marital forensics

How a Forensic Accountant Can Help During a Divorce

Whether there is intense financial conflict or simply confusion, finances continue to remain the center of divorce proceedings for many couples. As a result, divorce attorneys and individuals seeking divorce often require a forensic accountant to fairly and expertly evaluate the couple’s finances, particularly if:

  • Either spouse owns a business or is self-employed
  • Either spouse entered into the marriage with significant separate assets or liabilities
  • Either spouse will have more custody time with the children than the other
  • The property to be divided is more than just a house and retirement funds
  • The property is significant in value and neither spouse can agree on how to divide it

As financial experts with specialized skill sets in investigation, auditing, and accounting, forensic accountants are incredibly useful when it comes to helping achieve complete financial transparency in divorce proceedings.

Identify Joint Assets & Liabilities

Constructing a Marital Balance Sheet

When going through a divorce, it is incredibly important to ensure that the marital property is fairly and expertly evaluated before dividing it. Why? Because if one spouse fails to report certain assets, either intentionally or by mistake, it will significantly affect how the assets are divided and how settlements are decided.

If you need help determining whether an asset is marital or separate, or if an asset has been commingled, then a forensic accountant can investigate and review your accounts to determine which type of property it is. A forensic accountant will identify and report all joint assets and liabilities in a marital balance sheet to help ensure an equitable division of assets.

Assets could include: real estate, bank accounts, cars, investment accounts, retirement accounts, value of a business, employee benefits, and more. Liabilities could include: mortgages, credit card balances, personal loans, and more.

Appraise Assets, Businesses, and Properties

In order to fairly split assets among the parties, the actual values of businesses, properties, and other assets need to be professionally appraised. Forensic accounts will perform business valuations, appraise assets, and obtain appraisers for properties to determine accurate values of marital assets.

Locate Hidden Assets

Intentionally hiding assets has serious consequences, yet many individuals continue to attempt to conceal assets and prevent equitable division. Hiring a forensic accountant can help ensure that all hidden assets are accounted for.

In order to prove the other party is hiding assets, a forensic accountant with examine tax returns, financial statements, bank records, real estate records, insurance policies, and other important documents to uncover discrepancy in reporting. Forensic accounts are experts in financial document analysis and leave no stone unturned in their investigation. They can locate hidden income, hidden bank accounts, off-shore accounts, hidden property, hidden investments, cryptocurrency, and more.

Determine Child Support & Spousal Support

Income Calculations

Forensic accountants perform professional income calculations that aid in the financial decisions (e.g. child support or alimony) being made as a result of divorce. For spouses that will likely pay or receive support, forensic accountants will create an accurate financial picture to ensure fair treatment. They will calculate cash flow using wages, interest, investments, dividends, and cash outflows from a business to develop a precise income. Consequently, an appropriate amount of child support or spousal support can be determined.

Lifestyle Analysis

In addition to calculating the income for either or both of the parties, the forensic accountant may also conduct a lifestyle or marital spending analysis in order to determine appropriate amounts for alimony and/or child support. The forensic accountant will perform a detailed analysis of personal financial records, classify all expenses, and create an accurate picture of marital spending to establish how the parties lived.

Strategize the Division of Assets & Liabilities

A forensic accountant uncovers crucial financial information that affects how marital assets with be divided. As independent experts, forensic accountants will ensure that marital property is fairly evaluated and that all liabilities are accounted for. They will also work with you and your divorce attorney to strategize an equitable division of these assets and liabilities and provide valuable input on the settlement process.

In addition, how assets are divided in a divorce can have serious tax implications—a knowledgeable forensic accountant can help you understand and prepare for any potential liabilities.

Litigation Support Services

Should a settlement not be reached and the divorce goes to trial, the forensic accountant will act as an expert witness and provide expert witness testimony in court or at depositions. As expert witnesses, forensic accountants are essential in helping the court understand complex financial issues at heart of the case and clearly presenting an objective, professional opinion on the matter. In addition to presenting their conclusion and explaining their findings in court, forensic accountants can also:

  • Assist in discovery and preparation for deposition or trial
  • Help develop compelling opening arguments, direct examination, and cross examination
  • Review and comment on the strengths and weaknesses of the opposing expert

Speak to an Expert

Having a forensic accountant help you and your legal team navigate a complicated financial situation is key to achieving the best possible outcome. The best time to contact a forensic accountant on a divorce matter? The earlier, the better.

If you would like to learn more about how Fact Finder Forensics can assist you or your client in a divorce matter, contact us today and book some time to speak with our experts.

Bookkeeping

Rebuilding Your Books with a Forensic Account

Has your business fallen behind in keeping accurate books?

This is the case for many businesses, but the COVID-19 pandemic exposed the detrimental impacts of not having proper books and records. Financial records easily fall into a state of disarray as business owners focus on building their operations and growing their business. For many businesses, the pandemic made it all to clear how important properly kept books can be. As a result, countless businesses are currently operating with erroneous, incomplete, or missing books.

Having proper accounting records is crucial to business owners not only to gain insights into their performance, make strategic business decisions, and maintain efficient operations—but also to meet statutory compliance, file accurate financial reports, and to be prepared in case of an audit.

Reconstruction of accounting records may also be necessary if a business is undergoing a Merger & Acquisition or organizational change, is migrating existing records to a new system, has identified issues found in an internal or external audit, or if their financial data has recently been lost or destroyed.

It’s not too late to rebuild and get back on track.

One of the best things businesses can do to strengthen operations as they transition into the post-pandemic economy is to pivot their accounting practices and rebuild their books. It is not enough to rely on accounting software, which only provides the most rudimentary of error checks. When it comes to reconstructing months or years of inaccurate, incomplete, or nonexistent recordkeeping, your business needs to retain a forensic accountant to piece it back together and get the full picture.

Forensic Accounting: Recordkeeping & Books Reconstruction

Reconstruction of accounting books can be extraordinarily complex, especially when those financial records are in a state of chaos. As a result, it is a task best left in the hands of a financial expert, such as a forensic accountant, who can unravel the most convoluted financial matters.

Forensic accountants are highly-trained financial experts who use their accounting and auditing skills to investigate fraud. However, their proficiency in financial investigations and ability to reconstruct financial facts also allow them to serve as expert bookkeeping and accounting professionals.

Consequently, forensic accountants are the ideal professionals to use when accounting records need to be completely reconstructed from messy or missing source material and to make sense of dead ends. They have the investigative skills and technical experience needed to rebuild transactional trails, to get your books compliant, and your accounting back in order.

Fact Finder Forensics: Financial Data Reconstruction

While rebuilding your accounting records, our experienced team will:

  • Identify and find critical source documents needed for analysis
  • Use forensic technologies to restore necessary financial transactions
  • Analyze source documents (bank account records, credit cards, invoices, payroll records, etc.)
  • Reassemble meaningful data and manually reorganize large datasets
  • Fix errors, omissions, and oversights
  • Create an accurate database of financial transactions
  • Ensure records can withstand examination or an audit

Fact Finder Forensics has the expertise and resources to quickly and efficiently rebuild your business’s books in order to restore operational stability, improve productivity, and establish a solid foundation for future recordkeeping.

Recover & Thrive

The goal of bookkeeping is to organize financial information in such a way that it can be readily analyzed for making budgets, projections, strategic decisions, and filing accurate reports. With the forensic technology and expertise available to our forensic accountants, your business can fully recover from mismanaged financial records and trust in the quality of the reconstruction.

If you would like to find out more about how Fact Finder Forensics can help your business recover from mismanaged financial records and rebuild your books, contact us today and book a consultation.

Bank Money Laundering

Fraud News: Danske Bank Money Laundering Scandal

Fraud Spotlight: Money Laundering

On December 13, 2022, Danske Bank, Denmark’s largest bank, plead guilty to one count of conspiracy to commit bank fraud and agreed to forfeit $2 billion to settle a long-running investigation involving billions of dollars in illicit transactions. Under the plea agreement, the bank will also be placed on probation for three years.

The Copenhagen-based bank came under investigation in 2018 shortly after it disclosed that more than $200 billion of largely illicit funds had flowed from Russia and other former Soviet states through its Estonia branch. In court filings, the bank admitted to defrauding U.S banks between 2008 and 2016. The Estonia branch, now closed, funneled approximately $236 billion in funds from high-risk clients in Russia and other countries through the U.S. financial system.

Dankse Bank: Estonia Branch

Dankse Bank Estonia created a lucrative business line serving non-resident customers known as the Non-Resident Customer (NRP) program. According to prosecutors, the Estonia branch enticed clients by telling them they could transfer large amounts of money with little, if any, oversight through the NRP program. The United States Department of Justice (DOJ) also revealed that the bank’s employees conspired with NRP customers and worked to hide the illicit transactions by using shell corporations to obscure ownership of the funds.

As a result, Russian clients and other high-risk clients were able to gain access to U.S. banks and pump billions of dollars of suspicious and criminal funds through the U.S. financial system. Danske Bank Estonia collectively processed approximately $160 billion through U.S. banks.

As a result of internal audits, information from regulators, and an internal whistleblower, Danske Bank became aware of the Estonia branch’s highly suspicious and potentially criminal transactions by at least February 2014. Danske Bank was also aware that its Estonia branch lacked adequate controls for anti-money laundering and didn’t meet its standards.

According to the DOJ, instead of providing truthful information, Danske Bank lied to U.S. banks about its weak anti-money laundering systems, inadequate monitoring capabilities, and its high-risk, offshore customer base to gain access to the U.S. financial system.

Plea Agreements & Settlements

Danske Bank has accepted responsibility for defrauding U.S. financial institutions and for funneling billions of dollars in suspicious, illicit transactions through the United States. As a part of their guilty plea, Danske Bank will forfeit over $2 billion and implement significant changes to its compliance program and anti-money laundering controls.

In addition to its criminal plea and settlement with the DOJ, the bank has also coordinated settlements with the U.S. Securities and Exchange Commission (SEC) and with Denmark’s Special Crime Unit. The SEC’s complaint specifically charges Danske Bank with violating the antifraud provisions of the Securities Exchange Act of 1934.

The DOJ has said it will credit the $850 million needed to resolve the SEC and Danish probes, and as a result, Danske Bank will pay $1.2 billion to the U.S. Department of Justice.

The Investigation Continues

As of December 2022, no individuals have been charged. However, according to the DOJ, the investigation is continuing. In a phone interview with Reuters, the Assistant United States Attorney General for the DOJ, Kenneth Polite, stated: “Focusing on individual accountability is always a priority, not just for this case, but for all of our corporate resolutions.”

The plea agreement with the DOJ marks the first time the United States has taken action against Denmark’s biggest bank in what has now become one of the world’s largest money laundering scandals. Polite told Reuters that the Danske case is now one of the top five largest financial institution resolutions the DOJ has reached in the last decade.

To read the U.S. Department of Justices’ official press release about the money laundering scheme, click here.

Check back with Fact Finder Forensics as we continue shining a light on fraud.

Crypto Fraud

Fraud Awareness: Crypto Mining Scams

The Conditions for Fraud: Scammers & Cryptocurrency

Although cryptocurrency is not a mainstream payment method, it has become an alarmingly popular method for scammers to defraud individuals and businesses.

Cryptocurrency presents the opportunity to break free of traditional, government regulated banking methods. The speculative nature of the industry, the volatility of the currency, the constant evolvement of the related technology, and the difficulty in understanding the technology has enticed scammers who want to cash in on the public’s craze.

Fraudsters exploit these conditions and consistently present themselves as crypto experts who can help individuals become a part of lucrative opportunities. The Federal Trade Commission (FTC) reported that more than 46,000 individuals were involved in crypto scams in 2021 alone, resulting in a collective loss of $1 billion.

In particular, crypto mining scams and fraudulent mining operations are skyrocketing. Simply put, crypto mining is the process of creating new digital currency or “coins.” The process involves using special equipment with software designed to solve the complicated, cryptographic equations needed to release new coins into circulation. Once they achieve this, the miners are rewarded with newly minted coins, giving people ample incentive to invest in mining equipment.

A Look at the Latest Crypto Mining Scam

Fraudsters are taking advantage of people’s interest in crypto mining and their desire to obtain the necessary equipment.

A New York man defrauded more than a dozen victims out of a collective $2 million through a long-running crypto mining scam. Chester “Chet” Stojanovich, 38, was arrested by the Federal Bureau of Investigation (FBI) in April 2022 and charged with one count of wire fraud.

From March 2019 to September 2021, Stojanovich posed as a dealer of crypto mining equipment. Stojanovich and the various companies under his control (Chet Mining, Chet Mining Canada, and Phoenix Data LLC) told investors that he would purchase mining equipment on their behalf and then take payments to host that equipment for them at a facility in Goose Bay, Canada.

According to the FBI, Stojanovich did not purchase the mining equipment as promised. Likewise, the hosting facilities in Canada were completely fictitious. Instead, Stojanovich spent money from his fraudulent scheme lavishly. Some of his purchases included private jet flights, limousine rides, parties, hotels, restaurants, Apple products, gifts for his wife, more than $33,000 to an online casino, and $80,000 of personal credit card debt.

Stojanovich took payments from customers for approximately 3,000 miners. In order to convince customers who became suspicious, he purchased about 75 miners from Amazon and eBay. He used these miners as props to create the illusion that the mining equipment had been purchased as promised. Whenever customers asked for evidence of their purchase, Stojanovich would simply send them pictures of the miners he had bought as well as photos of himself standing near piled-up boxes.

In one instance, a customer demanded Stojanovich provide solid proof of his mining equipment purchase, including serial numbers, insurance policy documents, or shipping documents. When Stojanovich couldn’t provide this, the customer demanded Stojanovich take him to the hosting facility in Canada. Stojanovich agreed and the two set off from New York City in a rental car. However, it ended with Stojanovich abandoning the customer at the Buffalo airport and telling him he would not receive a refund.

In September 2019, Stojanovich abruptly halted communications with customers. Two months later, he resurfaced and told his customers that the owner of the fictional hosting facility in Canada had gone bankrupt and run away with their equipment. Despite receiving several lawsuits from his victims, Stojanovich continued with a second scam, convincing three mining brokers to purchase $200,000 in equipment. He eventually refunded them $61,000 for the nonexistent equipment and kept the rest for himself.

Stojanovich faces up to 20 years in prison.

Avoiding Crypto Scams

Cryptocurrency scams are driving online fraud. How can you stay vigilant? When it comes to crypto, it’s best to remain skeptical about new opportunities and wary of individuals who promise that you do not need to understand the technology in order to make money. Warning signs of crypto scams can include:

  • Promises of guaranteed returns
  • Excessive marketing & extravagant claims
  • Poor or non-existent whitepapers
  • Unnamed team members and anonymous owners
  • High-pressure to invest in an opportunity quickly
  • Cold calls about crypto investment opportunities

Always take your time to carry out research and fully vet crypto opportunities. If you would like to read more about cryptocurrency and scams, visit the official FTC website for consumer advice: https://consumer.ftc.gov/articles/what-know-about-cryptocurrency-and-scams

Report Crypto Fraud

Report fraud and other suspicious activity involving cryptocurrency to the FTC at https://reportfraud.ftc.gov/#/ or the Internet Crime Complaint Center (IC3) at https://www.ic3.gov/Home/FileComplaint.

 

Check back with Fact Finder Forensics as we continue shining a light on emerging fraud landscapes.

Fraud Awareness: Fraud Week Compilation

#fraudweek #factfinderforensics

As International Fraud Week comes to a close, it is only right that we celebrate the wonderful work done by the Association of Certified Fraud Examiners (ACFE), the world’s largest anti-fraud organization and leading provider of anti-fraud training and education.

The ACFE has played a fundamental role in improving fraud detection and preventing fraud worldwide through its dedicated education efforts. The ACFE first established Fraud Week in 2000 as a means to fight fraud. This annual devotion of time every third week in November to improve fraud awareness and provide anti-fraud education has not only united organizations globally against fraud—but it has also helped countless business leaders, employees, and citizens to proactively prevent fraud in the workplace and in their everyday lives. Join us in commending the ACFE for their tireless commitment to fraud detection and prevention!

Though it may be the end of this year’s International Fraud Week, it is not the end of the fight against fraud. As a proud supporter of Fraud Week, we encourage you to take a look at our compilation of fraud awareness materials highlighted this week to combat fraud.

Elder Financial Exploitation

Financial elder abuse is a fast-growing, underreported crime against older adults. It is the theft or embezzlement of money or any property from a senior. This is a serious form of abuse as it can leave elderly persons unable to take care of themselves and provide for their needs.

Here are key signs that a senior loved one is being financially exploited:

  • Unexplainable or significant withdrawals from financial accounts
  • The addition of names to a senior’s card
  • Sudden changes to their financial condition
  • Missing cash, checkbooks, debit cards, or credit cards
  • Unpaid bills despite having enough money
  • Variation in signatures on documents and checks
  • Unusual changes to wills, power of attorney, or other legal documents
  • Assets mysteriously transferred
  • Payments for goods or services they do not use
  • A secretive relationship with someone online
  • Appearance of a stranger who forms a new, close relationship and offers to manage finances or assets
  • A caregiver, relative, or another person seems to restrict their communications and isolate them from contact with others

Remember: fraudsters aren’t always strangers. Caregivers, friends, and even other family members can take advantage of an older adult’s trust. Find more resources for financial elder abuse at https://www.justice.gov/archives/stopfraud-archive/elder-fraud-and-financial-exploitation.

Real Estate Fraud

Where there are large sums of money being transferred, scammers will appear in droves. Unfortunately, fraud is only increasing in real estate transactions, especially with remote deals becoming more common. The top real estate scams include:

  • Wire Fraud
  • Foreclosure Relief Scams
  • Mortgage Scams
  • Home Inspection Scams
  • Rental Scams
  • Deed or Title Fraud
  • Commercial Real Estate Fraud (advance fee schemes, misappropriation of funds, falsified documents, etc.)

Read the full article at https://www.linkedin.com/pulse/fraud-awareness-real-estate-fact-finder-forensics-inc?trk=organization_guest_main-feed-card_feed-article-content

Recognizing & Reporting Fraud in the Workplace

No matter your role, industry, or level of seniority—you can help the fight against fraud by knowing the common types of workplace fraud, recognizing the signs, and reporting it.

The most common types of workplace fraud include: payroll fraud, asset misappropriation, financial statement fraud, and corruption. Business owners and employees are the first line of defense against fraud. Every person protect their workplace by recognizing the signs. Here are some classic red flags seen in workplace fraud:

  • Complain constantly, take shortcuts, and try to beat the system
  • Irritable, secretive, suspicious
  • Hoard information and won’t relinquish a duty
  • Living beyond means
  • Working longs hours without taking leave or holiday
  • Experiencing financial difficulties, gambling debt, or substance abuse

Read the full article at https://factfinderforensics.com/2022/11/17/fraud-awareness-recognizing-reporting-workplace-fraud/

Whistleblower Process & Resources

Whistleblowers are champions in the fight against fraud and they are imperative to safeguarding businesses from the growing fraud problem. Many employees will observe fraud, wrongdoing, or misconduct at their workplace. Individuals should never feel pressured to cover up illegal acts, stay quiet, and not report misconduct out of fear.

According to the ACFE’s Occupational Fraud 2022 Report to the Nations, tips are the most common way frauds are detected. Having an anonymous email or phone hotline has been found to foster even more tips. In fact, 47% of frauds at companies were detected through an anonymous fraud reporting mechanism like a hotline. If a hotline isn’t available to you, try:

  • Writing an anonymous letter to your organization’s internal audit team or anti-fraud team, if applicable.
  • Anonymously reporting it to the board of directors or the board’s audit committee, if applicable.
  • Or directly submitting a tip at the whistleblower program that is relevant to your information (False Claims Act, SEC Whistleblower Program, IRS Whistleblower Program)

Every employee, regardless of position, can help prevent fraud. While a majority of employees and employers are honest, if you observe something that isn’t right, it may be necessary to take action.

Read the full article at https://factfinderforensics.com/2022/11/17/fraud-awareness-whistleblower-process-resources/

Money Laundering Through Video Games

Technology has long offered multiple channels for fraudulent activity, but what may come as a surprise is the rapid expansion of money laundering through online video games. Since it is incredibly popular to acquire in-demand merchandise and sell them to other players for profit, in-game items suddenly have real-life monetary value and cybercriminals are taking full advantage of this virtual marketplace.

Read more about the full process of how criminals launder money through online video games at…

Spread Fraud Awareness

A little awareness can go a long way. Being aware of the signs of fraud and recognizing fraudulent schemes is critical to prevention. Share educational resources with family, friends, and co-workers to remain vigilant and help the fight against fraud.

Video Game Fraud

Fraud Awareness: Money Laundering Through Video Games

#fraudweek #factfinderforensics

In honor of International Fraud Week, Fact Finder Forensics is continuing to explore fraud in an effort to raise awareness and fight this global issue. Today we are discussing how criminals are able to exploit current video game platforms to filter illicit funds. Technology has long offered multiple channels for fraudulent activity, but what may come as a surprise is the rapid expansion of money laundering through online video games.

Gold Farming

Though many online video games are free to play, game publishers create in-game purchases if players want to obtain rare virtual merchandise. It’s not unusual for avid online gamers to spend money on their favorite video game as they work to level up their character or collect exclusive items—especially since it is incredibly popular to acquire in-demand merchandise and sell them to other players for profit.

This practice is known as “gold farming” and is commonplace in large multi-player online video game platforms. However, criminal activity becomes possible because of it. In-game items suddenly have real-life monetary value and cybercriminals are taking full advantage of this virtual marketplace.

Microtransactions

Gamers may use prepaid gift cards or credit cards to pay for in-game currency and to purchase rare weapons, characters, clothing, and more. Players will usually spend less than $200 on video game merchandise at a time. These relatively small “microtransactions” aren’t out of the ordinary on crowded video game platforms, creating a new avenue for cybercriminals to launder money that is difficult to detect.

The ease of transferring in-game currency coupled with the industry’s unregulated status has allowed money laundering to flourish on crowded online gaming platforms, particularly in multi-player games. Cybercriminals can easily blend in and get lost in massive multi-player worlds as they funnel money through seemingly normal in-game microtransactions.

Online gaming is especially attractive for fraudulent activity because there is a lack of customer identification, no monitoring of financial activities, and insufficient reporting and response for suspicious transactions.

Gaming the System: How Do Criminals Launder Money Through Video Games?

Criminals will start by downloading a free-to-play online video game using a phone, tablet, or PC. Next, they will either create a new account or hack an existing account to further encrypt their identity.

The cybercriminal will then channel the proceeds of their illegal activity—often stolen credit card information or money from other illicit activities—into the game and convert the money to the in-game currency. Under the guise of normal play, they will make a series of microtransactions with the in-game currency, purchasing rare weapons, character apparel, and more to create a lucrative, sellable character.

Money laundering usually follows three steps: placement, layering, and integration. Online video games have become an ideal cover to carry out these steps since other traditional channels have become too well-examined. First, the illicit funds are funneled into the game. Once placed, the money is layered through multiple microtransactions in an effort to lose the original source. Finally, the laundered money is integrated back into real world currency through a sale.

Cybercriminals will either sell their stash of in-game currency or their powered-up characters at discounted prices on gray market exchange websites (e.g. Player Auction, G2G, IGVault). With the lack of regulation in the online gaming world, it has so far proven to be an effective method for cybercriminals to cleanse fraudulent gains without intense scrutiny.

Regulation

Video games with in-game purchasing and trading continue to launch—meaning illicit activity will continue to thrive in these virtual marketplaces. As of yet, there are no clear regulations or expectations within the video game industry on what should be done to identify and prevent criminal activity on their platforms.

After all, buying in-game items with stolen credit card information is no different than a purchase of goods with a stolen credit card. The responsibility for detecting the fraudulent activity remains with the payment processing company, not the video game platform. However, it is clear that the entire video game industry needs to concentrate on creating effective guidelines and clear protocols for microtransactions in an effort to reduce criminal activity.

Business Whistleblower

Fraud Awareness: Whistleblower Process & Resources

#fraudweek #factfinderforensics

As Fraud Week continues, Fact Finder Forensics is highlighting the importance of whistleblowers and the process of whistleblowing. Whistleblowers are champions in the fight against fraud and they are imperative to safeguarding businesses from the growing fraud problem.

Many employees will observe fraud, wrongdoing, or misconduct at their workplace. Individuals should never feel pressured to cover up illegal acts, stay quiet, and not report misconduct out of fear. From everyday workers to upper management, the majority of people will come forward to report fraud and expose unlawful conduct.

Whistleblowing is a legally protected act, in which employer retaliation is prohibited in addition to adverse employment actions caused by whistleblowing. The decision to become a whistleblower is not an easy one. Often these individuals love their jobs and do not want to cause harm to their company. However, unscrupulous companies are counting on this.

If you suspect of wrongdoing or know of fraud being committed by your employer, fellow employee, or another entity—you can take steps to stop it. Learn what you can do with that information and help fight fraud.

Who Can Be a Whistleblower?

Becoming a whistleblower is one way for authorities to become aware of practices that violate the law, cheat investors, steal taxpayer funds, and more. Anyone with specific, detailed information about fraudulent activity can become a whistleblower, qualify for protection, and in some instances, receive rewards. Whistleblowers are usually employees of the organization that is violating the law. However whistleblowers can be anyone with concrete evidence of wrongdoing.

The Process

To become a whistleblower, you will need specific, detailed information and to file a claim with the program that protects against the specific type of fraud you are reporting. The most commonly filed government programs for fraud include: the False Claims Act (FCA), the SEC Whistleblower Program, and the IRS Whistleblower Program.

The statue of limitations, procedure, and protections vary depending on the program you are planning to file under. Whistleblower cases will follow a general timeline: a complaint is filed, an investigation takes place, cases are brought to trial, and resolutions and settlements are reached.

False Claims Act (FCA)

The False Claims Act, also known as the “Lincoln Law,” is a whistleblower law that allows citizens to sue companies or individuals that are defrauding the government. It makes it illegal for anyone to make false claims to receive benefits or funds from the government through a federally-funded program. The FCA provides financial rewards for whistleblowers as well as job protection against retaliation. However, it requires that whistleblowers use lawyers to file these qui tam lawsuits. Violations that can be reported include:

  • Creating a false statement to get a claim paid
  • Presenting a false claim for payment
  • Reverse false claims
  • Reducing amount of the money owed to government
  • failing to return an overpayment

SEC Whistleblower Program

The SEC Whistleblower Program provides incentives to individuals who report violations in U.S. financial markets and businesses. This could include accounting fraud, securities fraud, consumer fraud, and more. The program allows individuals to submit information anonymously. However, it requires whistleblowers to obtain counsel, who will submit the information anonymously on the whistleblower’s behalf.

Find more resources on the program at https://www.sec.gov/whistleblower/resources

IRS Whistleblower Program

IRS Whistleblower Program provides rewards and protections to individuals who report and provide information about tax fraud or tax underpayments by their employers or other. The IRS keeps the identities of tax whistleblowers confidential with certain limitations.

Find more resources on the program at https://www.irs.gov/compliance/whistleblower-office#moreinfo

Fraud Hotlines & Other Reporting Options

According to the ACFE’s Occupational Fraud 2022 Report to the Nations, tips are the most common way frauds are detected. Having an anonymous email or phone hotline has been found to allow for even more tips. In fact, 47% of frauds at companies were detected through an anonymous fraud reporting mechanism like a hotline. If a hotline isn’t available to you, try:

  • Writing an anonymous letter to your organization’s internal audit team or anti-fraud team, if applicable.
  • Anonymously reporting it to the board of directors or the board’s audit committee, if applicable.
  • Or directly submitting a tip at the whistleblower program that is relevant to your information.

Every employee, regardless of position, can help prevent fraud. While a majority of employees and employers are honest, if you observe something that isn’t right, it may be necessary to take action.

Corporate Fraud

Fraud Awareness: Recognizing & Reporting Workplace Fraud

#fraudweek #factfinderforensics

As International Fraud Week continues, Fact Finder Forensics is committed to shining a light on fraud. We support weeks like this to call attention to a major problem affecting people and businesses domestically and abroad. When it comes to fraud, a little awareness goes a long way.

Today we are looking at common frauds that occur in the workplace, their tell-tale signs, and how to report workplace fraud. No matter your role, industry, or level of seniority—you can help the fight against fraud by knowing the common types of workplace fraud, recognizing the signs, and reporting it.

According to the ACFE’s 2022 report, the typical fraud can last up to 12 months and cost an average of $117,000. Industries with the most reports currently include: construction, real estate, transportation and warehousing, wholesale trade, and utilities. It most commonly occurs with employees working in operations, accounting, sales, and upper management.

Fraud takes many forms and can be difficult to detect. If businesses and employees alike aren’t diligent, the toll of this deception and theft can become considerable.

Payroll Fraud

Payroll fraud, or corporate account fraud, occurs when someone exploits a business’s payroll system to steal money while appearing to pay someone for their labor. An employee with easy access to the payroll system has the means to commit this type of fraud. However, payroll fraud can be committed by anyone inside or outside the organization through extensive hacking. Examples of payroll fraud include:

  • Submitting false timesheets to pay themselves or someone else more than they earned
  • Padding work hours on timesheets
  • Issuing unauthorized bonuses
  • Sending money to a fake employee or ex-staff member

Financial Statement Fraud

Financial statement fraud occurs when corporations misrepresent or deceive investors into believing that they are more profitable than they actually are. This includes manipulating financial records to make their assets, income, or total net worth appear greater or painting their debts, liabilities, and losses to appear smaller. This type of fraud is commonly committed to secure loans or to avoid consequences for not reaching financial goals. Look out for:

  • Growing revenue without corresponding growth in cash flow
  • Consistent sales growth while competitors are struggling
  • Significant surge in company performance within the final reporting period of the fiscal year.

Asset Misappropriation

Asset misappropriation occurs when an employee takes or misuses company assets for their gain. This could include cash misappropriation (directly stealing money from the company) or non-cash misappropriation (stealing non-cash assets such as office supplies or inventory without authorization). Without proper controls, such as strong asset and inventory management, this type of fraud can happen over and over again. Examples of asset misappropriation include:

  • Transferring funds from company bank accounts
  • Making unauthorized purchases on a company card
  • Taking cash directly from a safe or skimming cash
  • Stealing inventory, supplies, or equipment

Corruption

Corruption is a blanket term for several different types of business fraud. It essentially means when a person in power at a business deliberately mishandles funds or engages in any kind of dishonest behavior. Business owners or employees in powerful positions have the potential to become corrupt if they seek to make as much money as possible with little regard for justice or morality. Corrupt behaviors can include:

  • Money laundering
  • Accepting bribes
  • Making unreported transactions
  • Conducting business dealings with criminals.

Know the Signs

Why do people commit fraud? Most often, it boils down to financial pressure, rationalization, and opportunity. In particular, economic turmoil like we are experiencing today often leads to a rise in dishonesty and fraud. However, employees committing fraud will often exhibit tell-tale behaviors that business owners and employees should know. Here are some classic red flags for employee fraud:

  • Complain constantly, take shortcuts, and try to beat the system
  • Irritable, secretive, suspicious
  • Hoard information and won’t relinquish a duty
  • Living beyond means
  • Working longs hours without taking leave or holiday
  • Experiencing financial difficulties, gambling debt, or substance abuse

Report Irregularities

Every employee, regardless of position, can help prevent fraud. Now that you have learned some common types of workplace fraud, you can remain vigilant. While a majority of employees are honest, if you observe something that isn’t right, it may be necessary to take action. As an employee, here is what you can do to report fraud:

  • If available, use your company hotline to anonymously report wrongdoing.
  • If applicable, write an anonymous letter to your organization’s internal audit team or anti-fraud team.
  • If the allegation involves top management, anonymously report it to the board of directors or the board’s audit committee.
  • Or go directly to the SEC Office of the Whistleblower and submit a tip at https://www.sec.gov/whistleblower/submit-a-tip

Business owners and employees are the first line of defense against fraud. Every person can fight against fraud and protect their workplace. However, in a post-COVID setting, employee negligence is the number one threat to corporate fraud. Why? Many employees are unhappy with the return to the office setting and have little interest in protecting their employer’s interests, especially if the preventative tasks are tedious.

It is incredibly important for everyone in an organization to be well-versed in workplace fraud, the signs to look for, and the preventative measures needed to thwart it. Make sure your employees know the signs of fraud and understand the policies and repercussions of committing fraud. Inform them of easy, anonymous ways to report malpractice and consistently reward ethical behavior.

Check back with Fact Finder Forensics this week as we continue to discuss fraud and promote anti-fraud readiness.

Fraud Awareness

Fraud Awareness: Real Estate

Here at Fact Finder Forensics, we are making our best effort to create awareness useful to all viewers this week. Today’s Topic is Trending Real Estate Scams 2022.

Seems like everyone is talking about interest rates and housing prices but not a lot of focus on the risk associated with being a hot topic. So, we are tackling Real Estate Fraud. Here are the top 7 Current Scams:

Wire Fraud – You are in the process of buying a home and you receive an email, text, or phone call from someone claiming to be from the title company, mortgage company, or real estate brokerage providing you instructions on where to wire your escrow funds. The swindler creates a fake website that appears nearly identical to the title or lending company that you are working with, making their website look legitimate.

Foreclosure Relief Scams – If you are experiencing a difficult time, please visit this website: https://home.treasury.gov/data/troubled-assets-relief-program/housing/beware-of-scams

Mortgage Scams – Mortgage fraud is typically carried out for profit or for housing.

  • Mortgage scams for profit: Those who attempt mortgage fraud for financial gain are typically lenders, brokers and other entities that make false claims in order to obtain monetary compensation or equity from lenders and homeowners.
  • Mortgage scams for housing: Mortgage scams for housing are generally perpetrated by borrowers in order to gain ownership or change the appraised value of a home. According to the mortgage fraud index, one in 200 refinance applicants and one in 164 mortgage applicants have indications of fraud.

 

Home Inspection Scams – Yes, because buying real estate is not hard enough, now you have to worry about the step that is your security blanket.

Typical Home Inspection Scams:

  1. You only get a visual inspection of your home.
  2. They don’t really check the condition of your roof.
  3. They don’t have any training.
  4. They are really working for your real estate agent.
  5. There are hidden costs.
  6. No experience with new homes.
  7. They won’t give a guarantee.
  8. They don’t have E&O Insurance.
  9. They don’t know local building codes.
  10. They damage the home.

 

Rental Scams – Scammers often advertise rentals that don’t exist or aren’t available to trick people into sending money before they find out the truth.

Deed or Title Fraud – When someone steals your home through forging a deed or other means of illegally transferring ownership of your property.

Commercial Real Estate Fraud – Commercial real estate fraud schemes are often complex and can take on many forms.

  1. Misappropriation of funds
  2. Advance fee schemes
  3. Misrepresentations such as submitting falsified documents, making false statements, or providing fraudulent statements

 

For resources on how to report and prevent Re al Estate Fraud, visit STOP FRAUD: https://www.justice.gov/archives/stopfraud-archive/resources-victims

Fact Finder Forensics Inc. Joins Movement to Shine a Spotlight on Fraud

For Immediate Release

11/07/2022

For More Information Contact:

ACFE: Stefanie Hallgren, (512) 478-9000

E-mail: [email protected]

 

Fact Finder Forensics Inc. Joins Movement to Shine a Spotlight on Fraud

International Fraud Awareness Week kicks off Nov. 13, 2022 worldwide

Philadelphia, PA– Fraud costs organizations worldwide an estimated 5 percent of their annual revenues, according to a study conducted by the Association of Certified Fraud Examiners (ACFE). Occupational Fraud 2022: A Report to the Nations analyzed 2,110 occupational fraud cases that caused a total loss of more than $3.6 billion.

The seriousness of the global fraud problem is why Fact Finder Forensics announced that it will be participating in International Fraud Awareness Week, Nov. 13-19, 2022, as an official supporter to promote anti-fraud awareness and education. The movement, known commonly as Fraud Week, champions the need to proactively fight fraud and help safeguard business and investments from the growing fraud problem.

Fact Finder Forensics joins hundreds of organizations who have partnered with the ACFE, the world’s largest anti-fraud organization and premier provider of anti-fraud training and education, for the yearly Fraud Week campaign.

During Fraud Week, official supporters will engage in various activities, including: hosting fraud awareness training for employees and/or the community, conducting employee surveys to assess levels of fraud awareness within their organization, posting articles on company websites and in newsletters and teaming up with local media to highlight the problem of fraud.

ACFE president and CEO Bruce Dorris, J.D., CFE, CPA, said that the support of organizations around the world helps make Fraud Week an effective tool in raising anti-fraud awareness.

“Fraud is an issue that unfortunately affects people from all walks of life around the world and it takes many forms,” said Dorris. “Whether it’s a trusted employee stealing from a small business, or organized rings of fraudsters targeting seniors in our community, most people know someone who’s been victimized by fraud. That’s why it’s so important for organizations to join in this fight together in order to raise awareness during this week. It is a serious problem that requires a proactive approach toward preventing it and educating people is the first step.”

For more information about increasing awareness and reducing the risk of fraud during International Fraud Awareness Week, visit FraudWeek.com.

Fact Finder Forensics Inc. provides forensic accounting services to individuals and companies. We are dedicated to preventing, detecting, and mitigating fraud through education, awareness, and by being proactive partners with our clients, business leaders, and the communities we serve. Our firm is committed to serving as trusted experts, advisors, and investigative specialists in matters of financial crime, fraud education, and corporate due diligence.

About the Association of Certified Fraud Examiners
Based in Austin, Texas, the ACFE is the world’s largest anti-fraud organization and premier provider of anti-fraud training and education. Together with more than 90,000 members, the ACFE is reducing business fraud worldwide and inspiring public confidence in the integrity and objectivity within the profession. For more information, visit ACFE.com.

Sun Sign Designs Tampa Digital Marketing©2023 All Rights Reserved Fact Finder Forensics