Fraud Cases Up During COVID Era

Posted by Megan Kerrigan.

Today, the world is unpredictable and changing rapidly. We see a new president, a worldwide pandemic, a lack of jobs for Americans, and the changing of our everyday lives. With COVID-19, we see the world dealing with large business and financial disruption. Since the shutdown the government started pumping large sums of money into the global economy in the hope this will improve the financial issues families are having. With all these factors coming into play, we see that corruption and fraud are most likely to occur with people working from home and the lack of regularity. “Now, there is likewise understandable concern that the significant public health and economic impacts of the pandemic, including in connection with the substantial governmental expenditures, will further fuel white-collar offenses” (Debevoise). Individuals are struggling due to the pandemic with a lack of income and financial stability and that will promote white color crimes to take place. Americans will have a strong motive to support their families in a time like this. The intent to act on crimes will be stronger than ever.

We see most companies today having to work from home to slow the spread of the virus. Working from home is the only option for businesses and American to make money and survive. Due to the lack of communication in the office and lack of materials with everyone working from home, we will see certain types of white-collar crimes slow down. This is because of the lack of fast interaction between one another and response times. Enforcement agencies are prioritizing safety with individuals who are working remotely. People might think that the agencies are not being as strict with the current dilemma, but they are mistaken.

“Enforcement agencies in the United States and Europe have stated that their objective is vigorously to prosecute violations of anti-fraud and anti-corruption laws, particularly in the context and aftermath of COVID-19” (Debevoise). These agencies have a list of top priories to look at as well as known challenges they understand they will be facing. The top is fraud and corruption. The Organization for Economy Cooperation and Development said that this pandemic and the disruption in the economy will create an environment almost too easy for corruption to occur. The healthcare sector has a large opportunity for bribery and corruption. “The scope for potential corruption is wide-ranging, including in procurement, product development, and dissemination, as well as medical fraud. This is exacerbated by the urgency of securing medication, ventilators, and PPE amidst global scarcity concerns” (Debevoise). People are going to do whatever they possibly can to make sure they are safe, even if it breaks the law. Enforcement is taking action and have taken a proactive approach to these issues.

Another area where white-collar crimes are more than ever going to be circulating is the abuse in regulated financial markets. Due to the extreme market volatility with his pandemic we see a large increase in market abuse. Businesses are still required to meet standards despite the disruption with the pandemic, but agencies also understand they need to provide some relief by deferring reporting deadlines. This gives businesses time to get information together without penalties. SEC has not slowed down the cases and is still working on cases and prosecuting new ones but also delayed reporting requirements due to the CARES ACT terms.

COVID-19 has affected restaurants, gyms, hotels, family-owned businesses, auto industries, airlines, corporations, individuals, enforcement agencies, and many more. Everyone is still trying to adapt to the constant changes while keeping up with making sure illegal acts are not occurring. Enforcement agencies are continuing to investigate and prosecute white-collar crimes and misconduct because they know that economic and financial crime will increase in the wake of the pandemic. I personally feel that Americans need to be aware of this to try to defer any act of fraud or corruption that is motivated by a lot of individuals due to this pandemic.

Megan is a master’s in accounting student at the Feliciano School of Business, Montclair State University.

https://www.debevoise.com/insights/publications/2020/05/white-collar-crime-and-covid-19-enforcement-in-a (Links to an external site.)

The Field of Forensic Accounting Will Continue to Grow


Posted by Lynne Thach.

Forensic accountants play a very important role in court. They provide litigation advisory services, investigative services, and essential support for lawyers and attorneys in many situations in court. The most important role is that forensic accountants are used as financial expert witnesses because of their technique, investigation, knowledge, and practice skills assisting in uncovering truth. They ultimately provide a credible analysis that may be relied upon in court. In this paper, I only emphasize the role of forensic accountants in litigation, especially in discovering financial fraud.

Financial fraud has been increasing and a substantial threat to the development of economies and society’s stability. The need for forensic accounting stretches into any situation where there is suspicion of fraud in an entity’s financial transactions. Forensic accountants are trained to look beyond the numbers and deal with the business reality of a situation. It is more than accounting and more than detective work; forensic accountants combine their accounting knowledge with investigative skills to search through companies’ financial reports and uncover the facts of the case. It is always better to hire forensic accountants sooner than later “to assist the attorney in translating complex financial issues into a more understandable manner” (by Mark S. Warshavsky).

Financial fraud can take many forms including Ponzi schemes, securities fraud, tax evasion, and embezzlement that are so-called “white-collar crimes”. Some early scandals included Enron, WorldCom, and The Bernie Madoff, and were reminders of the harm that can be done by fraud. These events prompt high demand for forensic accountants. They are responsible for recognizing red flags and ending fraud before they become big enough to significantly impact large numbers of people. Discovering fraud requires high forensic accounting skills including communication skills, analytical skills, investigation skills, accounting skills, legal knowledge skill, and practicing skills. The articles “The role of forensic accounting in discovering financial fraud’ states the result which showed that practicing forensic accounting is effective in discovering fraud.

The field of forensic accounting will continue to grow and develop as more accounting and technological changes are made as more frauds are discovered. Until then it is important that forensic accountants are well-educated and well-trained, because thousands of innocent people rely on them every day.

Lynne is a master’s in accounting student at the Feliciano School of Business, Montclair State University.

(Links to an external site.)

https://www.gettrymarcus.com/wp-content/uploads/pdfs/TheForensicAccountantsRoleinLitigation.pdf

https://www.longdom.org/open-access/the-role-of-forensic-accounting-in-discovering-financial-fraud-2472-114X-1000176.pdf

The Forensic Accounting Profession Amid COVID

Posted by Jake Martin.

The year of 2020 is certainly not a typical year considering all the events that took place. One major topic that has the whole world worrying is COVID-19 which is considered a pandemic. Billions of people around the world have been negatively affected by this virus and unfortunately many have lost their lives. COVID-19 has certainly disrupted forensic accounting in many ways throughout the legal system along with the employees who work in the court system. Many of these employees are required to work remotely from home which does not normally happen. Having in-person meetings with clients and co-workers is an everyday task that has been altered by this virus. Working remotely definitely presents its own challenges such as communication issues and heavy usage of technology to stay connected. Forensic accountants must carry out face-to-face interviews, attend dispositions, and ultimately question suspected fraudsters. These tasks now have to be done through the computer because transmission of the virus is highly likely through close contact.

Adam Hanover, CPA/CFF, managing director of restructuring and dispute resolution at CohnReznick LLP, believes that virtual interviews are a poor substitute for the real thing. In the article, Hanover stated, “Zoom is just not the same, The lack of human contact is challenging. Sometimes, you need to be in the room with an individual to sense whether he or she is hiding something. A personal connection with someone who may or may not be an adversary is of utmost importance in our line of work.” I personally agree with Adam Hanover because while conducting interviews, body language and fluent communication are necessary for properly evaluating the person. Without these factors, poor judgement can be made which ultimately can change the final decision of the court case.

With the emergence of COVID-19, the fraud terrain has changed with new forms of fraud occurring at rates never seen before. One of the new forms of fraud relates to relief checks which was given by the government for individuals that couldn’t afford their normal expenses. Criminals have taken to selling bogus checks on the dark web, sometimes redepositing them three or four times. Before listing the check as fraudulent, the check must be confirmed and then immediately removed from access to the user. Due to COVID 19, many legal issues have been put on hold because in-person authentication is required and tasks through Zoom tremendously impact productivity. Overall, continually touching base with your legal team is especially important during this pandemic to ensure communication and transparency is continued. Forensic accountants remain optimistic about their circumstances and believe the virus will eventually become less of a factor while conducting their legal work.

Jake is a master’s in accounting major at the Feliciano School of Business, Montclair State University, Class of 2021.

https://www.journalofaccountancy.com/newsletters/2020/oct/coronavirus-challenges-forensic-accounting.html

College Admission Scandals and Forensic Accounting

Posted by Jenny P. Velarde.

Financial crimes come in different colors. Most of us think of the words fraud and embezzlement when we think of these acts. Luckily, forensic accounting was created to conduct examinations utilizing accounting, auditing, and other analytical skills. This form of accounting is most suitable when investigating financial crimes. Forensic accountants are brought in when it is time to investigate a possible fraud and bring justice to those responsible. Many of us were all surprised to learn that a college cheating scam unfolded including well-known celebrities, such as Lori Loughlin, and Felicity Huffman.

In the case of the college admissions scam, which was given the name of “Operation Varsity Blues” by authorities, the FBI used their team of forensic accountants to help them indict 50 individuals. Operation Varsity Blues was the case where students fraudulently were admitted to U.S. colleges and universities through a combination of bribery, cheating on standardized tests, and bogus athletic credentials. None of the students or schools were charged in this case. The focus was on William Singer, who owned a college preparatory business called the Edge College & Career Network, also known as The Key. (Medina, Benner, and Taylor, 2019). It was found that William Singer used his nonprofit organization, Key Worldwide Foundation, to pay bribes to coaches that would help parents get their children admitted to those universities. It also helped them cheat on their standardized tests. The investigation discovered that parents paid Singer approximately $25 million from 2011 to February 2019. The Key was also used as the recipient of these bribes which allowed the parents not to pay any federal taxes on those funds.

Cases like this normally stem from a tip, or a whistleblower. According to an article on blanker.com (2020), Bloomberg reported that the whistleblower was someone by the name of Morrie Tobin. He was a financial executive who was already being investigated for securities fraud. He told the authorities that he had paid a bribe to a Yale University women’s soccer coach, which helped him get his daughter accepted. This would be expected for someone to provide information for them to get leniency. Fortunately, the intelligence Tobin provided to the authorities led to this famous scandal that was heard around the nation and in other countries.

Dr. Jennifer Stevens, an assistant professor of accountancy in the Ohio University School of Accountancy stated, “It played a huge role in the indictment, and the FBI has an entire forensic accounting team that does this. They’re not actually special agents. They work alongside special agents, but they have a division of forensic accountants that would have been working on a case like this” (Cohn, 2019). She speaks to how this team was able to trace these actions to those indicted, especially to William Singer who pleaded guilty to counts of racketeering conspiracy, money laundering conspiracy, conspiracy to defraud the United Stated, and obstruction of justice. Most of the parents were charged with conspiracy to commit mail fraud. Our world without forensic accountants would allow these, and other financial crimes to take place. Luckily, we can use these experts in court and in investigations so justice can be served.

Jenny is masters of science in accounting student at Montclair State University, Feliciano School of Business, Class of 2023.

Work Cited

Medina, J., Benner, K., & Taylor, K. (2019, March 12). Actresses, Business Leaders and Other Wealthy Parents Charged in U.S. College Entry Fraud. Retrieved November 16, 2020, from https://www.nytimes.com/2019/03/12/us/college-admissions-cheating-scandal.html (Links to an external site.)

Cohn, M. (2019, March 25). Forensic accounting helped uncover college admissions scheme. Retrieved November 16, 2020, from https://www.accountingtoday.com/news/forensic-accounting-helped-uncover-college-admissions-scheme (Links to an external site.)

Forensic Accounting Lessons From The College Admissions Scandal – San Antonio CPA: Forensic Investigative Accounting: Litigation Support. (2020, February 27). Retrieved November 16, 2020, from https://bankler.com/forensic-accounting-lessons-from-the-college-admissions-scandal/

Current Administration “tackling Chinese companies that mean to do America harm”

Posted by Elias Aguiar.

Since the very announcement of President Trump’s running for office until now, his motto has been to ‘make America great again.’ One of the ways he planned on doing this was to be tougher on China, as he felt that the United States could no longer turn a blind eye to the true nature and conduct of the Chinese government. In the last four years of his presidency, President Trump has made it known that the United States would not be walked over any longer, and though his time is almost up he hasn’t shown signs of slowing down at all. On Thursday, president Trump signed an executive order that prevented Americans from investing in Chinese companies that also help in China’s military operations.

This is major news in the business world as markets as well as many Chinese companies will feel the effect of this order. Companies that support China’s military will ultimately suffer as a result. According to Peter Navarro, a White House trade Adviser, the Trump administration is “tackling Chinese companies that mean to do America harm.” This administration firmly believes that the Chinese Communist Party is out to get Americans and in order to drain their resources, this administration has incentivized Chinese companies to end military support. 

Furthermore, the White House has already identified 31 Chinese companies as well as over 100 subsidiaries traded on U.S. exchanges that currently support China’s military. As stated by Navarro, reasoning for the order is due to the fact that “American capital should not be used to finance Chinese militarizatoin, partiularly weapons that are going to be used to kill Americans.” If China didn’t like President Trump before, they definitely dont like him now. 

Elias is an accounting major at the Stillman School of Business, Seton Hall University.

https://www.foxbusiness.com/markets/navarro-trump-chinese-companies

The Disappearance of Toilet Paper and Cleaning Supplies

Posted by Jessi-Marie Agosto.

Due to the re-emergence of shutdowns and curfews, as a result of spikes in COVID-19 cases, toilet paper and cleaning supply aisles are emptying once again. Already, “22 states have imposed restrictions aimed at decreasing the spread of the virus” and therefore, purchase limits are once again emerging at supermarkets and retail stores (Fox Business). These limits are striking panic in shoppers, causing them to once again, stock up on the necessities such as toilet paper and cleaning supplies. Major discount retailers such as Walmart and Costco are already sold out of cleaning supplies like disinfecting wipes, while smaller stores such as Walgreens and Dollar Tree have the essentials in stock (Fox Business). The reason for this, according to Whitney Hatcher, a collections specialist, is that “‘people are seeing the empty shelves at bigger stores and panic buying’” (Fox Business). Hoarding of the necessities has already hit us when COVID-19 first made its appearance and as we are beginning to slowly recover, the demand for such items has once again made its appearance.”

As the toilet paper and cleaning supplies fail to be replenished at a rate that meets this unexpected new surge of demand, shoppers are not the only ones being negatively affected. As the demand for items increases, retailers are having to invest more money into their supply chains in order to meet these unexpected surges, something they have been doing “over the last several months” (Fox Business). Based upon what occurred last spring of 2020, we can expect to see limitations on the necessities including water, dairy, and of course, toilet paper and cleaning supplies. In San Diego, the renewed shortages are clearing shelves quickly as “‘the TP aisle is bare. Big jugs of milk mostly gone’”, according to Melin Isa, an internet marketer (Fox Business). I can only imagine that as cases continue to rise, the number of panic-stricken shoppers will rise as well, leading to many empty shelves, unlocking another fear for not only the virus, but also, for the possibility of starving to death.

In my opinion, from working at the retail store, Walgreens, and therefore encountering many families of four or more, this winter will bring forth many fears surrounding the possibility of going without a meal. Last winter, my family did not have to struggle with finding toilet paper, however, they did struggle to find canned goods as the limitations in stores were always faulty. Honestly, such limitations work to a certain degree, as there are ways to get around, and because of these ways, many suffer the repercussions. While it is necessary to purchase what one needs, to hoard, on the other hand, causes unnecessary stress for those who are not panicking because they reach the markets and the shelves are completely empty. As retailers try their best to replenish the sold-out items, it is important to remember that these are hard times for everyone.

Jessi-Marie is a finance major at the Stillman School of Business, Seton Hall University, Class of 2023.

https://www.foxbusiness.com/lifestyle/panic-buying-of-toilet-paper-hits-us-stores-again-with-new-pandemic-restrictions

Does Facebook Have Any Principles?

Posted by Joseph Ng.

Within the article “Facebook moderators say company has risked their lives by forcing them back to the office” they mention several factors regarding business law. The main points of this article is that Facebook is forcing its employers to work during the pandemic in office spaces that are not safe due to COVID-19. The article mentions “ In several offices multiple COVID cases have occurred on the floor.” The position that is speaking out against Facebook are content moderators whose main purpose is to make sure all the post on Facebook does not have any graphic content such as self-harm, child abuse and more. This type of speech is not allowed even though the first amendment of the constitution allows freedom of speech however, this is unprotected speech since it violates criminal law, fighting words and defaming speech under constitutional law. Facebook requires these people as their software is not able to scan through all the post being posted daily so, they have looked to outsourcing companies to provide them with the content moderators.

The main business law topics that Facebook breaks are the ethical side of business. Facebook most likely wants the content moderators to work during this type to continue to generate profit. It follows the principles of utilitarianism and break corporate social responsibility which is that the corporation should have a responsibility to the citizens, employee, stakeholders and community to be ethically social and responsible for their decisions and is only concerns is about the outcome. They most likely has done a cost-benefit analysis where it takes into account around how many workers will get sick from working in the office and  how much it will cost to take care of them versus the amount of profit they will generate for the company. One worker wrote “After months of allowing content moderators to work from home, faced with intense pressure to keep Facebook free of hate and disinformation, you have forced us back to the office.” As you can see many of the content moderators are unhappy with the decision Mark Zuckerberg has made.

In my opinion Facebook should let their employees work from home as they have a lot of money and those workers are under a lot of stress. They have to view many disturbing content daily as part of their jobs to help keep the company from further legal actions such as, if they let this type of content be posted out it could influence  other kids to participate in those activities or, have a negative influence or, emotional disturbance causing emotional trauma and possibly legal actions such as a tort of intentional infliction of emotional distress. Facebook thirst for money could be its downfall as the company disregards their own employees feeling for greed. As the laws are relatively new compared to other laws due to the late explosion of the internet and social media platforms it is most likely that there will continue to be legal problems as they wander into new territory of the internet and legal system as they adapt to the changing times of technology.

Joseph is a biology major at Seton Hall University, Class of 2021.

https://www.cnbc.com/2020/11/18/facebook-content-moderators-urge-mark-zuckerberg-to-let-them-work-remotely.html

Google’s Monopoly of Ads Needs to Stop

Posted by Matthew DeFalco.

In the Fox News article, “Google ad costs, not its alleged monopoly, irks businesses”, we learn that the United States Justice Department has filed a lawsuit against technology giant Google. The company is being sued for “anticompetitive behavior” when it comes to advertising and online searching. Unfortunately, this is actively taking place as the company’s dominance over online searching and advertising is growing by the minute causing harm to rival companies and consumers. This is because Google is allowed to charge ridiculous prices for advertisement due to the of the monopoly they hold—which is devastating many small businesses. Lastly, the article states that “ The more a company can pay, the more likely it will get a prized spot in search results” (p. 3) which prevents small businesses from being able to compete with these multi-million dollar companies. This article provides an inside look at what is actually happening to small businesses and what needs to be done to stop this anticompetitive behavior.

The writer gives insight from Bryan Clayton, a CEO of a small company, GreenPal, which helps homeowners find landscapers. Clayton noted that startups do not “have a million-dollar advertising budget” which makes it extremely difficult for owners to promote their business without giving a huge sum of money. In my opinion, I find that there is no reason as to why advertisements on Google should be so expensive, and I agree with the Justice Department for suing for anticompetitive behavior. This type of behavior means that there is no room for competitors when Google is controlling 90% of global internet searches. While this is great for Google’s bottom line, it is devastating to small businesses that cannot allocate millions of dollars for advertising.

With advertisements running between $50,000 and $100,000, Google is leaving business owners two choices: pay up or shut down. It is the unfortunate reality as our virtual society leaves small businesses who cannot afford advertisements in the dust. Something needs to be done, and it needs to be done quickly in order to prevent Google and other big corporations from getting even bigger than they are today. This is why it is essential that the court follows through with its suit and holds Google accountable so that small businesses have the opportunity to reasonably purchase advertisements which is proving to be a necessity in order to survive in our current society.

Matthew is an accounting and finance major at the Stillman School of Business, Seton Hall University, Class of 2023.

LINK: https://www.foxbusiness.com/markets/google-ad-costs-not-its-alleged-monopoly-irks-businesses

California Governor Attends Party Amid New Thanksgiving Restrictive Order

Posted by Nicole Gizzi.

California Governor Gavin Newsom rolled out restrictions to residents regarding the thanksgiving holiday. Initially, he and the California Department of Health defined that gatherings such as “social situations that bring together people from different households at the same time in a single space or place” would be banned. Also, he required that the host of any private gathering to limit attendance to no more than three households and the duration to no more than two hours, along with hosts ensuring guests gathering only outdoors and promote physical distancing, frequent handwashing or sanitizing and the use of masks or face coverings. He announced there would be a travel advisory for visitors leaving and entering their respective states ahead of the holiday due to cases of COVID-19 spiking in the area. He had pleaded with his residents to avoid social gatherings that mix households. This order also urges people against nonessential travel and asks residents of the three states to quarantine for 14 days after arriving from out of state.

Cody Wolfe, a country singer, blasted Newsom’s orders on Twitter tweeting out: “Hey @GavinNewsom as a new California resident. I live in a condo. So therefore, I cannot have my Thanksgiving outside, but it is okay I am coming over to your place to spread some holiday cheer all over your dining room table. Oh, and as by legal right of the US constitution I’m not wearing a mask as I deem it to be unlawful and unconstitutional, you should be impeached for committing treason.” (Manfredi 7-8)

On November 6th, 2020, it was reported that Newsom was spotted at an outdoor party at French Laundry, an upscale restaurant in Napa Valley on November 6th. The birthday party was for political adviser Jason Kinney that had at least a dozen attendees. He put out a statement the same day stating, “While our family followed the restaurant’s health protocols and took safety precautions, we should have modeled better behavior and not joined the dinner.” (Conklin 2) He took wide criticism for this given the hefty amount of orders he is set to put in place for the Thanksgiving holiday.

More to follow.

Nicole is a Financial Technology major and Cybersecurity, Stillman School of Business, Seton Hall University Class of 2023.

https://www.foxnews.com/politics/california-newsom-birthday-party-thanksgiving-limitations

https://www.foxnews.com/entertainment/celebrities-rip-californias-gov-newsom-over-coronavirus-thanksgiving-rules

Are We Better Than Robots?

Posted by Dante James.

We all know that technology and robots will be the thing of the future, but we are not sure how close or how far that future is. Lots of people imagine the future being controlled by artificial intelligence and that humans will become obsolete to these pieces of metal. As we develop more and more, day by day, we fear that robots will completely takeover and control what we do starting from small tasks, moving to taking jobs, then completely having their own lifestyles. Walmart has already taken a step towards that future when they signed a contract with Bossa Nova Robotics. However, that contract was ended recently due to information gained by the well-known retailer.

“Walmart Scraps Plan to Have Robots Scan Shelves” by Sarah Nassauer, is an article that discusses why Walmart designed to pull out of the contract that they have signed with Bossa Nova Robotics. Walmart is an American national retail corporation that wanted to try to get the edge on its competitors by using artificial intelligence to get the job done. But the company soon realized that compared to the teens and young adults that worked and scanned the shelves like the robots, the teens actually matched up or did better than most. The article states that, the “retailer ends contract with robotics company after seeing similar results from workers grabbing online orders during pandemic”. We all know that the pandemic has been tough for everyone, and that 2020 itself has also been an extremely tough year, and the fact that these workers are able to keep up with robots during a time like this makes it even more amazing. Not to mention the additional problems that employees have to face such as engaging with customers, mental and physical health issues, and just real-world problems that the robots will never encounter. All in all, on a good day these workers may and/or will perform better than robots.

In conclusion, this article is basically a straightforward read with facts, information, and statistics on the comparison of the robots working in relation to humans working. I believe that no matter ho far we develop with technology we will never be replaced or taken over. I think that just because we are human and have a natural connection to one another, we would never allow the world to be run rampant by robots.

Dante is a business major at the Stillman School of Business, Seton Hall University, Class of 2023.

https://www.cnbc.com/2020/11/02/walmart-ends-contract-with-robotics-company-bossa-nova-report-says.html?&qsearchterm=contract