Here’s a doozy:
The Securities and Exchange Commission today announced charges against former senior officers of Mexico-based homebuilding company Desarrolladora Homex S.A.B. de C.V. for their roles in the company’s $3.3 billion accounting fraud. Homex settled SEC charges earlier this year without admitting or denying allegations that it reported fake sales of more than 100,000 homes to boost revenues during at least a three-year period.
The SEC used satellite imagery to help uncover the accounting scheme and illustrate its allegation that Homex had not even broken ground on many of the homes for which it reported revenues.
The image shows the purported home site with dozens of units highlighted as those that were sold. And the other image of the actual site shows enormous pieces of undeveloped land. This scam was carried out by the CEO, CFO, Controller, “a manager in the company’s operations department” and they layered their borrowing with 13 banks “in check-kiting fashion” and “mischaracterized them to Homex’s auditors.”
As a student, I remember thinking that check kiting was the stupidest way to commit fraud. On the other hand, it sounds a fun fraud because I imagine it’s a bit of a challenge to stay one step ahead of the float. Still, if the fraudster doesn’t have a plan to come up with actual money, then it becomes exhausting, and once you take a day off, you’re busted.
However, I suppose if you’re a massive corporation with a dozen or more banks at your disposal, you could borrow money “in check-kiting fashion” quite a bit longer, but I still imagine that would be a tedious task for whoever’s in charge of the kiting. It’d be enough that the person would probably be tempted to rob a bank just to make it stop. This story will probably wind up in an accounting textbook.
Elsewhere in SEC enforcement: Lawyers Charged With Assisting a Microcap Fraud Scheme
Good lord, here’s The Wall Street Journal on the latest in alpha male business executive power trends: The fancy backpack.
Driving that uptick, in part, is the backpack’s evolution into a higher species of bag. “Men’s backpacks have gotten more executive,” explained NPD analyst Marshal Cohen. That means fewer sad-sack shapes in cheap polyester and more finely crafted designs in sumptuous leather. “Backpacks have evolved from utilitarian and technical versions, from brands like Oakley or Victorinox, to ones that are [more upscale] in leather, or a mix of fabrication,” said Mr. Cohen.
Imagine being so self-conscious about whether backpacks are lame or not that you convince yourself to spend $1,000 or more on one. “But wait,” I hear you saying, “It’s not just a status item, it’s very practical!”
“The backpack has exploded as the go-to accessory in the man’s wardrobe,” said Roopal Patel, the senior vice president at Saks.
Sure, she said, some of this growth can be traced to the rise of dress-code-allergic startups and a more casual attitude about business attire overall. But whether you’re an executive or an intern, a backpack suits the densely stacked schedule many men now face. “We think about how a man is living his everyday life,” Ms. Patel said, describing the thought process behind the store’s selection of bags. “We look at functionality: Does it fit his laptop and workout gear—how about a water bottle?” A briefcase can get you to the office and back, but what if you have tennis at 8 a.m., meetings all afternoon and ceramics class at 7 p.m.? A backpack, she added, better targets a modern man’s needs.
I know that when my densely stacked schedule includes tennis followed by all-day meetings followed by ceramics, my lavish backpack is the only thing keeping me grounded.
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The featured job of the week is a Senior Financial Analyst with BlueCross BlueShield of Tennessee in Chattanooga.
Previously, on Going Concern…
I mentioned that the New York AG is looking into the Deloitte hack.