Professor Elam

Fraud at the SBA

Tuesday Sept 21, 2021

Good morning. Let's get down to business.

A former head of the Small Business Administration is facing criminal charges in San Antonio that he misappropriated hundreds of thousands of dollars donated to two nonprofits he’s led.

Hector Barreto, who headed the SBA for five years under President George W. Bush, was indicted by a San Antonio federal grand jury on four conspiracy charges, including to commit money laundering and wire fraud.

Barreto, 60, received more than a combined $900,000 from the Latino Coalition Foundation and Hispanic Business Roundtable Institute from 2013 through 2019, according to the indictment. He lives in Orange County, California.

San Antonio health care consultant Miguel Gutierrez, who along with Barreto allegedly had operational control over both nonprofits, was indicted on the same charges. Gutierrez also is charged with four counts of filing false tax returns.

The Case of counterfeit Coupons

Weekend Sept 18 2021

Just when I think I have heard of every kind of fraud, along comes counterfeit coupons.

A Virginia Beach couple created fake coupons worth millions and re sold them costing business a lot of discounts which were not earned.

I must say this is a creative scheme. But as usual, she did not know when to quit, and now faces 12 years in prison, her husband got 7 years.

 

KPMG in the News Again-For the Wrong Reasons

Weekend Sept  18 2021

It's hard to keep a sescret among 1,100 employees.

KPMG was fined $1450 K for mass cheating on internal exams apparently required by the PCAOB.

 The fines and punishment are amazingly light.  Those involved even e mailed answers around, gee rather lax don't you think?

 

Georgetown Tennis Coach Gordon Ernst Pleads Guilty

Thursday Sept 16, 2021

Gordon Ernst entered a guilty plea for his involvement with Rick Singer.

Singer paid  multiple coaches money from parents to admit unqualified students to athletic scholarships.

Ernst will forfeit $3.4 M  from the scheme.

I wonder where he put the $3.4 M, in a US bank?  Georgetown University calls it an unprecedented breach 0of trust.

Reading dozens of such cases over the years I am always amazed the perp never knew when to quit and leave the country

before being caught. Prosecutors ask four years, Gordon wants one year. Singer has also plead but has not been sentenced.

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Mo Fayne Jailed 17.5 Years for Ponzi Scheme

Thursday Sept 16, 2021

Rapper Maurice "Mo" Fayne, who appeared on Love & Hip Hop: Atlanta when he was engaged to cast member Karlie Redd in 2018, has been sentenced to 17-and-a-half years behind bars for crimes including the misuse of millions of dollars in PPP loans.

The 38-year-old Fayne, who lives in Dacula, Ga., was arrested in May 2020 on charges of making false statements on his application for a loan from the Paycheck Protection Program — which was intended to stabilize the economy during the COVID-19 pandemic — as well as bank fraud and conspiracy and wire fraud related to a Ponzi scheme. Fayne went on to plead guilty — TMZ reported that he did so after cutting a deal with prosecutors to avoid even more time — and he was convicted in May 2021.

Officials said Fayne had, in April 2020, applied for $3.7 million through United Community Bank for his corporation, Flame Trucking. They money was supposed to be used to pay his employees, mortgages or other costs related to his business. 

Instead, Fayne spent it on personal expenses: $85,000 in jewelry, $40,000 for past-due child support, $136,000 for the lease of a Rolls-Royce, $65,000 in cash, $50,000 for money he owed in another legal case and $907,000 to start a new business. 

 

Maurice "Mo" Fayne has been sentenced to 17-and-a-half years in prison. (Photo: Instagram)

Fayne paid an additional $230,000 to people helping him to run a Ponzi scheme. According to the Justice Department, he had run the scheme from March 2013 to May 2020, taking money from people who intended to invest in his business and using it to "pay his personal debts and expenses and to fund an extravagant lifestyle for himself."

In addition to the time in federal prison, U.S. District Judge Mark H. Cohen ordered Fayne to five years of supervised release and payment of $4,465,865.55 to his victims across multiple states.

 

A Crypto Ponzi Scheme

Thursday Sept 16, 2021

A cryptocurrency hedge-fund manager who lied about returns on his $90 million fund and siphoned money from its accounts to cover a lavish lifestyle was sentenced to 7½ years in prison Wednesday.

Stefan Qin, 24 years old, pleaded guilty in February to one count of securities fraud after prosecutors said he ran the fund, Virgil Sigma Fund LP, like a Ponzi scheme for three years until its implosion in late 2020. The U.S. attorney’s office for the Southern District of New York said many of the more than 100 investors in the fund were scammed.

Federal sentencing guidelines called for 15½ to nearly 20 years in prison, but U.S. District Judge Valerie Caproni said at a hearing Wednesday in federal court in New York that those recommendations were draconian.

Mr. Qin’s lawyers had asked for a two-year imprisonment, but Judge Caproni said she needed to give a sentence that dissuaded others from committing similar white-collar crimes. Mr. Qin “frittered away millions of dollars” and wiped out some victims’ savings, she said.

Interesting Insight into Health South Fraud

Thursday Sept 9 2021

I have had the best feedback on the Aaron Beam presentation of anything I have ever introduced to students.

One student's Mother worked for Health South, here is his insight, very interesting.

 

I'm always really interested when one of my business classes brings up Healthsouth because my mother is an Occupational Therapist who was working for them when all of this went down. She had gone up to the corporate headquarters in Birmingham and was amazed and disgusted with how the city put Richard Scrushy on a pedastal and how huge his ego was.  It was not a shock to most employees when the fraud came to light, it was just mostly embarrassing to say that you worked for them.  My mom and all of her co-workers also followed everything leading up to the trial. They had heard that Scrushy was actually going around to different inner city churches each weekend, trying to manipulate people that might end up in the jury pool into believing he was a great guy. She was always dumbfounded that a jury could believe that all these different CFO's over the years all had the same scheme when they didn't even work together, but Schrushy knew nothing. Right.....

I was really impressed with Mr Bean and his sincerity. You were correct when you said that listening to him first hand really made this issue jump out of a textbook and apply it to a real person. I'm sure that he knew that the truth would come out one day.  I can't imagine the anxiety that that would cause. How can you ever really just enjoy your life after you've cheated? He didn't mention that one of the CFO's committed suicide around this time as well. 

NFL Players plead guilty to defrauding Health Care Fund

Wed Sept 8, 2021

NFL ringleaders sought players eligible for payments from a special fund.

They then forged fake invoices for equipment and services that never took place.

Gene Upshaw NFL Player Health Reimbursement Account Plan

I thought those guys make pretty good money to start with?

What Clinton Portis and other ex-NFL players allegedly did

In the original indictment, the trio was part of a group of 12 players accused of submitting false claims for reimbursement for expensive medical equipment that was never purchased, such as hyperbaric oxygen chambers, ultrasound machines that are typically used on pregnant women, and electromagnetic therapy devices used on horses.

The ringleaders would allegedly find ex-players eligible for the program and offer to submit claims, fabricating documents and prescriptions in exchange for kickbacks.

Claims would allegedly be for about $40,000 to $50,000 and were submitted between June 2017 and Dec. 2018, eventually adding up to millions of dollars in fraud.

In addition to the three players who pleaded guilty on Tuesday, 12 other players, including former Pro Bowl wide receiver Joe Horn, have been charged and pleaded guilty.

 

Kraft Et tu Brute'?

Tuesday Sept 7, 2021

Coda to a massive scandal: Two Kraft executives charged in accounting scheme [CNN Business] The SEC announced the formal charges and the settlement on Friday after a long-running regulatory investigation that Kraft disclosed in 2019. The company will pay $62 million as part of the settlement. The agency alleges that from the last quarter of 2015 to the end of 2018, Kraft “engaged in various types of accounting misconduct” — including faking supplier contracts to get discounts that the company hadn’t earned — to ultimately make their financials look better to analysts and investors.

JA Ethics

Friday Sept 3, 20 21