First, if you hate your inventory counts, can you only imagine what it’s like to have to keep tabs on tank after tank of frozen bull semen? Count your blessings, people.
A woman in Ohio pleaded not guilty last week to stealing a tank of bull semen valued at $110,000 from her employer. Authorities say 45 year-old Karen Saum planned to use the semen to extort money out of her employer – the rightful owner of the sperm – to start her own business. I can only imagine what kind of business she planned on starting with the seed money.
Detectives said a tip led them to Saum’s garage, where they found the stolen semen. Just a tip.
Det. James Hollopeter told WHIO TV that Saum used her knowledge of the company’s internal workings to lift only the high quality semen. “She knew where this semen would have been located,” he said. “It was actually locked in an interior closet because it was more valuable that some of the other that they had out.”
Right. Because everyone knows you don’t leave the good shit lying around where any old creepy criminal can get their paws on it.
Next week I’ll be attending the ACFE Fraud and Conference Exhibit in San Diego where many forensic and fraud sleuths will be enjoying each other’s company and one-upping each other with stories on how many criminals they’ve busted over the years. It looks like you can still register so if my presence is the dealmaker for you, then I suggest you get on this.
John Walsh, the host of America’s Most Wanted will be giving a keynote although I’m a little confused as to what he’ll share with people that comb through ledgers for a living. Anyway, if you want to get in touch with me at the conference or while I’m in San Diego, you can email me, DM or @ me on Twitter or shoot me a message on LinkedIn or Facebook. I promise I’ll respond at some point especially if you offer to drive me to the beach or buy me an old fashioned in the Gaslamp Quarter.
And if you’re not in San Diego or attending the conference, don’t worry, I’ll be on a regular posting schedule so there will be the regular dose of inflammatory nonsense coming your way.
A hospital in Winnipeg is suing Deloitte after an ATM scam went undiscovered for over ten years. Luckily some vigilant RN, janitor or cafeteria worker (it’s not clear from the article) noticed something amiss and alerted the proper authorities.
Police arrested a long-time hospital employee last year after she allegedly skimmed $1.5 million from automated teller machine (ATM) deposits between 2000 and 2010.
According to a lawsuit filed last week, the fraud was uncovered by hospital staff, not the auditor. The lawsuit accuses Deloitte & Touche of preparing financial statements not in accordance with “generally accepted accounting principles” and “materially misleading” the hospital about its financial position.
“MHC says that D & T owed it a duty in contract and owed it a duty of care not to act negligently or make negligent misrepresentations to MHC and to ensure that cash and liquid assets as reported in the financial statements were not materially misstated.”
According to the lawsuit, a former finance clerk deposited Worker’s Compensation Board cheques into the hospital operated ATM, understated the amount and pocketed the difference.
All this trouble and no one was even taken hostage. Not good, Green Dot.
Misericordia Health Centre files suit against auditor [Winnipeg Sun]
In what might be a lagging indicator of recession-spawned misdeeds, the percentage of reported corporate frauds compared with all other reported incidents increased to 20.3% in the first quarter of 2011, a rise of more than 60 basis points from the previous quarter, according to data from 1,000 organizations worldwide. Of the 30,000 ethics- and compliance-related reports from people at those organizations in the first quarter, more than 6,100 concerned accounting or auditing irregularities, embezzlement, kickbacks, and other forms of fraud. [CFO]
Stephen Siddell’s dishonesty led to 16 people losing their jobs while he and his wife, Louise Siddell, took luxury foreign holidays. They even posted photographs of their stay in a six bedroom villa in Cyprus on Facebook boasting, “because we’re worth it”. Liverpool Crown Court heard the couple had lock-up garage in Bromborough, which was an “Aladdin’s cave” full of their expensive furniture and designer goods. 24-year-old Louise Siddell had also used their ill-gotten gains to pay for jewellery and breast enhancement. [Wirral Globe]
Deroy Murdock seems to feel that the government should revisit its accounting practices since it appears government accounting is little more than legal fraud. Obviously he has absolutely no idea how accounting really works or he’d call the entire thing fraudulent (I mean, let’s be real, it is and everyone knows it), so let’s humor his opinion for a moment and consider government accounting.
Rep. John Shimkus (R., Ill.) grilled Health and Human Services secretary Kathleen Sebelius about this before the House Energy and Commerce Subcommittee on Health. He wondered how, in essence, the Obama administration could move $500 billion from its left pocket (Medicare) to its far-left pocket (Obamacare) and somehow finance $1 trillion worth of Medicare and Obamacare.
“Your law cuts $500 billion in Medicare,” Shimkus reminded Sebelius at a March 3 hearing. “Then you’re also using the same $500 billion to say you’re funding health-care [reform]. Your own actuary says you can’t do both.”
“So,” the eight-term congressman continued, “are you using it [the $500 billion] to save Medicare, or are you using it to fund health-care reform? Which one?”
Secretary Sebelius confessed: “Both.”
“So, you’re double-counting,” Shimkus replied.
“The same dollar can’t be used twice,” observed Health Subcommittee chairman Rep. Joe Pitts (R., Pa.). “This is the largest of the many budget gimmicks Democrats used to claim Obamacare would reduce the deficit.”
As any college business major knows, such double counting would earn a big, fat F on an accounting final. Far worse, this is illegal.
Obviously Joe Pitts is not at all familiar with how accounting works. The funny part, as Murdock points out, is that the SEC does not consider non-GAAP financial statements to be anything but misleading and inaccurate. It’s a good thing the federal government won’t be trying to file an IPO any time soon.
Financial statements filed with the Commission which are not prepared in accordance with generally accepted accounting principles will be presumed to be misleading or inaccurate.
Question: is there a particular reason “generally accepted accounting principles” is not capitalized? Because GAAP and gaap are two different things, one of which is a set of rules (not principles, no matter what James Kroeker may believe) while the other is basically a bunch of bullshit that we call “accounting” and agree is OK. Sort of like Don’t Ask Don’t Tell for financial statements.
Maybe! David Friehling was supposed to be sentenced last week but apparently it got pushed back again.
On November 3, 2009 Friehling pleaded guilty to various charges ranging from securities fraud to filing false reports to the SEC. He was to be sentenced for these crimes in February 2010 but because of his cooperation with the government, that was postponed until September 2010….that was then postponed until March 15, 2011….now that has been postponed until September 16, 2011. […] So what does a guy know who claims he did not know a lot? Is Friehling working with the Feds and Irving Picard (Madoff Trustee) on strong-arming Mets’ owners Saul Katz and Fred Wilpon? I doubt it. Can Friehling put a finger on one of the Bernard Madoff family members, who have yet to be charged criminally? Maybe.
Of course this could mean that Friehling also knows the location Jimmy Hoffa, the true identities of the participants in the Kenneday assassination and the Coke formula. Oh wait, everyone knows that one now. ANYWAY, the investigators may just be enjoying the anecdotes and would hate to see the poor guy shipped upstate. But most likely, he’s trying to save his ass from a sentence in FPMITAP like his #1 client received.
Giving Friehling the benefit of the doubt, he is cooperating to do the right thing now but he is also trying to get his sentence reduced in the process. With a fraud so large, I do not see how the Federal Sentencing Guidelines keep this guy in prison for less than 20 years.
Madoff Accountant — Now Auditing To Save His A#$ [Forbes/Walter Pavlo]
A report in Bloomberg apparently thinks so.
From the ‘Berg:
HSBC Holdings Plc (HSBA), Europe’s biggest lender, was warned twice by auditors that entrusting as much as $8 billion in client funds to Bernard Madoff opened it up to “fraud and operational risks.”
KPMG LLP told the London-based bank about the risks in 2006 and 2008 reports. The firm was hired to review how Madoff invested and accounted for the funds, for which HSBC served as custodian. KPMG reported 25 such risks in 2006, and in 2008 found 28, according to copies of the reports obtained by Bloomberg News.
Okay l there for two before everyone gets too excited. Let’s just get one thing straight right off the bat – KPMG probably leaked these reports to Bloomberg (I only say probably because I don’t know for an absolute fact but – COME ON – who else?). Secondly, even though the report says “warned twice by auditors” this was not an audit performed by KPMG; it was “[a] review how Madoff invested and accounted for the funds.” What exactly that entails isn’t clear; possibly agreed-upon procedures? Anyway, here’s what the story says were in the two reports:
In the list of risks in KPMG’s report, number 2 was that “BLM embezzles client funds,” using the initials as shorthand for Bernard L. Madoff. To prevent it, KPMG recommended in both 2006 and 2008 that HSBC “establish a process to monitor monthly statements” and reconcile them with contributions from clients.
The 2006 report listed fraud risk number 5 as “client cash is diverted for personal gain” and risk number 18 as “trade is a sham in order to divert client cash.” It went on to say there were concerns “Madoff LLC falsely reports buy/sell trades without actually executing in order to earn commissions” and “BLM falsifies accounting records which are provided to HSBC.”
KPMG reviewed samples of trades and account statements for both its 2006 and 2008 reports to test the risks and detected no discrepancies, the reports said. Even so, the firm suggested HSBC “consider undertaking a periodic review which includes tracing a sample of client trades back to the bulk order.”
After reading that you might think that KPMG hit a home run but what if the “risk factors” listed are just standard boilerplate risks that are included in every single one of these reports? If that’s the case, then KPMG was slapping in the applicable information as it related to BLM, handed it over and collected a nice fee. Maybe KPMG was all over this but there’s no way to know because A) Bloomberg didn’t republish the reports in full; B) Other KPMG teams close to Madoff are getting their asses sued which means they either ignored the risks or couldn’t get a hold of these two reports and C) HSBC throws KPMG under the bus, essentially saying that they were duped by Berns:
HSBC confirmed hiring KPMG in 2005 and 2008 to review Madoff’s firm, adding it now believed Madoff had tricked the auditors. “It appears from U.S. government filings that Madoff and his employees foiled these reviews by, among other things, providing forged documentation to KPMG,” the bank said in an e- mailed statement.
“KPMG did not conclude in either of its reports that a fraud was being committed by Madoff,” HSBC said. “HSBC did not know that a fraud was being committed and lost $1 billion of its own assets as a victim.”
So did KPMG warn HSBC or not? This Bloomberg story seems to think so but there are is a lot of evidence that KPMG was just as clueless as as everyone else who didn’t walk – or run away screaming, arms flailing – away from Madoff.
For Michelle Lynn Shelton, who is accused of taking $760k of her employer’s money, the answer is “NOT LONG!”
Detectives launched their investigation in December after another accountant, who was filling in while Shelton was away from work, discovered the apparent transfer of a large amount of money between two personal bank accounts, police said. Police said the company conducted an audit and contacted police. Shelton started working for the company in June 2007 and the evidence suggested she began diverting funds two months later, police said.
Allegedly! Admittedly, we’re a little behind on this one but you know how it is. Anyway, your Ponzi scheme du jour comes by way of the great Northwest, where Frederick Darren Berg, who seems to have some sort of charter bus fetish, is being prosecuted for orchestrating the largest Ponzi scheme in Washington.
When he was at the University of Oregon in the 80s, Berg allegedly helped himself to his fraternity’s cash to fund a “charter bus venture” and then pleaded guilty to a check-kiting scheme with another bus company a few years later. After those nickel and dime failures, Fred was done messing and decided to really do this:
The 48-year-old founder and chief executive officer of Meridian Group is accused of defrauding hundreds of more than $100 million invested in his Seattle company’s mortgage funds between 2003 and 2010.
Prosecutors allege Berg spent tens of millions on a ritzy lifestyle, including a posh Mercer Island mansion, two yachts and two jets.
But investigators say Berg diverted a bigger chunk, estimated at $45 million, to create a luxury bus line that served tour groups and sports teams, including the Seahawks and the Oregon Ducks.
And we all know what happened to mortgage funds, don’t we? Okay, then. So your next question probably is, “how did the auditors miss this one?” Well!
Berg used some simple stratagems to mislead auditors at Moss Adams, a large Seattle-based firm, which produced audits for a trio of Meridian funds for three years.
The standard procedure is to send out confirmation letters to a random sample of mortgage borrowers and compare what they say they’ve paid with what the lender’s records say.
But Moss Adams didn’t notice most of the confirmations it sent out were going to post-office boxes and coming back with the same handwriting, said [bankruptcy trustee Mark] Calvert.
Berg had rented more than 20 P.O. boxes and had the mail forwarded to another address in Seattle. He was replying to the auditors’ queries himself, according to the indictment.
[Cringe] Oops. To be fair, auditors can’t be expected to be hand-writing experts…can they? Mr. Calvert seems to think so and told the Seattle Times that he plans on suing Moss Adams and Deloitte for their roles. Oh, right! How do they fit in? To wit:
Berg also hired Deloitte Financial Advisory Services to do a “valuation report” on funds V through VII, meant just for Meridian management. Meridian, however, used it to reassure investors, touting Deloitte’s conclusion “the sample mortgage pool appears to be of higher quality and better performance” than comparable loan portfolios.
But Calvert said Deloitte’s supposedly random sampling “was not completed as outlined” in its agreement with Meridian. He declined to be more specific.
Moss Adams and Deloitte would not comment on their work for Meridian.
Golf is probably the furthest thing from most of your minds right now because a) it’s somewhere between 0 and 20 degrees Fahrenheit outside or b) you hate golf. For the latter, you can continue reading in so you may engage in laughing and pointing. For the former, despite it being the offseason in most parts of this fair land, a report from the Manchester Evening News should cause you to temper down your love for a
good walk nice spin in a cart spoiled.
A golf fanatic accountant who stole thousands from his employers and then funnelled it into his ailing club has been jailed. David Beech, 59, showed a ‘bizarre misplaced sense of loyalty’, when he siphoned over £70,000 from his bosses into struggling Oldham Golf Club, where he was treasurer.
But Beech, of Holly Grove, Chadderton, was rumbled when a company auditor went through the books. He pleaded guilty straight away and repaid £51,262 of the cash back although £19,300 was still unaccounted for, Sheffield Crown Court heard. At court it also emerged he received an 18-month suspended sentence 23 years ago for stealing from another employer. Defending, Robert Smith said Beech had demonstrated a “bizarre, strange, misplaced sense of loyalty” to the golf club. “It had a negative impact on the club in that they were under a false impression as to their own finances,” he said
Typical reaction of the members:
About a year ago at this time, we just started learning about Sue Sachdeva, the convicted embezzler extraordinaire of headphone cobbler Koss. It took a little less than a year for everything to get sorted out including quite the inventory of