Professor Elam

Student Reflection on Aaron Beam

Weekend Sept 17,2022

Aaron Beam was the CFO of Health South. I conducted an interview with him for our students. Aaron Beam served a few months in jail for his participation in this fraud.

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First of all, thank you to Professor Elam for conducting this interview. I did find his testimony extremely interesting. We, as people, are definitely susceptible to those extremely charismatic personalities. Not only in business, but in religion and politics as well, wouldn't you say?  Not just the Richard Scrushy's of the world.  But what about the Adolf Hitler's? David Koresh? Jim Jones, Jonestown? And many, many others. What a shame that these personalities are wasted on such dispicable individuals. 

Listening to Aaron Beam, he is definitely like one of the disciples of these leaders. He got lured in. Enjoyed the good life. The money. The fame. But....he's one of the survivors, right? One of the ones that walked away. While he still served jail time, it was minimal. Yes, he lost all of his money and other assets. But he knew what he was doing was wrong and he got out. Unfortunately, he didn't do anything to stop the bleed. By not saying anything, other CFO's and multiple accounting professionals also comprimsed themselves in this scandal. But it begs the question. If not in this scandal, than perhaps in another. 

All of these stores we've learned about so far in the class. They're all pretty much the same, aren't they? One little white lie. Which leads to another. And another. They don't get caught, so the lies get bigger and bigger. At some point, they probably start to feel like they're invincible. But in many cases, greed gets involved. They start living large and they love it. Who wouldn't? Besides, they haven't been caught thus far. And then what happens? They get less secretive. They start telling others. Others start getting involved and sharing the wealth. But with every new person that is brought into the fold, the risk increases. 

I had someone tell me one time. If you cheat, you WILL get caught. You might get away with it for a while. Or even longer. But eventually, you WILL get caught. Did that stop him from cheating? No. Even though he believe he would be caught. Nope. Didn't stop. People become arrogant. Egotistical. 

In the case of Richard Scrushy. He told these extremely intelligent room of CPA's, that he will deny everything, if he's ever questioned. So, basically letting these CFO's and others individuals involved, that even though he is asking them...no demanding them to cook the books. That he will deny everything. He will sell them all out to save his own self. The fact that he because an evangelist of sorts as his reign is coming to the end, proves my point about the Koresh's and Jones' of the world.

Going from millions of dollars to mowing lawns. But which was better for his conscious, his heart and his soul?

family

https://www.youtube.com/watch?v=0G7cRhZGn-8

 

More on BBB

Tuesday Sept 6, 2022

Interesting observations and a link to the lawsuiit against the CFO.

Now connect the assignments I have had you read.

First Self Reliance,  to this point, Gustavo Arnal had a great career. And reading the linked story, was linked and trusted. Now think about Jackie's description of how things go awry in Shadow Account. Urged on by one shareholder, Arnal went where he should never have gone, a pump and dump scheme. That is my assumtion, why else did he jump?  We find what people are made of when things are at their worst, it's easy to look good in good times.

More BBB analysis

BBB's response

Here is evidence of stock manipulation, wow what a jump

 

The fortunes of BBB have been falling for some time, here is a multi year weekly graph.

Bed Bath Beyond CFO found dead

Weekend Sept 4 2022

IN the aftermath of the 19+29 crash, it was reported some individuals took their own lives by jumping off tall buildings.

Froday afternoon apparently the BBB CFO  jumped from the  18th Floor. He had previously worked for Proctor and Gamble and Avon.

I am guessing he had made some fictional entries and could not stand the stress of it but that is just speculation on my part.

Guxtavo Arnal found dead.

Later this weekend Sunday, Matt Lampert at Socio Institute sent me this update on the CFO

CFO subject of insider tradingand fraud lawsuit

The suit, filed in United States District Court for the District of Columbia on August 23, claims that Cohen and Arnal provided "materially false statements regarding the financial condition and holding situation" of Bed Bath & Beyond for their financial benefit. The lead plaintiff is investor Pengcheng Si.

"The defendants, knowing that the information they disclosed was false, took advantage of the inflated stock price and used fraudulent and misleading SEC filings to sell all their [Bed Bath & Beyond] shares and options at artificially inflated prices to unsuspecting and innocent public investors and then retained control of the profits," the suit states. 

On August 18, both Arnal and Cohen sold shares of the company, with Arnal selling more than 42,000 shares for an estimated $1 million, and Cohen selling the entirety of his 9.8% stake through his firm, RC Ventures, causing shares to plummet.

The lawsuit claims Cohen — who is also the co-founder of Chewy and chairman of GameStop — approached the CFO about his "pump and dump" scheme in March 2022, and "convinced Gustavo that their plan would be a mutually beneficial one.""Under this arrangement, defendants would profit handsomely from the rise in price and could coordinate their selling of shares to optimize their returns," the lawsuit states. 

Arnal allegedly worked with JPMorgan, which is listed as a defendant in the suit on claims the bank "aided and abetted" the plan by "enabling Cohen to use JPM's accounts to effectuate such transactions and otherwise launder the proceeds of their criminal conduct."

The lawsuit further notes Cohen's involvement in similar plans, such as elevating GameStop to "meme stock" status.

"Cohen has historically employed pump and dump schemes to raise much needed capital and has ignited several meme stocks to jaw-dropping heights," the lawsuit states. 

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this is why we have a course in ethics. And his salary was about  $750,000, was another million really worth  the risk, hardly.

A tragic end to another foolish fraud scheme.

The Chinese Audits

Friday Sept 2 2022

Anyone who has dealt with Chinese authorities knows that serious negotiation starts only after an agreement is signed. Hong Kong learned this lesson the hard way in the decades after the 1984 Sino-British Joint Declaration.

Now it’s America’s turn. This week Chinese authorities and the U.S. Public Companies Accounting Oversight Board struck a last-minute deal allowing American regulators to inspect the audit papers of Chinese companies in Hong Kong that are listed on U.S. stock exchanges.

Under the 2020 Holding Foreign Companies Accountable Act, the Securities and Exchange Commission has warned some 260 Chinese companies, collectively worth $1.3 trillion in market capitalization, that they will be delisted in the U.S. by 2024 if they don’t allow independent audits. In response, the Chinese government introduced tighter rules for companies listed overseas and encouraged Chinese businesses to upgrade their listing on Hong Kong’s stock exchange. New laws on data security and personal information make it almost impossible for many Chinese companies to maintain their listing status overseas without acting in breach of their legal obligations at home. Five Chinese state-owned companies recently announced they would voluntarily delist from the New York Stock Exchange.

The deal between Beijing and the PCAOB seems to have reassured the financial world. The Nasdaq Golden Dragon China Index, which tracks Chinese companies that trade in the U.S., surged on the news. But differences between the two sides soon emerged.

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PCAOB insists that its audit inspections will be wholly independent of Chinese authorities, with no requirement for consent from the Chinese government. The China Securities Regulatory Commission insists that “audit work papers and other information that the U.S. regulator needs access to will be obtained by and transferred through Chinese regulators.” The CSRC also says that a Chinese regulator may “assist” in any interviews or testimonies Chinese personnel give during audit inspections.

Under the Chinese interpretation, the PCAOB would be able to inspect only information Chinese authorities have first screened. Officials may insist that data crucial for proper auditing and transparent governance amounts to state or trade secrets and therefore isn’t disclosable under Chinese law. It will be almost impossible to challenge these decisions within the Chinese system, even in Hong Kong. The definitions of state or trade secrets fall within the domain of the Hong Kong Committee on National Security, whose decisions are binding on the Hong Kong courts and not open to any challenge by private parties or overseas regulators. Even if the Hong Kong courts were dragged into a dispute, the U.S. side won’t be able to count on a level playing field given the overarching power Beijing has under the Hong Kong National Security Law.

That’s not all. We expect China will maintain that audit records containing sensitive personal information and national-security data must be destroyed after any audit in compliance with Chinese laws. The American side is likely to insist that it has the right to preserve all audit records as per international auditing standards.

All and all, the agreement looks to be little more than window dressing. It may allow Chinese companies to remain on U.S. stock exchanges, but there’s no reason to think they’ll be rigorously audited.

This may please some large institutional investors, but the signal to the Chinese Communist Party is that U.S. regulators, and by extension the Biden administration, are still unwilling to challenge the governance issues endemic to Chinese companies—despite the serious financial risks they pose to investors and shareholders in the Western financial system.

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Mr. Kwok is a senior fellow at Harvard’s Kennedy School of Government. He served as a Hong Kong legislator, 2012-20. Mr. Goodman is executive director of the China Risks Institute and director of policy and advocacy at Hong Kong Watch.

Appeared in the September 2, 2022, print edition as 'U.S.-China Audit Deal Is Only Window Dressing'.

Gleim Professor Led Audit Exams - How to register

Wednesday  Aug 24 2022

Dear Texas A&M University - San Antonio Student,

I hope this email finds you well. You will use the Gleim EQE P-Led Assessment Quiz for Auditing in your ACCT 4311 class for the FALL(22) semester as required material.

To obtain access to the Gleim EQE P-Led Assessment Quiz for Auditing and allow your instructor to track your progress, you must click one of the two links below or copy/paste the URL into a web browser. Note that you MUST use one of these links to order your materials because they indicate to Gleim which virtual class to enroll you in. If you order via any other means (e.g., the Gleim website), you will not receive credit for your work.

https://www.gleim.com/?promoID=ASSESS-TAMU-SA-FALL(22)-ACCT-4311

This link allows you to order only the Gleim EQE P-Led Assessment Quiz for Auditing, which is required for this class. Clicking the link will send you to the Gleim website, where you must create your account or log into an existing account. Then, you will be taken to the shopping cart with the correct item listed at $0.00. Complete the check out process by following the on-screen instructions.

OR

https://www.gleim.com/?promoID=PLED-TAMU-SA-FALL(22)-ACCT-4311

This link presents you with the option to order the Gleim EQE P-Led Assessment Quiz for AUD for the specially discounted price of $34.95. This system usually retails for $50.00, but Professor Elam and Gleim have arranged to give you a great deal.

**Note: If you wish to order the Premium Review System for AUD, you ONLY need to use the second link. Using this link will also give you access to the required course materials.**

Please feel free to contact me if you have any questions regarding access to the course.

Thanks, and have a great day!

Alexandra

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Alexandra Graham
Professor Relations Coordinator | IMA Chapter Coordinator
800.874.5346 ext. 428 | 352.375.0772 ext. 428
alexandra.graham@gleim.com | www.gleim.com/professors

Malyasian PM Goes to Jail 1 MDB Scandal

Wed August 24, 222

We are studying ethics and auditing in my classes.  Here is what I mean by keeping up with  the accounting news to broaden your

context of understanding accounting, finance, and ethics.

finance.yahoo.com

nMalaysain ex PM Najib jailed for 12 eyars in 1MDB Scandal

Goldman pays $2 B fine over 1MDB deal

$2 B Fine, is anyone at GS going to jail?

How to Prepare for an Audit

Tuesday August  23, 2022

I am teaching two classes on auditing this semester. Here is a handy short video and article on

How to Prepare for an Audit

I looked and this site provides lots of continuing education on audits.

https://yellowbook-cpe.com/

NFL Player Health Care Fraud

Friday August 19 2022

• Gene Upshaw Health Reimbursement Account Plan
• June 2017 – Dec 2018
• $3.9 M False Claims
• False claims hyperbaric, cryotherapy, ultrasound for injured players

NFL Players plead guilty to health care fraud

the fund was created to help NFL players with long term injuries, but these guys stole from that very fund

NFL players are well paid, so  why get caught up in something like this

 

One of my Psychologist friends suggested that most players lack much education despite playing in college and probably do not understand the amount of money they are paid, hence they do something like this

Meet Richard Cardenas

Friday August  19 2022

• Wrote about $1 M hot checks
• Organized weeklong football event 2019
• Paid for uniforms, transport, meals
• Promised college scouts would see the students
• A prior theft conviction raised to second degree felony

Max 20 Year Prison sentence

Richard Cardenas created a fraudulent football agency story writing over $1 M in hot checks

The check-writing that sent him to prison centered on youth sports. Witnesses established that Cardenas organized a weeklong football event early in 2019 and, starting the previous November, paid for uniforms, transportation and meals for participants.

Cardenas told attendees from across the state that they would be seen by scouts who could recruit them to play on college teams, according to testimony. Lovett on Tuesday could not explain his motive, saying he never cooperated with investigators.

During his trial, multiple vendors testified that three checks Cardenas wrote for uniforms with screen-printing and embroidery, totaling more than $40,000, bounced in the weeks leading up to the event, officials said.

Evidence also established that on Jan. 22, 2019, Cardenas also rented numerous charter buses to transport guests to the event and wrote a check for $34,000 that he knew he did not have the money to cover.