Boat Ride to Jail | Nonprofit Fraud Blog

Reposted from the This Week in Nonprofit Fraud Blog – June 16, 2014

The Craigslist Water Park

Splashes_Oceanfront_Water_Park
Photo courtesy of Wikimedia Commons

June 17, 2014: Liliana Trafficante was sentenced to 41 months in prison after duping investors out of $1 million in a five-year scheme to raise money that she claimed would be used to build a water park to help foster children. The funds were used to maintain her lifestyle, including paying for personal expenses like rent, and payoff of personal debt. Trafficante claimed to be the Chief Executive Officer of International Dreams (a charity which she had invented), as well as four other affiliated fake entities. She would solicit individuals through various means, including Craigslist, to pay for specific water park projects such as land but simply used that money for herself.  In addition to her prison term, Trafficante was ordered to pay restitution of $750,000.

Lessons Learned

  • Even with proof of previous investors in an alleged program, due diligence must be performed when investing in or donating to a new project or organization. An individual who is willing to lie to one investor is likely willing to lie to many.
  • In particular, postings soliciting money on Craigslist should be questioned – most legitimate charities do not seek funds this way.

Raffa Forensic Practice Tips

  • Know your partners! Customers and vendors are not the only partnerships where risk exists when no prior relationship exists.
  • Does your organization thoroughly vet organizations before making a charitable donation?

See more on this case at FBI Press Releases

Boat Ride to Jail

Mississippi Department of Marine Resources
Photo Courtesy of National Park Service

June 16, 2014:
Bill Walker, the former head of the Mississippi Department of Marine Resources (DMR), was sentenced to a five year prison term and ordered to pay $700,000 for public corruption. He had plead guilty in March to conspiring to defraud the government after the Mississippi State Auditor’s Office and the FBI determined that Walker misspent $1,881,000 in public funds. Walker had used a private foundation as a shell corporation to divert the funds in order to lease two recreational fishing boats at a cost of almost $1.4 million to DMR. The boat was used 95% of the time by Walker; he also used state funds to purchase a waterfront lot from his son, Scott Walker (who is facing related charges).

Lessons Learned

  • It is important to critically evaluate the relationships between nonprofits and related government-operated entities, especially in terms of shared personnel and leadership.
  • Find out where your funds are really going and seek assurance with audit reports.

Raffa Forensic Practice Tips

  • Does your organization have review procedures in place to detect contractors and grantees that are engaging in transactions with your employees (and their families)?

See more on this case at The SunHerald

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

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