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Accounting News Roundup: Short Tenures and Obvious Scams | 08.01.17

Posted on by Caleb Newquist
accounting-news-scaramucci-short-tenure-honolulu-texting

No one’s texting. Incredible.

Short tenures

You see it every year — one or two new employees at a Big 4 firm flame out after two weeks or a few months on the job. This usually manifests in one of two situations:

  1. The new employee realizes he or she has made a big mistake.
  2. The firm realizes it made a bad hire and it’s evident immediately.

In either situation, people feel conflicted. In Situation #1, the overwhelmed person wants to meet some arbitrary milestone in public accounting (e.g. 2 years) because that’s the rumored average tenure for new employees. In Situation #2, the firm wants to give this person a chance but knows that it’s probably pointless.

This is all on my mind because, like most things these days, the political reality we’re all living in serves as a reminder that whatever you’re experiencing, it’s probably not as chaotic as this:

John F. Kelly, President Trump’s new chief of staff, firmly asserted his authority on his first day in the White House on Monday, telling aides he will impose military discipline on a free-for-all West Wing, and he underscored his intent by firing Anthony Scaramucci, the bombastic communications director, 10 days after he was hired.

This is remarkable since even the most overwhelmed, harried associates earn at least two paychecks before they get asked to leave.

SEC enforcement

Sometimes I can’t tell if financial crimes are intended to be obvious or if they’re simply brazen to the point of stupidity. The SEC issued a press release yesterday that serves as a good example:

The Securities and Exchange Commission today filed charges to stop an alleged ongoing fraud by a Massachusetts businessman misusing investments intended for the development of cancer diagnostic tests to instead pay personal expenses and fund his fiancée’s restaurant businesses.

According to the SEC’s complaint, Patrick Muraca established two pharmaceutical development companies and raised nearly $1.2 million by representing to investors that their money would be used to develop products to detect cancer and other diseases. The SEC has traced the flow of investor funds into Muraca’s personal bank account and alleges that at least $400,000 has been used to pay rent for the restaurants and fund other purchases by Muraca, including payments to a casino, automotive shop, and cigar shop.

Let’s give Muraca credit — at least the fiancée’s restaurant business is an actual business. Still, he didn’t try that hard to hide the fact that he wasn’t running a pharmaceutical development company:

The SEC alleges that investors were never informed of the alternative uses of their investments in NanoMolecularDX LLC and MetaboRX LLC, including the fact that Muraca characterized the general character of the businesses as “Serving Food; Restaurant” in separate documents he has filed with the Commonwealth of Massachusetts to do business in the state.

For once, I’d like a criminal to take the absurdity a step further. Instead of raising money under the pretense of CANCER SOMETHING SOMETHING, and then investing it a restaurant, why not use the money to buy a giant Woody Woodpecker balloon? Or foam cowboy hats? They all have about the same chance to generate a return.

Previously, on Going Concern…

Another amusing SEC Twitter account to make regulators more fun. In Open Items, someone is, “Looking for advice on staying agile while meeting ITGC controls.”

In other news:

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