27 Oct 2019
0

Real Estate Money Laundering Schemes

Roger Rossmeisl, CPA
Fraud Briefs
Real Estate Money Laudering Schemes

Money laundering is the process by which criminals transform their ill-gotten gains into legitimate-looking funds. It’s widespread and wide-reaching, making it a significant corrupting influence on financial systems, governments and certain professionals. Criminals use many different types of businesses to “wash” their dirty money, but some are more useful than others. Real estate money laundering is a favorite industry, given its high dollar value and availability of inventory. Money Laundering: 3 steps The typical money laundering scheme involves three phases: Placement: Here the proceeds of criminal activity enter the financial system. Layering: This is where the money launderer conducts a series of transactions to distance the money from its criminal source. Integration: Finally, the criminal uses the money, which now appears legitimate and divorced of any crime. Executing money laundering operations effectively is critical if...

20 Oct 2019
0

Connection Between Fraud and Geometry

Roger Rossmeisl, CPA
Fraud Briefs
Connection Between Fraud and Geometry

What is the connection between fraud and geometry?  Fraud experts have long suggested that the presence of three conditions, known as the “fraud triangle,” greatly increases the likelihood that an employee will commit fraud. Over the years, this conceptual framework has been expanded to become a “fraud diamond.” Understanding these models can help you protect your business. Classic shape The classic fraud triangle consists of: Pressure An individual experiences some type of pressure that motivates the fraud. Pressure can come from within the organization — for example, pressure to meet aggressive earnings or revenue growth targets. Or, the pressure could be personal, such as the need to maintain a high standard of living or pay off debt from credit cards, medical bills or gambling. Rationalization Perpetrators must be able to mentally...

16 Oct 2019
0

Health Care Fraud is Alive and Well in America

Roger Rossmeisl, CPA
Fraud Briefs
Health Care Fraud is Alive and Well in America

Even if you haven’t heard much about it lately, know this: Health care fraud is alive and well in America. Here’s a roundup of recent stats, law enforcement initiatives, common fraud schemes and how you can help prevent these crimes. Just the facts During fiscal year (FY) 2018, the Health Care Fraud and Abuse Control Program (a government initiative that coordinates federal, state, and local law enforcement) won or negotiated over $2.3 billion in health care fraud judgments and settlements. During the same period, the Department of Justice (DOF) opened 1,139 new criminal health care fraud investigations. In addition, the DOJ filed charges in 572 criminal cases. What does this mean for you? The National Health Care Anti-Fraud Association estimates that health care fraud costs the nation at...

06 Oct 2019
0

Beware Pump and Dump Schemes

Roger Rossmeisl, CPA
Fraud Briefs
Beware Pump and Dump Schemes

When the value of a stock skyrockets, its investors may think they’ve hit the jackpot. But if the stock in question is part of a “pump and dump” scheme, investors may, in fact, lose their shirts. Here’s how to avoid getting taken by this type of investment fraud. Beware pump and dump schemes! A penny for your stocks In the typical pump and dump scam, a fraud perpetrator buys shares in an inexpensive, relatively illiquid stock (often referred to as a “penny” stock) whose price will react dramatically when trading volume increases. Then the crook makes false or misleading statements to encourage people to sink their savings into the stock and drive up its price. When it hits a certain dollar amount, the fraudster sells, locking in...

01 Oct 2019
0

Catching Revenue Recognition Fraud

Roger Rossmeisl, CPA
Fraud Briefs
Catching Revenue Recognition Fraud

Early revenue recognition has long accounted for a substantial portion of financial statement fraud. By recording revenue early, a dishonest business seller or an employee under pressure to meet financial benchmarks can significantly distort profits. Fortunately, fraud experts have tools for catching revenue recognition fraud. Multiple methods Early revenue recognition can be accomplished in several ways. A dishonest owner or employee might: Keep the books open past the end of a period to record more sales, Deliver product early, Record revenue before full performance of a contract, Backdate agreements, Ship merchandise to undisclosed warehouses and record the shipments as sales, and Engage in bill-and-hold arrangements. In this last scenario, a customer agrees to buy merchandise but the company holds the goods until shipment is requested. It and any...

24 Sep 2019
0

Fight Fraud Actively for Maximum Effect

Roger Rossmeisl, CPA
Fraud Briefs
Fight Fraud Actively for Maximum Effect

When it comes to reducing fraud loss and duration, companies should fight fraud actively. Active detection methods (such as surprise audits or data monitoring) are far more effective than passive methods (such as confessions or notification by police). This was a major finding of the latest Association of Certified Fraud Examiners (ACFE) Report to the Nations: 2018 Global Study on Occupational Fraud and Abuse. Yet many companies fail to use active methods to their full potential. Active vs. passive detection The ACFE study found that frauds detected using passive methods tend to last longer and produce larger losses than those detected by such active methods as: IT controls, Data monitoring and analysis, Account reconciliation, Internal audit, Surprise audits, Management review, and Document examination. These active methods of detection...

09 Sep 2019
0

Your Phone May Be a Fraud Risk

Roger Rossmeisl, CPA
Fraud Briefs
Your Phone May Be a Fraud Risk

As more people use mobile phones, more fraud perpetrators target these devices. According to Javelin Strategy & Research, between 2017 and 2018 the number of fraudulent mobile-phone accounts opened grew by 78%. Schemes in which thieves open a phone account in your name and use it to access your bank account, sign up for credit cards and gain access to personal information are only some of the recent fraud trends. Fraudsters have plenty of ways to defraud consumers through their phones.  It's clear . . . you're phone may be a fraud risk. Your phone may be a fraud risk: Why they’re vulnerable One of the reasons mobile phones are so vulnerable is that phone security hasn’t kept pace with traditional computer security. Mobile devices rarely contain...

26 Aug 2019
0

Assess Fraud Risk Before Experiencing Losses

Roger Rossmeisl, CPA
Fraud Briefs
Assess Fraud Risk Before Experiencing Losses

If you’re like most business owners and executives, you may not actively search for fraud risks — until there’s an incident and you’re facing possible losses. Although publicly traded companies must conduct fraud risk assessments, privately held businesses don’t have the same requirements. Nevertheless, reviewing internal controls for gaps that might allow crooks to slip through is recommended for all companies. Assess fraud risk before experiencing losses: 4 major ways A comprehensive risk assessment might start in the areas where fraud is most likely to happen, such as accounts payable, purchasing and IT. But don’t stop there. If you close a door in only one department, those bent on fraud will find openings elsewhere. Look at your internal controls in the same way a dishonest employee would...

25 Aug 2019
0

Background Checks on Prospective Employees

Roger Rossmeisl, CPA
Fraud Briefs
Background Checks on Prospective Employees

Background checks don’t inoculate companies against occupational fraud and other criminal acts by employees. After all, many thieves have never been caught and, therefore, have no criminal background.  But conducting background checks on prospective employees remains critical. If you’re hiring an accounting staffer, for example, you want to know if that person is deeply in debt and has an incentive to cook the books. If you’ll be issuing a company car, you probably don’t want to hire someone with a slew of moving violations. Basic information At a minimum, ask former employers to confirm dates of employment, job titles and other resumé information, and then ask about the applicant’s work habits and reliability. Many employers are unwilling to divulge more than factual information because they fear lawsuits from...

19 Aug 2019
0

The Greatest Corporate Espionage Risk

Roger Rossmeisl, CPA
Fraud Briefs
The Greatest Corporate Espionage Risk

It’s a federal crime to steal trade secrets.  However, that doesn’t stop thieves from successfully making off with billions of dollars in intellectual property (IP) annually. Companies may work hard to prevent outsiders from infiltrating their organizations, yet the greater danger is generally internal. Here’s how to identify your business’s corporate espionage vulnerabilities and prevent employees from taking advantage of them. The greatest corporate espionage risk: bad and good intentions The greatest corporate espionage risk is internal.  Employees with access to trade secrets may take that information with them when they leave your company.  Or they can pad their paychecks by selling information while still employed. But not all employees who share IP have bad intentions. In some cases, they may not realize they’re passing it on....

ROGER ROSSMEISL, CPA

Kho & Patel CPAs
160 E. Arrow Highway
San Dimas, CA 91773

(714) 325-0442
roger@khopatel.com

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