Litigation

Becoming an Expert Witness

Posted on November 05, 2020
Are you a CPA who wants to become an expert witness? Lawyers are always on the lookout for financial experts who can help them win cases. Virtually all civil suits involve issues about money, and a certified public accountant is one of the best resources for sorting out the financial details...

Criminal Defense Work: Financial Crimes

Posted on November 03, 2020
The most interesting cases I work are criminal cases for defendants accused of financial crimes such as money laundering, tax fraud, bribery and corruption, embezzlement, and investment fraud. I do my best work as a forensic accountant and fraud investigator in cases in which a trail of money must be followed through a complex web…

Ponzi Scheme Red Flags

Posted on October 30, 2020
How do you know if you’re considering investing in a Ponzi scheme? The promoters will never come out and tell you they are running a pyramid scheme, so the investors have to be smart enough to recognize them on their own. The good news is it is easy to spot a Ponzi scheme...

Preventing Corporate Fraud

Posted on October 28, 2020
Executives have the means to commit and cover up the largest frauds. They have access to the information and computer systems, they have power over all employees and they have access to the money. The finance function is riddled with fraud risks and the company?s executives are in the best position to take advantage of…

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

Posted on October 16, 2020
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…

Starting a Fraud Investigation (Course at CPA Crossings)

Posted on October 05, 2020
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...

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

Posted on September 21, 2020
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...

Real Housewives Star Teddi Mellencamp Accused of Fraud With Diet Program

Posted on September 17, 2020
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...

Infidelity and Fraud

Posted on September 03, 2020
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,…

Becoming a Fraud Investigator (Course at CPA Crossings)

Posted on August 31, 2020
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…

Herbalife Charged Criminally for Bribery

Posted on August 28, 2020
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…

No Collar Fraud: White Collar Crime Committed by Millennials

Posted on August 24, 2020
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…

From Chaos to Clarity in Financial Investigations

Posted on August 19, 2020
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,…

R. Kelly Shows Us the Importance of Tracing Funds

Posted on August 17, 2020
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,…

Learn How to Investigate Fraud

Posted on August 12, 2020
If you want to learn how to do fraud investigations from a forensic accountant what has over 20 years of experience in the field… here’s your chance! This course is for: Accountants who want to begin doing financial investigations Investigators who need training on the financial aspects of investigations Students considering a career in forensic…

What to Do When You Are Being Audited and Your Records are a Mess

Posted on August 07, 2020
How to terrify just about anyone: Tell them their taxes are being audited. Even worse: When their books and records are a mess. (Or maybe even non-existent.) Every number could be scrutinized. That means documentation must be produced to support the amount of each expense and the business purpose of the item...

Fortune Hi Tech Marketing: Real money made from recruiting, not product sales

Posted on March 31, 2011
Earlier this week I showed you how Fortune Hi Tech Marketing appears to be a pyramid scheme, rather than a legitimate “direct sales” company or multi-level marketing opportunity. Today we are taking a look at the recruiting aspect, which is what I believe makes FHTM cross over the line into the world of pyramid scams [...

Medifast ?Take Shape For Life? Lawsuit: Total vindication for Tracy Coenen in SLAPP suit

Posted on March 29, 2011
More than a year ago, Medifast Inc. (NYSE:MED) sued me, my company Sequence Inc, Barry Minkow, his company Fraud Discovery Institute, Robert FitzPatrick, William Lobdell, and an anonymous message board poster for defamation. Barry Minkow and FDI initiated an investigation of the company in 2008, and the rest of us researched the company and contributed [...

China MediaExpress Holdings: Critics and short sellers were right!

Posted on March 28, 2011
In February, I wrote about China MediaExpress Holdings Inc. (NASDAQ:CCME) and several fraud allegations that had surfaced via researchers at Muddy Waters and Citron Research. After looking at the allegations and the support (or lack thereof), my conclusion was that there was something wrong at the company...

Fortune Hi Tech Marketing: Multi-level marketing scam or pyramid scheme?

Posted on March 28, 2011
Fortune Hi Tech Marketing is one of hundreds of multilevel marketing companies that operate in the U.S through a combination of clever lawyering (“Let me show you how to set up your MLM so it appears to abide by the laws.”) and failure of law enforcement to enforce the laws against pyramid schemes and business [...

Can MLM Be a Crime: Canadian Police bring criminal fraud charges against multi-level marketing company Business in Motion

Posted on March 24, 2011
By Robert FitzPatrick of Pyramid Scheme Alert Royal Canadian Mounted Police (RCMP) in the province of Manitoba in central Canada have brought criminal fraud charges against a multi-level marketing company that had been large, very visible and quite popular in Canada...

Planning and conducting corporate fraud investigations

Posted on March 18, 2011
The unthinkable has happened. We have good employees. Our people are honest. They don?t steal from us. They?re like family. We trust them. So it goes when a company discovers a fraud from within. Then what happens? After the initial shock wears off, it?s time to start investigating the situation...

NOVA Benefit Plans: IRS cracking down on welfare benefit plans

Posted on March 14, 2011
NOVA Benefit Plans LLC  of Simsbury, Connecticut has been in a bitter battle with the Internal Revenue Service over whether its welfare benefit plans are actually tax scams. Section 419 of the Internal Revenue Code allows welfare benefit plans, but abusive plans organized under this section have been aggressively pursued by the IRS...

More evidence of fraud at China MediaExpress Holdings

Posted on March 12, 2011
Last month, I wrote a piece on China MediaExpress Holdings (NASDAQ: CCME) and the allegations of fraud by researchers at Citron Research and Muddy Waters. The story grew quickly with the reaction of the company and its supporters. China Media Express Holdings responded to the allegations with a letter posted on their website, but the [...

FCPA books and records violations: The government will always win.

Posted on March 08, 2011
The Foreign Corrupt Practices Act (FCPA) is aimed at preventing bribery of foreign officials. One key part of the FCPA is the books and records provision, which includes the following from 15 U.S.C. § 78m: (2) Every issuer which has a class of securities registered pursuant to section 78l of this title and every issuer [...

Las Vegas Sands FCPA investigation: What did management do when they first found out about allegations of bribery and corruption?

Posted on March 06, 2011
Earlier this week, Las Vegas Sands (NYSE:LVS) announced in its 10-K for the year ended December 31, 2010 that it is the subject of an FCPA investigation: On February 9, 2011, LVSC received a subpoena from the Securities and Exchange Commission requesting that the Company produce documents relating to its compliance with the Foreign Corrupt Practices [...

What do you do with mountains of data in a financial investigation?

Posted on March 04, 2011
From my Thought Leadership series at Securities Docket: A couple of months ago I presented a webcast for Securities Docket which focused on how my firm is using new tools and techniques to better analyze financial data in forensic accounting engagements...

Tax audits and bad recordkeeping

Posted on March 01, 2011
You are being audited. These are some of the most dreaded words an individual or business will ever hear from a state or federal tax auditor. They invoke fear, panic, and sometimes anger. Most of all, they create a need for documentation. Every number could be scrutinized...

Update on fraud allegations at China MediaExpress Holdings

Posted on February 23, 2011
A couple of weeks ago I posted an article examining some of the allegations against China MediaExpress Holdings (NASDAQ:CCME) alleging that management was committing fraud on the investing public. I also discussed the company’s response, as well as the response of writers who are supporters of CCME...

Five myths about fraud

Posted on February 21, 2011
We’ve all heard so much in the news about fraud over the last several years. Not a day goes by that we don’t hear about an executive caught with his hand in the cookie jar, a company that failed to follow proper accounting rules, or a compensation structure that led someone to cheat with the [...

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