Reposted from the This Week in Nonprofit Fraud Blog – January 27, 2014
A Repeat Offender
Photo courtesy of Marquet International
January 23, 2014: Barry Minkow, the former wunderkind infamous for perpetrating one of the largest investment frauds of all time at ZZZZ Best carpet cleaners at the tender age of 21, has found himself again convicted for fraud. After his initial release from prison in 1995, Minkow claimed to be a “changed man” and became pastor of a San Diego church, having undergone a religious conversion while incarcerated. His newest conviction is for embezzling $3 million from that church, using unauthorized bank accounts, forged signatures, and by simply stealing member donations. Minkow is already serving a 5-year prison term for securities fraud, after having manipulated stock prices of companies that he was helping law enforcement investigate through his “Fraud Discovery Institute.”
See more on this case at CNBC
- One of the judges that sentenced Minkow to prison described him as having “no moral compass that says ‘stop.’” While it is admirable to provide a person with a second chance, it may place your organization at enormous risk.
Raffa Forensic Practice Tips:
- Does your organization have a Fraud Policy that includes a no tolerance policy? Would your organization criminally prosecute a person who commits fraud against your organization? This zero tolerance policy is meant to not only send a message that your organization will not tolerate fraud and immoral behavior, but also will hopefully stop a criminal from committing fraud against their next victim organization.
- Also, does your organization have a formal background check policy, including guidelines on how to handle criminal histories?
An Incontinent Plan
Photo courtesy of Dallas/Fort Worth Healthcare Daily
January 24, 2014: Pamela and Kenny Adenuga were convicted of multiple counts of healthcare fraud for a multi-million dollar Medicaid overbilling scheme. The Adenugas submitted hundreds of forged prescriptions and delivery receipts, primarily for incontinence supplies, for reimbursement on behalf of their company, His Grace Medical Supply & More. When they were audited by Medicaid in 2010, the Adenugas created more than 100 fake patient affidavits, all of which were notarized by one of their parents.
See more on this case at Healthcare Daily
- Always remember that a person who is willing to commit fraud is also going to be willing to lie to an auditor to hide that fraud.
- The Adenugas enlisted family to add an air of legitimacy to their fake documents through the use of the notarization process
Raffa Forensic Practice Tips:
- The auditor’s creed is “trust, but verify.” It is extremely important to view supporting documents, like receipts and invoices, with a skeptical eye. Look for related parties in ascertaining credibility to a document or statement.
- Does your organization have an effective internal audit process, and are your internal auditors trained to spot anomalies in documentation?
DON’T BE THE NEXT VICTIM OF FRAUD!
The Raffa Forensic Accounting Services Practice offers a wide variety of fraud prevention and detection services including Fraud Risk Assessments, Background and Workplace Investigations, Fraud and Internal Investigations, Transactional Due Diligence Investigations, Anti-Fraud Consulting and Training, and Computer Forensic Analysis.
For more information on the Raffa Forensic Accounting Services Practice please visit us at www.raffa.com/ProfessionalServices/Forensic/ and the Nonprofit Fraud Prevention Institute at www.raffa.com/Fraud.
You can also contact the following Raffa professionals with any questions or if your organization needs assistance in fraud prevention:
Lawrence J. Hoffman, CPA/CFF, CVA, CFE, Senior Partner: Lhoffman@raffa.com
Leslie C. Kirsch, CFE, Manager: Lkirsch@raffa.com