...Burning Down the House: Mortgage Fraud and the Destruction of Residential Neighborhoods Ann Fulmer March 2010 Burning Down the House: Mortgage Fraud and the Destruction of Residential Neighborhoods Mortgage fraud is bank robbery without a gun. 1 It is a high-yield, 2 low risk enterprise that has been reported in all 50 states, Puerto Rico, Guam, American Samoa, 3 Canada, 4 New Zealand, 5 Australia, 6 and England. 7 In the United States, it is committed by organized international and domestic rings, 8 street gangs, 9 terrorists, 10 drug traffickers, 11 real estate agents, 12 closing attorneys, 13 appraisers, 14 mortgage brokers, 15 The targeted victims distinguish mortgage fraud from predatory lending. In predatory lending cases the borrower is victimized by the illegal practices of the lender or its agents with respect to fees and disclosures relating to the cost of the loan. It is unfortunate that the media, consumer activists, legislators and law enforcement personnel frequently conflate mortgage fraud with predatory lending since it adds unnecessary confusion to an already complex issue and diverts attention and badly needed resources from the fight against true mortgage fraud. 2 The average “take” on a bank robbery is approximately $3,000.00. By contrast, the average straw borrower receives a “cut” of at least $10,000 and the orchestrator’s “take” in a mortgage fraud transaction frequently exceeds $100,000. In a few cases the orchestrator’s take was in excess of $1...
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...Death Fraud: What is it and how to prevent it? Acco 455: Fraud Prevention and Investigation D. Peltier-Rivest November 26, 2013 In 1986, fraudster James Hogue famously stole the identity of a dead infant to conceal his criminal past in order to attend high school while pretending to be an orphan with special backgrounds. Each year, nearly 2.5 million deceased Americans' identities are stolen by perpetrators (Kirchheimer, 2013). Death frauds have affected victims, companies, organizations and society at large in numerous ways. What exactly is death fraud, and how do we prevent it? What is death fraud? Death fraud can be broadly defined as any fraud that involves death but does not involve killing. There are several major types of death frauds: stealing the identity of a deceased person, faking death and faking that a deceased person is not dead. Identity theft A common type of death fraud is that of identity theft targeting dead people. According to the Identity Theft Handbook, during identity theft, criminals acquire key pieces of personal identifying information - such as name, address, date of birth, SSN/SIN etc. - for the purpose of impersonating and defrauding a victim (Biegelman, 2009). Death fraud, then, is a spin on this crime, targeting specifically the identity of deceased individuals who can no longer detect the crime and thus less likely to be caught. There are many ways a fraudster can obtain vital personal information of the deceased...
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...Identify and describe at least two forms of fraud techniques from your research. Include the identity of the government agencies that provide awareness for these types of fraud techniques. Tax fraud is something that seems to be on the rise these days, especially due to those that are completing their returns electronically, which is known as e-filling. With e-filing, evidence of fraud is difficult to find. There are no signed tax forms, envelopes or fingerprints, and e-filing promises quick refunds. Another type of fraud is when an unscrupulous return preparer modifies the bank – routing information on a return so the direct deposit refund will wind up in his/her own bank account, the victim wouldn’t know anything unless the IRS sends an audit, by this time, it would be too late (New York Times, 2013). It is reported that electronic Tax fraud is a major issue for state returns as well, An example that was giving in my research, a 25-year old woman e-filed a fraudulent Oregon state return reporting wages of $3 million and claiming a $2.1 million refund, and the Oregon Department of Revenue actually sent her the refund, without proper investigation. Another instance reported was in October 2013, a hacker stole 3.8 million unencrypted tax records from the South Carolina Department of Revenue (New York Times, 2013). When it comes to Tax fraud, the IRS has many ways of alerting the public on the aware of electronic tax fraud and how to notice if something is indeed incorrect with...
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...Contrary to some belief, accounting is not a “walk-in-the-park” career. Accountants do not sit at a desk one-hundred percent of the time crunching numbers that always add up perfectly. In fact, accounting fraud is one of the largest scandals found today. When an accountant enters an engagement with a client, who are they liable to? Certainly not just to the client, but also anyone who could negatively be affected by a material misstatement, as well as the government. These responsibilities are not easily assumed, nor are they equally distributed. Accountants assume a large responsibility to their clients. They enter a contractual agreement through an engagement letter, and use engagement letters to minimize the risk they assume under the contract. Many engagement letters include memos limiting the recovery. (Reinstein, Lobingier, & Green, 2009) Accountants expressly agree to do a project by a specific date, and imply that the work will be completed carefully. If an accountant breaches the contract, they can be found liable for damages. If it can be found that an accountant did not act with skill and competence, causing harm to their client, negligence can be proved. Accountants also may be found guilty of fraud. Fraud can be proved if an accountant makes a false statement, knowing it is false, and the client relies on the information, resulting in damages. Another liability to the client is the trust clients give their accountants. They are liable to keep the...
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...accounting firm. In August of 2005 KPMG admitted to criminal wrongdoing. They will pay $456 million for, finds, restitution, as well as penalties, to stay out of jail. From 1996 until 2003, KPMG and a lawyer decide to set up four phony tax shelters. The name of the four tax shelters is FLI P, OPIS, BLIPS, and SOS. These tax shelters targeted people who needed $10,000,000 to$ 20,000,000 in tax loss. Instead of paying the IRS they paid KPMG a percentage of the tax loss. They also file fraudulent tax returns. These returns were phoning. Even though KPMG tax department told the nine individuals that the tax shelters would not stand up to IRS scrutiny, they did the tax fraud anyway. The Tax fraud cost the United States at least $2.5 billion in lost tax revenue. KPMG were ordered to pay the following amounts, 100 million in fines, hundred and 28 million in criminal fines, 228 million in clinical restitution. Also KPMG had to stop doing two areas of practice. They were tax help and permanent adherence to a higher tax practice standard. Also with their preparation of tax returns. The agreement also said that KPMG is required to put into place and maintain an effective compliance as well as an ethical program. There are three elements that cause fraud to happen. Number one is perceived pressure; number two is perceived opportunity;...
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...think of the term forensics, what comes to mind? For younger readers CSI probably rings a bell, while the elder crowd would probably think of Quincy. Both TV shows glorified the acts of forensics in a medical sense. But a lesser-known form of forensics has been growing in use around the world. In light of recent accounting scandals throughout the world, investors and regulators have searched for various different methods to improve the safety of investors through more diligent accounting reporting practices. Until recently, detecting fraud was thought to be a part of the responsibility of the accountant. Fraud was something the internal or external auditors were expected to guard against by their periodic audits. We now know that auditors can only check for compliance of a company’s books to the Generally Accepted Accounting Principles (GAAPs) and to company policy; therefore, a new category of accounting had to be established, one which revealed the fraud for companies with suspected fraudulent transactions. This new area of accounting is known as forensic accounting. To fully understand the definition of forensic accounting, we can use parts of the definition of forensic medicine and accounting, both taken from Webster’s Dictionary, to produce a clear definition. Forensic medicine is a “science that deals with the relation and application of facts to legal problems.” Accounting is “the system of recording and summarizing business and financial transactions and analyzing, verifying...
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...Sarbanes–Oxley, Sarbox or SOX, is a United States federal law which was introduced in 2002. It is also known as the “Public Company Accounting Reform and Investor Protection Act” and “and 'Corporate and Auditing Accountability and Responsibility Act”. The main objective of the act is to protect investors by improving the accuracy and reliability of corporate disclosures. New aspects are created by SOX act for corporate accountability as well as new penalties for wrong doings. It was basically introduced after major corporate and accounting scandals including the scandals of Enron, WorldCom etc so that the same kind of scandals do not repeat again. There are 11 titles on the act. Each title consists of several sections. The Securities and Exchange Commission needs to implement rulings on the requirements to comply with the law. These major elements are- 1. Public Company Accounting Oversight Board: This title establishes the Public Company Accounting Oversight Board. It provides specific processes and procedures for compliance audits, policies for control purposes. Basically it provides an oversight of public accounting firms that do auditing. 2. Auditor Independence: It provides standards for external auditor independence, so that conflicts of interest can be minimized. It also mentions the requirements for appointing new auditor and auditor reporting requirements. Auditing companies are prohibited from providing non-audit services (consulting) for the clients for...
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...Fraud is a serious problem for most businesses today and often technology compounds the problem. In addition, the role of the independent auditor in the detection of fraud is often questioned. (http://www.swlearning.com/accounting/hall/ais_4e/study_notes/ch03.pdf) Fraud is dishonest activity causing actual or potential financial loss to any person or entity including theft of money or other property by employees or persons and where deception is used at the time, immediately before or immediately following the activity. (http://about.curtin.edu.au/definitions-impact.cfm) * Types of Fraud (http://www.auditsol.com.au/media/Fraudw.pdf) 1. Employee fraud Is internal or employee frauds are when fraud is committed against the company or organization a person is working for. Internal frauds can include: * payment fraud Payment fraud is any fraud that involves falsely creating or diverting payments. Payment fraud can include: * creating bogus customer records and bank accounts so that false payments can be generated * intercepting and altering payee details and amounts on cheques and Payable Orders, then attempting to cash them * creating false payment and financial information to support fraudulent claims for benefits * processing false claims by accomplices for benefits, grants or repayments self authorizing payments to oneself. * procurement fraud Procurement fraud is any fraud relating to a company purchasing goods,...
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...Non-For-Profit Fraud Authors’ Note This paper was prepared for Advanced Accounting, Summer 2013. OUTLINE 1. Introduction 2. The Reasons of Fraud in Nonprofits. 3. Types of Nonprofit Fraud. 4. Recent Fraud Cases: A. $1,000,000 Charity Scam by John Cody. B. ASPCA International and $27,000,000 Fraud. C. Fraud Committed by Anita Collins, Church Bookkeeper. D. Fraud Committed by Hugh Blackburn. 5. Fraud Prevention in Nonprofit Organizations. 6. Conclusion. Introduction. Most of us are familiar with the organization ASPCA (American Society for Prevention of Cruelty to Animals) and some of us even donate or consider donating money or time. But not many of us know that only 5 cents of every dollar collected by ASPCA goes actually towards the organization’s primary goal, which is helping animals. Just a few months ago a disaster hit NYC and the areas around. It is hard to believe but it gave great opportunity for fraud. Consider the case of the couple John Sandberg and Christina Terrassino, who launched a charity website, The Hurricane Sandy Relief Foundation. According to DCA (Division of Consumer Affairs), they have solicited more than $600,000 from about 2,000 donors. However, less than 1 percent of the money was given to the victims of the hurricane (Rose, 2013). Beside, consider the case of Anita Collins, a 67-year old church bookkeeper. She is known for stealing approximately $1,000,000 from the church she worked in (Huffington...
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...Tallahassee BeanCounters Team Case Kaylee Cutler Charles Spiva Shauna Jones Background During a routine audit of Tallahassee BeanCounters, the team’s owner Franklin Kennedy asked if we would investigate further into the potential of a fraud occurring within the company. Mr. Kennedy stated that he received an anonymous tip and believes that based on the tip, fraud within the organization was occurring. A fraud examination was conducted and the findings from relevant documents and interviews are below. Executive Summary: The investigation started when Mr. Kennedy approached our team asking us to review documents to see if a potential fraud within the organization was occurring. Mr. Kennedy received an anonymous tip that potential asset misappropriation was occurring within Tallahassee BeanCounters. We began our investigation by reviewing different financial documents obtained from Tallahassee BeanCounters as well as information provided to us by others within the organization covering the period from April through July. We analyzed payroll documentation from Tallahassee BeanCounters and ADP, purchase orders, invoices, and shipping receipts for various equipment purchases. We examined concession purchases, and analyzed sales of tickets, parking, programs, concessions, and promotional activities to determine where assets presented evidence of misappropriation. After having reviewed and analyzed all documentation requested and received, we found that $6,913...
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...[ABSTRACT] from the analysis of accounting information distortion that is illegal, because the accounting fraud, manifestations and hazards start to analyze the accounting fraud of China's listed companies the motivation to find out the real causes of the accounting fraud, and through drawing and learn from foreign countries in the prevention and treatment of accounting fraud experience, to present my accounting fraud prevention and treatment response. [Keywords:] listed company; accounting fraud; Governance 1, the listed company's accounting fraud and harm the performance of the form (A) the manifestation of accounting fraud 1. Fictitious business activities. Listed companies, the most common means of accounting fraud, namely through the fictitious transactions, increasing sales revenue or other income, and inflated assets. Such methods often need to forge economic contracts to cope with bills, tax invoices, customs declarations and a series of legal documents, which not only had violated accounting rules is contract Law, tax Law and other important economic Laws and regulations of the open defiance and provocation, is of a serious nature economic crime. 2. Manipulation of related-party transactions. Fraud, fictitious companies, apart from economic activity, more by way associated with particular transaction, such as debt restructuring, asset replacement, non-monetary transactions, etc. to achieve the purpose...
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...general public, consumers and employees. Another typology is the size of entity, such as the crime of a major domestic corporation. Thirdly, the product or service involved is another topology. Finally, the nature of the harmful activity. I believe the victim and type of activity are the most significant, because you will most likely have the most data to draw from. Victims will almost definitely report their loss if they suspect foul play; all the while the type of activity will be reported or derived from the victims report. These areas, in my mind, hold for quantitative data. 2. Identify and discuss how the corporate abuse of power, corporate fraud, and corporate economic exploitation are interrelated, and which segments of society suffer from these forms of White Collar Crime. The corporate abuse of power, corporate fraud and corporate economic exploitation are interrelated by very undefined line. Based on my reading corporate abuse of power may be...
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...THE FRAUD INVESTIGATION PROCESS I. The fraud investigation process involves systematically A. The engagement process B. The evidence process C. The reporting process D. The loss recovery process II. The engagement process A. Analyze data B. Create Hypotheses regarding a possible fraud C. Test hypotheses D. Refine and amend hypotheses E. Fraud theory is supported by the evidence III. The evidence collection process A. Physical evidence, Collect physical and documentary evidence B. Collect documentary evidence C. Collect observational evidence D. Collect interview evidence 1. The initial interviews are conducted with the most remote suspects 2. The investigator then conducts additional interviews that are successively closer to the suspects 3. With the prime suspect being the last person interviewed IV. The fraud investigation engagement process A. Initial report 1. Includes the initial information used to justify the investigation 2. The initial information should be included in a unified case file 3. The incident report can serve as probable cause for law enforcement 4. The incident report can provide proof the suspect is not being singled out because of illegal discrimination or in violation of collective bargaining rights B. Make notifications and evidence 1. Routine incident reports may be routed to a predetermined department ...
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...policing tactic is really the best way to explain the majority of success in white collar crime cases. Although there are only three types of agencies that go after white collar crime, those types have a large number of agencies within them. The first agency that I want to talk about is the Federal Bureau of Investigation. The FBI is probably the most known about or heard of agency around. Most people associate the FBI with tracking down the world’s dangerous criminals and terrorist but the FBI handles a lot of white collar crime as well. In the Criminal Investigations Division the FBI has a program called the Financial Crimes Section. The FCS is broken up into several different units. There is the Economic Crime Unit, the Health Care Fraud...
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...Tax refund scams is a rapidly growing and costly financial crime in the United States. Wifredo Ferrer, the inspector general at the Department of Treasury has estimated that by 2016 tax refund scams will cost tax payers $21 billion (Rosen, 2014). The Fiscal Times reports that in 2013, $5.2 billion has been defrauded from the federal government in fraudulent tax refunds. Although this number is shockingly high, auditors believe that the actual number is much higher (Ehley, 2014). To illustrate how costly this crime is, Treasury Department auditors found that in 2012 an estimated $3.3 million has been issued to a single address in Lansing, Michigan through 2,137 refunds (Ehley, 2014). What has contributed to this type of fraud is rise in online tax filing where con artist can use stolen identity to file a phony tax return. Another cause of surge in this type of fraud is that the law requires the government to send a refund checks within six weeks after an individual files the tax return (Rosen, 2014). However, it may take employer several months before they make W2 forms available. For this reason con artist can get away with fraudulent tax refunds as long as they file a bogus tax return before a legitimate one is received (Rosen, 2014). In fact, Corey Williams, one of the known tax refund con artist, has illustrated just how easy it is to commit this type of fraud in his 60 Minute interview with Steve Kroft. Williams explains that he was able to buy a list of stolen identities...
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