Tragedy of fraud – another case study

Fraud devastates an organization. The damage to the fraudster and loved ones is also severe.

A series of posts on my other blog, Attestation Update, explores the ripple effects of one specific fraud.

Mrs. Amy Wilson embezzled from her employer. After completing her prison term, she started rebuilding her shattered life. She is sharing her story.

Here are my posts in this series: (more…)

“Tragedy of Fraud” e-book now available at Amazon

“Tragedy of Fraud – The Ripple Effects from Fraud and the Wages Earned” describes the tragic consequences from fraud.

There are ripple effects that spread out to harm innocent bystanders.  The perpetrator draws a wide range of well-deserved wages that will be paid in full.

The book looks at two fraud incidents to learn what happens after a fraud is discovered. One took place in a local megachurch and the other in the mayor’s office of a small city.

The book closes with a discussion of the fraud triangle. That’s the idea that three components need to be present for a fraud to take place – opportunity, motivation, and rationalization. There are steps an organization can take to reduce those factors.

You can find the book at Amazon here

This book is a compilation of blogs posts that have been previously published at Nonprofit Update and Attestation Update. The posts have been edited slightly and reorganized for easier reading.

Major sections of the book: (more…)

‘Tragedy of Fraud’ in e-book format – soon to be released

Tragedy of Fraud – The Ripple Effects from Fraud and the Wages Earned will be released soon in Kindle format. This is a compilation of blog posts about the damage caused by fraud. It will also discuss the fraud triangle.

The sections of the book are: (more…)

Fraud triangle illustrated in a movie

I recently enjoyed the 1968 version of The Producers. Wonderful stuff. Lots of laugh lines I’d forgotten about since I watched it last.

While watching, I realized there was a great illustration of a fraud triangle developed in about 5 minutes or so. For an edifying, educational exercise, let’s review the sequence to illustrate the concept of fraud triangles.


Wages of fraud – loss of licenses

The sad tragedy of fraud in a neighboring city is in the next to last chapter. Yesterday one of the admitted middleman in the Upland bribery scandal was sentenced to a year and a day in federal prison.

The Inland Valley Daily Bulletin discusses the case and sentencing in their article Co-defendant in Pomierski case is sentenced to one year.

Previously I described the wages earned from a felony conviction.

Add to the high cost the probable loss of any professional credentials or state licensing necessary to do your job.


Wages of fraud – 2 year prison sentence is just the start

(cross-post from Attestation Update.)

I’ve been following the corruption case in the city next to where I live.  This post describes the sentencing and additional consequences of the fraud.

The mayor was accused of accepting bribes from a local business in return for helping them get back in business. In April 2012, he pled guilty to one count of bribery. The remaining 9 charges were dropped at the sentencing.

Yesterday he was sentenced to two years in federal prison.


Another chapter in the Tragedy of Fraud

Prison.  Bankruptcy.  Publicity. Civil litigation.

Such are the wages of fraud.

It is such a tragedy.  Such a waste.

The mayor of a neighboring city provides the next example of the devastation from fraud.

I’ve discussed this case in my other blog, Attestation Update, over the last year from the perspective of an auditor. See my update for developments this week:  Guilty plea in corruption trial mentioned a year ago.

Here is my short version of the government’s accusation, based on reports in the local paper, mostly this article from the Daily Bulletin.


My guest post at re:The Auditors on accounting for the Olympus fraud

Francine McKenna asked me to combine my short comments on the Olympus fraud into a guest post on her blog.

I’m quite happy to announce my revised, expanded, and edited discussion is available. You can read the full thing at How Do You Hide A Multibillion Dollar Loss? Accounting For The Olympus Fraud

Many thanks to Francine for the wonderful opportunity to speak to a big audience.

If you suspect fraud in your ministry, get help early

If you come across some things that make you think there are some shenanigans going on, your first reaction will be to look at it some more. 

While you will obviously want to look at something so you can understand it, don’t get too far into an investigation.  If you think you’re looking at actual fraud, you need help.  Someone trained in investigations.


Scam watch – you don’t have to pay someone a bunch of money to file your SOI-100

Previously discussed a scam where someone is sending letters saying businesses need to pay $370 to file the renewal of a fictitious business name license.  Those are also called a doing-business-as name.

You also don’t have to pay anyone to file a Statement of Information (SOI-100) with the California Secretary of State.  That is the form that nonprofit organizations need to file every two years.  I previously mentioned that form in this post.


Scam watch – you don’t have to pay someone $370 to help renew your fictitious business name

If you want to conduct your ministry or business using anything other than your legal name, you have to get a fictitious business name.  This is also called a DBA, or “doing business as” name.

Let’s say you are on staff at Southside Community Church and are starting a major summer program as an outreach to the community.  This would be a big, ongoing project. If you’re going to be collecting money and trying to reach out beyond your local congregation, you just might decide to run the program under the name Southside Summer Swim.  If that is the case, you need to file for a fictitious business name with the county clerk’s office.


Scam watch – the IRS will not send a fax asking for your bank account info

William Vaughan Company CPAs, reports one of their clients got a fax that seemed to be from the IRS asking for bank account information.  See their post and a copy of the fax at: Recent IRS Scam Requests Bank Account Information.

How can you tell this is a scam?  That is not how the IRS does things.  Very simply, it fails the smell test. (more…)

How could an auditor pick up any red flags to this corruption case?

I’m writing a series of posts on my other blog about a corruption indictment of officials in the city of Upland.  The focus of that series of posts is a case study for CPAs based on a live, developing situation.  Since the audience will be CPAs, I will not cross-post those discussions to this blog.  If you’re interested, the posts start here and continue here and here.