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.
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/