Fraud Feed

November 18, 2024 - If you're a celeb reading this blog, protect your money (or donate it to me)! Also, happy Fraud Week!

The key recommendation: If you have someone managing your money, make sure you're watching it too. You don't have to be rich, like Dennis Rodman, Ricky Williams, or Shohei Ohtani. Maybe it's your company and you have someone who does your books for you. Maybe you run a department and are responsible for the budget. Maybe your aging parents have a rainy day fund for which your twice-removed cousin is still the executor on the trust.

Bonus recommendation: If you're working for these super famous/wealthy people, maybe just enjoy the ride instead of taking more.

This is old news, but I've been watching an HBO documentary called "Rich and Shameless". They had an episode on the money manager (same person) for Ricky Williams and Dennis Rodman, who took advantage of that position and funded a lavish lifestyle. In more recent news, Shohei Ohtani's interpreter was convicted of embezzling around $17M for funding a gambling addiction.

So what should you take away from this story? Trust, but verify. You might have a trustworthy person in charge of your/your company's funds, but you need to have controls in place. This can be as simple as checking balances/transactions yourself. If you can't seem to find the time, find an independent third party who can (and I'm talking more than just a standard financial statement audit). I always thought a cool public accounting practice would be to be the "forensic examiner" of celebrities' funds. Someone else can manage the money, but give me read-only access to your bank/investment accounts and I will verify your manager (or interpreter) isn't robbing you blind.

September 30, 2024 - Surprise, Surprise, Animal Abuser Also Steals

The key recommendation: When doing business with another entity (even if that means donating to a charitable organization), make sure they're providing the services or goods that you're paying them for!

Bonus recommendation: Don't steal from your mom. And don't be an animal abuser.

As a dog dad, I'm really holding back on some personal thoughts about this person. However, I'll keep it short and sweet and to the fraud point. She "allegedly" used a non-profit status to take $50K in supplies and cash. On top of that, she stole over $160K from her mom, which doesn't even include the credit card debt she also amassed in her mom's name, for personal expenses.

So what should you take away from this story? Vet (animal pun intended) your vendors if you're a business. Getting their I-9 is a good first step, but doesn't mean your diligence is done. Make sure they have a website. Look for reviews online. If it's a non-profit, check them on Guidestar. If you're spending a substantial amount of money with a vendor, consider putting in vendor audit clauses or mandated vendor site visits into your contract. I imagine most of the donations to this lady were from individuals with big compassion for dogs, but imagine if it turned out that your company's "charitable organization of the month" was something like this. You'd probably have a lot fewer employees willing to help out.

September 6, 2024 - The Personal Assistant

The key recommendation: As a business owner or executive not involved in the day-to-day finances, pick 10 checks a month and review the payee to make sure they're reasonable. Same goes for credit card transactions and other banking activity. Make sure your finance employees know you're doing this.

Bonus recommendation: If you're going to get arrested for embezzlement, look proudly into the camera. You got away with it for so long, might as well have some pride!

A classic tale of using a company credit card and bank access for personal use (allegedly. Throwing that in there as a disclaimer. Innocent until proven guilty.) If you're going to grant others in your organization signatory authority (or even if you're a large organization with many signatories), you need to be reviewing bank activity regularly. I'm not saying you should look at every transaction, as nobody has that kind of time, but at least look at a sample. For example, let's say you're a real estate company like this one. If you see payments to Louis Vuitton, you may want to take a closer look. While that may sound simple, it is amazing how many frauds of this nature occur just like it! Note that this article doesn't indicate how the funds were spent other than for personal use, but luxury goods are often tied to these schemes. Why not buy a $2,000 bag when it's not your money?