselves do not mean that money has disappeared or the finances are being manipulated. But they are signs that an investigation is warranted. Because divorce is so adversarial, it is likely that one or both of the spouses will conceal or manipulate financial facts. Continue reading

What is a Ponzi Scheme?

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Tracy Coenen explains exactly what a Ponzi scheme is: an investment scheme in which the promoter takes money from “investors” and promises to invest it. There is little to no real investment, and when it comes time to pay “returns” those investors, the promoter needs money from NEW “investors” to pay them. The promoter is generally stealing from the investors and constantly needs new money to keep the scam going. Ponzi schemes are often called pyramid schemes.

Top Ways to Detect Fraud in Companies

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Tracy Coenen talks to a group of CPAs about the top ways fraud is detected within companies. The Association of Certified Fraud Examiners (ACFE) conducts a survey of its members every two years. It consistently finds that the most common way fraud is found within companies is through tips from employees, customers, and vendors.

Next, management review of financial statements and account balances and reconciliations is a very effective technique. The internal audit function can also be very effective at helping to uncover fraud at companies. Sadly, many internal frauds are also uncovered by accident.

More on Billionaires Divorcing

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Last week I wrote about the billionaire divorce I worked on, as the Bill and Melinda Gates divorce story made headlines. These cases are once-in-a-lifetime cases, although last year I had an opportunity to work on one again. But after failing to reach a settlement for several months, an offer was made that was finally good enough, and the divorce was settled before I was retained to do a lifestyle analysis.

I wanted to give you more insight into how these billionaire or mega-millionaire divorce cases work. It’s rare for one spouse to run to the courthouse and file for divorce. Because there is so much money involved, there is often a very long negotiation process before the general public even knows what is going on.

Typically the parties spend many months (or years?) working on a settlement so they can go to courthouse with a signed agreement in hand when they officially file for divorce. If there is a prenuptial agreement, that may help when trying to sort things out. Unless, of course, one party is contesting the prenup and they want to run to court to get that worked out.

In the Gates divorce, it was reported that Melinda hired attorneys to start working on it two years ago. This does not surprise me. It has also been reported that by the time Bill and Melinda married in 1994, he was was already worth more than $9 billion. So why didn’t they have a prenup?

Who knows. Now they’re dividing assets from their 27 year marriage. They reportedly have a “separation contract” and on the day the divorce became public, $1.8 billion in stock was transferred from Bill to Melinda. That separation contract is exactly the type of thing I’m talking about when I say ultra high net worth parties often like to make agreements before they file for divorce.

It is also being reported that Melinda Gates also had some estate and trust attorneys on her team during the negotiations. Some are saying that is unusual, but when you have literal teams of lawyers from multiple firms representing each party in the mega-rich divorce, this is also not surprising to me.

Depending on who you believe, Melinda and Bill Gates have a net worth of around $128 billion or $130 billion. That much wealth boggles my mind. I can only imagine the amount of real estate owned, the investments through their family office (Cascade Investment LLC), and the work of the Bill & Melinda Gates Foundation.This is like one gigantic business splitting up, and it takes a lot of time to work out the details.