True Name Fraud Difficult to Repair


Wisconsin Law JournalAnyone with a decent credit history fears having his or her good name tarnished. We hear stories of other people’s credit problems finding their way onto our credit reports. We’re familiar with data breaches that expose our private details to criminals. But the scariest form of identity theft is true name fraud, in which someone opens credit accounts using your name and personal details.

Some people don’t worry much about true name fraud, believing that a little bit of legwork will clean up the problem. Certainly the credit reporting agencies will know that you are you and that the identity thief is not you, and everything will be corrected. A little proof provided to the credit card companies will show that you did not open the account, and the debt will be removed from your name, right?

Not necessarily. People often estimate the amount of time and effort it may take to clear their name when they are the victim of identity theft. And issuers of credit might not be very patient, sometimes using strong-arm tactics to get you to pay debts that you didn’t really incur. Continue reading

Medifast Files Lawsuit, Fraud Discovery Institute Reopens Investigation


UPDATE: On February 17, 2010, Medifast Inc. filed suit in US District Court, Southern District of California, alleging defamation, violation of California Corporations Code, and unfair business practices. On March 29, 2011, Judge Janis Sammartino dismissed all of Medifast’s claims against me in her ruling on my anti-SLAPP motion.

On Tuesday, Barry Minkow and the Fraud Discovery Institute issued a press release stating they were ending their investigation of Medifast Inc. (NYSE:MED) in order to focus on other companies.

One day later, Medifast filed a defamation suit in California against Minkow, FDI, Robert Fitzpatrick, William Lobdell, iBusiness Reporting, me, my company Sequence Inc., and an anonymous message board poster. The suit seeks general damages of $270 million, plus other damages. Continue reading

Koss Says They’ll Be More Profitable Now That Their VP of Finance Isn’t Stealing $31 Million From Them


Koss Corporation (NASDAQ:KOSS) filed a 10-Q with the Securities and Exchange Commission yesterday that pointed out the obvious… Now that their VP of Finance isn’t stealing at least $31 million from them, they think they’ll be more profitable.

The company says they’ll be restating the financial statements for the fiscal years ended June 2008 and June 2009, at the very least, and also restate the quarterly reports filed so far for fiscal 2010. The company says their numbers will improve now that Sue Sachdeva isn’t stealing from them (bold added by me): Continue reading

Fraud Discovery Institute Ends Investigation of Medifast Inc.


UPDATE: On February 17, 2010, Medifast Inc. filed suit in US District Court, Southern District of California, alleging defamation, violation of California Corporations Code, and unfair business practices. On March 29, 2011, Judge Janis Sammartino dismissed all of Medifast’s claims against me in her ruling on my anti-SLAPP motion.

In mid-2009, Barry Minkow and Fraud Discovery Institute began investigating Medifast Inc. (NYSE:MED), and published several reports on the company and its business model. The company was compared to Your Travel Biz (YTB), a company that was under fire from the authorities for being an alleged pyramid scheme.

There were questions about Medifast’s auditors,  but most notably, the company was criticized for the fact that its financial growth was due almost completely to the recruitment of new “coaches” into its Take Shape for Life (TSFL) division. A month ago, the most recent report on Medifast’s recruitment business was published by multi-level marketing expert Robert FitzPatrick, and Medifast’s management promptly misled shareholders by claiming these allegations were made by “convicted felon” Barry Minkow. Continue reading

The U.S. Government Wastes Our Money, and Wants Us to Let Them “Run” Health Care?


You don’t have to look far for examples of the ineptitude of the American Government. They waste billions and billions of dollars each year, but somehow, we’re supposed to believe they’ll do better with health care?

Hardly. It’s not even a challenge to find examples of waste and mismanagement in our government. And it would be irresponsible for citizens to believe they’ll do anything different when they’re in charge of our health care. In addition to the massive amount of money our government will waste, they will simply do a bad job with health care. Sorry, but I trust my current doctor more than I trust the system. Continue reading

Timothy Sykes Calls Foul, Shaq and His Lawyer Cry


shaqTimothy Sykes is a fantastically successful blogger, penny stock trader, and educator. He makes a living by teaching people how to recognize “pump and dump” schemes by penny stock promoters… and then short those stocks for a profit. They make money when the price of the stock they’ve shorted goes down… which is inevitable if you can identify a stock that is all hype and no substance.

What is a pump & dump? Essentially the promoters of a virtually worthless stock (worthless, because the company is a sham of some sort) do mass mailings of marketing materials. This is the pump. They hype a company with false and misleading information, hoping to interest people in buying the stock (taking long positions). As those people start buying up shares, the price of the stock rises rapidly. While this is happening, people who previously held the stock start selling (at an inflated price, thanks to the all the buying activity generated by their hype). This is the dump. The people selling make a ton of money on their stock. Continue reading

Even an MLM Scammer Says MLMs Are Scams…


stairsWho do you trust? That’s an issue that often arises for the former CFO of Crazy Eddie, Sam Antar. He’s been writing extensively about the financial statement fraud at, and has been dismissed by some as a con artist with ulterior motives.  But Sam has been vindicated, as has announced another restatement of earnings, meaning the company has a full decade of inaccurate financial statements now on file with the SEC. (Thankfully, the officers and directors of don’t have to take any responsibility for repeated misstatements of the financials, and are still getting health bonuses!!!!) Continue reading

Office Theft Cases Illustrate Importance of Oversight


WI Law JournalJane Pribek – Wisconsin Law Journal

Beaver Dam attorney James H. Olson, of Olson Law Offices LLC, got a sick feeling when a letter from a nearby community bank arrived at his home. The letter was from the bank vice-president, who told Olson that his assistant had been cashing checks on an account that Olson never created. The VP tried to contact Olson at his office, but the calls never went through.

Olson went to the bank the next day and learned that this had been going on for quite some time. Continue reading

Compliance Week Article: Koss Fraud Spotlights Small Filers’ Internal Control Issues


An article in today’s Compliance Week, Koss Fraud Spotlights Small Filers’ Internal Control Issues (subscription required), quotes me on internal controls and the auditors as it relates to the huge fraud committed by VP of Finance Sue Sachdeva at Koss Corp (NASDAQ:KOSS).

I’m no fan of Sarbanes-Oxley because I believe it was ridiculously expensive, and hasn’t really produced any meaningful results. Fraud is just as rampant as before SOX became law, and the only thing companies have to show for it is a huge bill from auditors and consultants. Continue reading

Koss Fraud Spotlights Small Filers’ Internal Control Issues


Compliance Week – Tammy Whitehouse

As Congress debates whether to exempt non-accelerated filers permanently from internal control audits—and that debate may take much longer than many expect—lawmakers might want to ponder the breathtaking fraud at Koss Corp. and its implications for external auditors’ role in preventing and detecting management deception. Continue reading