How-To Guide to Fraud Investigations Course (CPA Crossings)

Coming up on Monday, October 19: How-To Guide to Fraud Investigations course at CPA Crossings.

This is a 2 hour online course, and is the third in a 4 part series on conducting #fraud investigations. This is your chance to learn some fraud investigation techniques that I use in many investigations, and it is inexpensive at only $89 for 2 CPE credits!

This session shows you how to investigate an asset misappropriation scheme. We walk through a detailed case study so you can see where to start at the beginning of a financial investigation, and you’ll learn procedures and techniques used to investigate fraud and trace funds. Continue reading

Starting a Fraud Investigation (Course at CPA Crossings)

Coming up on Thursday Oct. 15: Starting a Fraud Investigation course at CPA Crossings.

This is a 2 hour online course. It is the second in a 4 part series on conducting fraud investigations, but don’t worry… the 4 courses can be taken individually and in any order. This session costs only $89 for 2 CPE credits.

What is it about? We talk about the early stages of a fraud investigation with topics including:

Assembling the fraud investigation team
Managing and supervising staff
Obtaining and managing evidence
Background checks
Public records searches
Digital data analysis
Interviewing techniques

It’s Not an Investment Club, It’s a Pyramid Scheme

Have you seen these invitations to “join an investment club” on social media? They’re frauds. They’re scams. They’re not investment clubs. This is a typical pyramid scheme (also called Ponzi scheme).

Below is the scam being promoted by an attorney in Washington D.C. who has a pretty decent social media following. For weeks, she’s been posting screenshots like this:

Real Housewives Star Teddi Mellencamp Accused of Fraud With Diet Program

Teddi Mellencamp Arroyave, one of the stars of reality series Real Housewives of Beverly Hills (RHOBH) has just been accused of running a scam with her diet and fitness program called All In By Teddi.

The All in by Teddi diet scam (allegedly) is supposed to be an accountability diet program. You have a coach who monitors you throughout each day with text message check-ins, and you follow a diet and exercise program. Sounds great, right?

It sounds especially great because Teddi weighed over 200 pounds at one point and took the weight off by focusing on healthy eating and being active each day. She wanted to help others with their weight problems and started a company she called LA Workout Junkie, and later changed the name to All in By Teddi.

The problem with Teddi’s program is that it is now being exposed as a dangerous diet. See all the excellent reporting the All in By Teddi fraud on Instagram by Emily Gellis! Emily also recently exposed the F Factor diet (a high protein, high fiber diet including special shakes sold by F Factor), a very restrictive diet that allows less than 1,00 calories per day.

The All in by Teddi program allegedly involves eating only 500 calories per day and doing one hour of intense cardio each day.

Here are the “allowed” foods and portions for the day (from Emily’s Instagram stories!): Continue reading

Infidelity and Fraud

What on earth do fraud and infidelity have in common? Quite a lot. While there may be no scientific studies available that analyze the correlation between financial fraud and infidelity, anecdotal evidence suggests there is a connection.

A discovery of a corporate fraud has often led to the discovery of a secret addiction like gambling, alcohol, or drugs. Digging into the financial records of a suspected thief finds a spending problem, a secret source of income, or theft from another party. Discovery of fraud has also led to a spouse finding out about infidelity and the existence of a love child.

The theory that fraud and infidelity are often related is simple: Fraud does not happen in a vacuum. It takes a certain mindset to be able to commit adultery and to be able to commit fraud. I have rarely seen extremely deceitful acts being confined to only one part of a person’s life. Continue reading

Becoming a Fraud Investigator (Course at CPA Crossings)

This Thursday Sept. 3: Becoming a Fraud Investigator course at CPA Crossings.

This is a 2 hour online course, and is the first in a 4 part series on conducting fraud investigations. It is jam packed with forensic accounting information, but it’s cheap at only $89 for 2 CPE credits!

What is it about? It’s getting you ready to perform a fraud investigation with information from a forensic accountant like:

– Common workplace fraud schemes
– Red flags of occupational fraud
– Skills of a fraud investigator
– Planning the fraud investigation
– Budgets, fees, and engagements letters

Who should take this course?

Anyone who wants to learn to investigate financial frauds. Accountants, private investigators, risk management professionals, law enforcement officers.

Thursday, September 3, 2020 at 11:30am Eastern. (If you miss it, the course will be taught again on October 5.) The format is me on camera along with a PowerPoint presentation.

Please use this link to register so I can track the participants who found the class via my blog: http://cpe.cpacrossings.com/SITCBFI2?partner=sequence

Herbalife Charged Criminally for Bribery

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

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

From Chaos to Clarity in Financial Investigations

The financial part of a case can become overwhelming very quickly. Particularly in cases involving white collar crime, securities fraud, Ponzi schemes, or other fraud recoveries, the trail of financial documentation is often very long. A forensic accountant needs to examine the financial documents and piece together the evidence in a way that attorneys, judges, and juries can understand.

When there are mountains of data, the investigator needs a way to quickly examine the data, assemble it in a format that is usable, find connections between transactions, and quantify results. Traditional forensic accounting techniques alone are no longer effective in these types of investigations. The volume of data can quickly overwhelm the investigator, and this affects the quality of the results.

Many of these cases involve moving money around rapidly between multiple bank and brokerage accounts to disguise the true sources and uses of funds. The long trail of financial documentation needs to be examined by a forensic accountant and the data must be pieced together to find where the money really went. Continue reading

R. Kelly Shows Us the Importance of Tracing Funds

I’ve become really good at tracing funds through multiple bank accounts with tens of thousands of transactions. The goal is to find where the money went, and if we’re lucky find evidence of hidden accounts. I usually find a hidden account when someone is sloppy: a transfer to a bank that we didn’t know about, no matter how large or small the amount.

R. Kelly is currently sitting in jail after being charged in 2019 with 13 counts of racketeering, forced labor, and sexual exploitation of children in federal court in Chicago. He was denied bail because he was deemed a flight risk. R. Kelly’s attorneys claimed he was broke, though.

And now the Feds say they’ve found a bank account R. Kelly controls, and the account received at least $1.2 million last year.

How did they find this secret account?

Apparently R. Kelly was on a recorded line from jail when he told people to contact a person who was supposed to open an account to receive money indirectly from him. In other words, someone opened an account in their name to hold onto R. Kelly’s money for him. Continue reading

Fraud Files Forensic Accounting Blog

Commentary on fraud, scams, scandals, and court cases.