Tuesday, October 1, 2013

Lance Armstrong Investigation: I can't believe it's come to this....

Here we are, nearly three and a half years after Floyd Landis's first confession came out and I posted that I was 99.9% confident that pro cyclists had been doping for the past 15-20 years. I ended that first post by saying "Sadly, what would be surprising to me is if someone who is dominating pro cycling such as Alberto Contador was actually not doping!" Of course, soon after that, Alberto failed a doping test in the Tour de France and was suspended from racing.

Since that first post, there have been many posts to follow (this makes number 150 with the label of Lance Armstrong Investigation) and

Saturday, September 28, 2013

Scientific Research Fraud is on the Rise--Especially in China

In accounting research, we had the first retraction in decades in the past year. Soon after the retraction, evidence was provided suggesting that the retracted article reported some very suspicious claims that were essentially impossible. The author(s) never provided a rebuttal to the claims and the author who claimed to obtain the amazing data for the article suddenly retired and is reportedly very hard (or impossible) to contact. While the retraction never stated that the article was a fraud, it all seems very suspicious...

In the harder sciences, The Economist reported this week that there has recently been a sudden uptick in fraudulent scientific research, especially in China. Here is a taste of the article:

Tuesday, August 27, 2013

Monitoring Matters

In a surprising development (to no one familiar with auditing or internal controls), it turns out that monitoring can actually make a difference in the way people behave!

Actually, a field study focused on monitoring and described in the NYT provides some interesting insights. While it isn't really surprising that monitoring focused on deterring theft actually deterred theft, what is less expected is that anti-theft monitoring actually increased productive efforts by employees. From the NYT article:

Monday, July 8, 2013

Fraudster gets Scammed

I always like it when I read about a fraudster who gets scammed. This reminds me of the groups who are dedicated to wasting time of the internet scammers. One group goes by ScamBaiter and another is 419 Eater. They basically waste time of scammers who send out the emails to people saying they're going to send them huge amounts of money if they will help them out. Well, I read about another scammer who got scammed today. This time, it involved a local power company in Utah. A scammer had notified a cookie company that they needed to pay their bill or their power would be turned off. You can read what happened next here....

Monday, June 24, 2013

Enron CEO, Jeff Skilling, Received Shorter Jail Sentence

Various news agencies reported last week that a federal judge reduced Jeff Skilling's prison sentence by about ten years. If Skilling is found to be on good behavior and take a drug and alcohol rehabilitation course, he could be out of prison within four years. Part of the agreement is for Skilling to quit trying to get his conviction overturned. This new ruling also frees up some money from Skilling's estate that will be used to compensate victims of the fraud, including former Enron employees who lost their retirement when the company went bankrupt. Diana Peters is one of many former Enron employees who was at the latest trial and is quoted as follows:
"I pray that your decision is to give Jeff Skilling the maximum sentence for his crimes." 
Fraud always ends in a sad story as innocent victims deal with the aftermath by experiencing serious devastation, suffering and heartache. My heart goes out to these former Enron employees who had nothing to do with the crazy games Skilling, Fastow, Lay and others were playing...

Monday, June 17, 2013

Whistleblowing is Paying Off

The WSJ reported this week that the SEC has handed out it's second ever Dodd-Frank award for whistleblowing. the article says that the SEC expects more awards in the future. Here's a quote...

Monday, June 3, 2013

City Governments Committing Financial Statement Fraud

The Wall Street Journal reported recently that city governments in Pennsylvania, Florida, California, New Jersey and Illinois are increasingly being charged with financial statement fraud in their bond offerings. In the case of Harrisburg, Pennsylvania, the SEC stated that:
...this is the first time the (SEC) has "charged a municipality for misleading statements made outside of its securities disclosure documents."
According to "Anthony Figliola, a vice president at Empire Government Strategies, a Long Island-based consulting firm to local governments. 'Harrisburg is the tip of the iceberg.'"

Sunday, June 2, 2013

Lance Armstrong Investigation: Betsy Andreu & Bill Bock Interviews

This short video discusses some aspects of the fraud in pro cycling that was perpetuated by Lance Armstrong. Betsy Andreu and Bill Bock (USADA General Counsel) spoke at UT Austin recently and this video was produced. They speak of omertà, truth, and how one person with moral courage can make a difference. Check it out, it's worth the four minutes...

Friday, May 31, 2013

SEC to Focus more on Financial Reporting Fraud

According to the Wall Street Journal, the SEC is ready to get back to work looking for financial reporting fraud. After the mortgage meltdown, the article states that the SEC turned its attention to cases related to the financial crisis and took its eye off of fraudulent financial reporting. Interestingly, the article identifies one new tool that the SEC plans to use to identify fraudulent financial statements...

Wednesday, May 15, 2013

Former Enron CEO Working a Deal to Get out of Prison

Mainstream news sources are saying that Jeffrey Skilling, former Enron CEO, is working a deal to cut his prison sentence by more than a decade. The reports say that...

Saturday, May 11, 2013

Is Fraud Committed by a Spiritual Advisor and an Accountant One and the Same?

Yes according to the Manhattan district attorney who prosecuted a fortune teller for committing fraud. Here's a quote from the NY Times:
“Larceny is larceny, no matter what form it takes,” Cyrus R. Vance Jr., the Manhattan district attorney, said in a statement. “Fraud by a spiritual adviser is no different than fraud committed by an attorney, an accountant or any other person who gains an individual’s trust in order to steal from him or her.”
If you are interested in what this fortune teller did, I'd check out the short article on the NY Times... I personally think the commonalities in various forms of fraud (such as gaining trust) are informative.

Ernst & Young Corruption Survey Results

Ernst and Young surveyed over 3,000 employees from 36 countries in Europe, the Middle East, Africa and India and found that a large percentage are aware of fraud in their organizations. The percentage admitting they knew of fraud seems to increase as you move up the management ladder of the organization. For example, 42% of board members and senior managers admitted to knowing about financial reporting irregularities. Apparently they admitted that either sales or costs had been manipulated...

Before you're tempted to dismiss this as due to corruption in the under developed nations, it turns out that while the rates are much higher in the third world, even highly developed countries in Europe report significant amounts of fraud (including financial reporting fraud) is going on in their companies. My guess is that the US is probably not as good as the best European nations

So much for fairly stated financial statements, not to mention, bribery and other forms of corruption...

Thursday, March 7, 2013

Justice Department Admits They're Soft on Fraud

As I've said in several posts in the past, including this one, the Justice Department under this administration is very soft on prosecuting fraudsters. As a result, the key players who caused the mortgage meltdown have been essentially given a "get out of jail free" card. Interestingly, Eric Holder, head of the Justice Department has even admitted that they don't prosecute fraudsters. In Holder's view, doing so would hurt the economy! Amazing!! This definitely explains a lot... Here is a great write up of this absurd and twisted logic by Barry Ritholz...It's pretty short and well worth reading.

Friday, March 1, 2013

The Real Winners in the Lance Armstrong Investigation: His Attorneys

Photo taken from Forbes.com
In most fraud cases, the real winners are the attorneys. This is definitely looking to be the case  with Lance Armstrong since he is getting sued left and right these days. Not only has the US Justice Department joined in Floyd Landis's suit claiming Lance defrauded the US Postal Service but numerous other lawsuits and legal actions are being filed daily. While the suit by the US Postal Service could, in theory, add up to over $100 million, these other suits could also add up to real money too, especially when you consider all the legal fees his attorneys must be charging him. For example, I learned about the following two new lawsuits today...

Friday, February 22, 2013

Lance Armstrong Investigation: Fed to Join Landis in Suing Lance, Weisel and Stapleton

This is hot off the press and, from what I can tell, was first published by the Wall Street Journal. Amidst speculation in the past few days that the Department of Justice was not going to join in the whistleblower lawsuit filed by Floyd Landis, the WSJ is saying they are going to join in. This is bad news for Lance, Thom Weisel and Bill Stapleton since Lance has now stated publicly that he was doping. On the other hand, this is good news for Floyd Landis who could end up a multi-millionaire as a result of this lawsuit. Here are some key fraudbytes from the WSJ article:

Wednesday, February 6, 2013

Lance Armstrong Investigation: Criminal Charges May Be in the Works

According to CBS News, federal investigators are considering criminal charges against Lance Armstrong. The main charges being considered are obstruction of justice, intimidation and witness tampering. I'd say intimidation is his specialty but the others are right up his alley too.

This investigation comes after the original criminal investigation was suddenly dropped a year ago by the now, infamous, Andre Birotte. Birotte had a few words about his investigation saying that he basically stands by his decision to drop it.

Here are some excerpts from CBS News:

Friday, January 18, 2013

My Analysis of the Lance Armstrong-Oprah Winfrey Interview

Photo taken from WSJ.com
I was traveling last night and was unable to watch the interview last night but I read some articles on what happened in Lance Armstrong's interview by Oprah Winfrey including one that gives all his responses on the Wall Street Journal. It's interesting reading for sure. Here are some thoughts:

Tuesday, January 15, 2013

Feds Joining Suit Against Lance Armstrong

CBS News reported yesterday that the federal government is considering joining in Floyd Landis's lawsuit against Lance Armstrong which alleges that he defrauded the government due to his doping while receiving $30 million in sponsorship funds from the US Postal Service. My understanding is that the government could receive treble damages for this lawsuit which would amount to $90 million. Lance would not be the only one to be hurt by this.

A tweet this afternoon by CBS News says that they have learned that Lance offered to settle with the government for $5 million and that he offered to be a cooperating witness in a federal investigation. The tweet claims that the Department of Justice turned down both offers.

If this is true, it suggests that the federal government will be joining in the lawsuit against Lance and they expect to go for significantly more than $5 million. The saga continues...

WADA Says Lance is not in Charge!

Just when Lance Armstrong probably was hoping he could show he is cooperating with USADA and WADA to get them to cut him some slack, WADA let's him know that he isn't in charge! Check it out at SportsIllustrated.com. Here is the heart of it:

Will Lance's Confession be Anticlimactic?

I've been thinking that saying Lance's confession will be anticlimactic will be a major understatement. I had decided that I won't even try to watch it come out live because it seems like a waste of time. However, yesterday, the NY Times published an article suggesting that Lance Armstrong's confession may be interesting in that it could involve testifying against many top-level officials in cycling such as Hein Verbruggen and Pat McQuaid of the UCI and Lance's former partner at Tailwind Sports, Thom Weisel. Here are some key excerpts from the Times article:

Saturday, January 12, 2013

Questions for Oprah to Ask Lance

We've all been hearing that Lance Armstrong is set to finally admit to doping and he has picked Oprah Winfrey to interview him when he admits it. NY Daily News published an article with questions that Betsy Andreu would like Oprah Winfrey to ask Lance Armstrong when Oprah interviews him at his Austin mansion on Monday. Betsy has some doozies that Oprah is sure to never ask. You can bet that if there was even a chance that Oprah would ask some of these questions, Lance would never agree to be interviewed by her. Here are Betsy's questions followed by two of my own...

Tuesday, January 8, 2013

Lance Armstrong Allegedly Bribed USADA

60 Minutes is going to air a segment on Lance Armstrong on Wednesday, January 9th, at 10 pm Eastern. The CBS News website states that they will report that someone representing Lance offered USADA a $250,000 "donation" in 2004. Travis Tygart, USADA CEO, is quoted as saying "We had no hesitation in rejecting that offer."

I suppose the truth about Lance will trickle out for years to come...It definitely makes a good case study for anyone out there teaching about fraud, corruption and organized crime. It makes me wonder if Lance's real name ends in Gambino or Bonanno...Maybe Armstrongo...

Friday, January 4, 2013

Lance May Admit He Doped

If this report is accurate, I will have to eat my words. I never thought Lance Armstrong would be able to do a complete 180 and admit to doping.  I even predicted he would go to his grave denying. However, according to the NY Times, he is considering confessing. Why would he do this now you ask? Here is what a Sports Illustrated blog has to say...

Wednesday, January 2, 2013

Opportunistic Fraud: Newtown Tragedy

This probably shouldn't come as a surprise to regular readers of this blog, but it didn't take long for someone to attempt to exploit the Newton tragedy for her own gain:

Woman Posed as Newtown Victim's Aunt in Fraud Scheme (NYT)