Fraud News Update 11.15.16 – This week’s edition of the Fraud News Update features: Gold Theft (a cheeky crime), The HealthSouth Turnaround (props to the CEO), Sandy Fraud (still rockin 4 years later), Corporate Ethics (karma isn’t enough) and Allegations of Fraud At The Clinton Foundation (one financial expert’s opinions).
As leaders in the fraud consulting arena, read on for more topical information and our insights, observations and unique commentary on some of the weekly fraud news stories.
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A “Cheeky” Crime
There are many ways to steal…but most wouldn’t immediately think that “turning the other cheek” is one of them.
However, that’s exactly what happened in Canada as a former Royal Canadian Mint employee, suspected of hiding gold pucks in his (insert bodily part here), was convicted of stealing gold from the Mint.
“Butt” (pun intended) wait, there’s more. This was a totally circumstantial case with no direct evidence showing that the employee committed the theft. This proves three things:
- Employee’s who are motivated to steal will come up with all sorts of creative methods to do so.
- Convictions can still be had in circumstantial cases lacking strong evidence of the theft.
- Don’t deposit the proceeds from criminal activity back in your bank – AML training makes teller’s suspicious!
The HealthSouth Turnaround
HealthSouth’s 2002 corporate implosion was one of the era’s many huge fraud meltdowns which are now classic case examples of corporate greed, misdeeds, lack of control oversight and financial shenanigans.
The former CEO, Richard Scrushy, was originally acquitted of the federal fraud charges related to the HealthSouth debacle but later convicted on other federal charges and sent to prison.
The anti-fraud industry spends a considerable amount of time examining cases where greedy business executives go bad leaving the public, and shareholders, holding the bag. E.g. Enron.
Most businesses like Enron, which suffer this kind of classic fraud implosion, are destined for the scrap yard with little to salvage.
It’s worth noting, however, that more than ten years later, HealthSouth, under CEO Jay Grinney, has changed the culture, implemented a positive control environment and made a remarkable business turnaround.
See how a CEO implemented positive change and kept a sinking ship from going under.
Post Sandy: 4 Years Later Fraud Marches On
Disaster fraud is a real deal and has been featured in the Fraud News Update regularly over the years. Recently, the WSJ highlighted Hurricane Sandy and the devastation associated with it.
Post Sandy fraud charges were heavy in 2016 and are expected to continue strongly in 2017, five years after the event.
Sandy is not unique in this regard. Every time there’s a natural disaster of some sort, the insurance claims pour in, leaving investigators swimming in a sea of fraud (exaggerated or completely staged) among the legitimate claims. Add contractor fraud post event, like the individual featured in the WSJ piece, and it’s Fraud Palooza!
Corporate Ethics – Is Karma Enough?
The answer is “no” and that’s the focus here. The author’s two key takeaways:
- Set the bar high
- Create a strong ethical culture
Couldn’t agree more, as some companies only strive to meet the minimum requirements. The key is to ascertain what the regulatory minimum is and then look for ways to blow the minimums away with a more robust anti-fraud program (policies, processes and procedures).
It’s important for businesses to be “good corporate citizens,” always do the right thing and go above and beyond the minimum required.
Otherwise, it’s a real bummer when one’s Dogma gets run over by their Karma.
Ortel: Clinton Foundation Largest Unprosecuted Charity Fraud in History
The election’s over and the dust is starting to settle. One side won and the others claiming that the FBI Director committed a flagrant foul. But Fraud News Update isn’t political commentary, it’s about stories making the news.
So, along comes financial expert Charles Ortel entering the fraud news fray. Ortel’s alleging that the Clinton Foundation, which is registered as a 501c3 with the IRS, is a fraud.
Charity fraud is not a new phenomenon in this country… it happens all the time. So, the fact that someone is alleging that a high-profile charity is operating fraudulently should surprise no one. Here’s a brief excerpt of what Ortel has to say on usawatchdog.com:
“Clinton Foundation documents omit crucial facts, include false and materially misleading statements, and exclude legally required audits of financial statements for each year of operation, that must be prepared on a consistent basis.” Pretty standard claims in many charity fraud cases.
Are there real charity fraud truths here, which warrant a prosecutor’s attention, or is someone just blowing political smoke? Will there be prosecutions after January 20th? That was “The Donald’s” rhetoric during the campaign but he was referencing the private server scandal. Clearly, this isn’t that.
To be perfectly fair however, “The Donald” has fraud issues of his own to deal with.
Fraud News – The Bottom Line
Fraud – empowering people to break the law. It’s a way of life for some and every fraud has a story. At Fraud Solutions,we’re passionate about helping customer’s mitigate enterprise fraud risk management losses. Being proactive is key, so, follow us each week as we cover the fraud beat with added insights, information and unique commentary on stories making the fraud news.
Those are our insights. What are yours?
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