Financial Statement Fraud: Lessons from the Zzzz Best Case

In this case, there are several conspirators who is involved in the fraud receiving punishment from either SEC or federal government. Robert Levin, the AMRE executive and major stockholder, and Dennie D.Brown, the company’s chief accounting officer, were subject to the punishment in the form of a huge amount of fine by the SEC and the federal government. This punishment came from reasons. After AMRE going public, the company have the obligation to publish its financial reports but its performance did not meet expectation. The investigation by SEC shows that Robert took the first step of this scam, fearing the sharp drop of AMRE’s stock price because of the poor performance of company. He abetted Brown, to practice three main schemes to present a false appearance of profitable and pleasant financial reports. Firstly, they instructed Walter W.Richardson, the company’s vice president of data processing, to enter fictitious unset leads in the lead bank and they originally deferred the advertising cost mutiplying “cost per lead” and “unset leads” amount, so that they deferred a portion of its advertising costs in an asset account. The capitalizing of advertising expenses allowed them to inflate the net income for the first quarter of fiscal 1988. Secondly, at the end of the third and fourth quarters of fiscal 1988, they added fictitious inventory to AMRE’s ending inventory records, and prepared bogus inventory count sheets for the auditors. Thirdly, they overstated the percentage

In 2011 twenty-five million Americans were taken advantage of. (Small, 2013) All twenty-five million were due to fraud, mainly seventeen types of fraud. (Small, 2013) These types of fraud were mainly, weight loss products, prize promotions, and work at home programs. (Small, 2013) However, in 1964 when a young Frank Abagnale Jr. set of on one of the longest crime sprees in history, the world of white collar crime was a lot different.

At an early age, Barry Minkow was introduced to the carpet cleaning industry by his mother who worked part time as a telephone solicitor for a small carpet cleaning company. This insight of the industry allowed Minkow to understand that the carpet cleaning industry was one which had very few barriers to entry, no licensing requirements, and required only a small amount of capital to enter. Also, because of these few barriers to entry, the industry has historically attracted a larger number of faulty startups in comparison to other industries. At 16 years old, Minkow started his carpet cleaning company under the name of ZZZZ Best Company. Right away he had a difficult time with customer

This shows that Minkow is an egoist because his only concern was himself and how he could benefit himself and did everything to make sure he was continuing to make money. He defies the 6 Pillars of Character, which are trustworthiness, respect, responsibility, fairness, caring, and citizenship. As the case was briefly explained Barry broke each pillar by lying to everyone and creating the phony company. He was also lying about his revenue and overcharging customers for services, which is unfair because he is stealing from people who trusted him. He had the responsibility to do what was right and didn’t because he didn’t care about anyone but himself and becoming successful.

In the case of Phar-Mor fraud, the company was involved in cover up and some accounts were created to hide the fraudulent activities. Bad inventory counts in the stores were made to help with the cover up and deceit about activities that cost hundreds of millions of dollars. (Williams, S.L., 2011)

(CFO)This electronic store was revolutionary. Everyone thought this store was amazing and had great deals. If only the customers knew, Eddie was committing fraud. Fraud is when you do a wrongful or criminal deception to result in financial or personal gain. Eddie committed human fraud and the reason for that was so that he can be famous, not a neighborhood guy.

ZZZZ Best company is one of the biggest examples of Accounting Frauds. The founder of ZZZZ best was Barry Minkow. He was a very smart young entrepreneur when he started the company. He was involved in credit card forgeries prior to starting his own carpet cleaning business “ZZZZ Best Company”. Minkow began his business with small carpet cleaning jobs and he became a multimillionaire in a very short period of time. Minkow met a person named Tom Padgett at Los Angeles Health club. This was the beginning of Minkow's big fraud scheme. Padgett was the insurance claims adjuster and Minkow became his friend. After becoming Padgett's friend, Minkow thought of using his friendship with him to make profit in his business. He convinced Padgett to

This paper introduces Bernard L. Madoff a fraudster who orchestrated a multi-billion dollar Ponzi scheme. The paper discusses elements that make up a Ponzi scheme and explains what a Ponzi scheme is. The paper goes on to introduce some of the victim’s and examines some reasons why someone might fall victim to a Ponzi scheme. The paper describes the three elements making up the fraud triangle and how they relate to the fraud and the fraudster. This paper covers Bernard Madoff’s background and history and how he committed the fraud analyzing the fraud triangle. The paper describes ways to correct the issue, accounting principles violated, and recommendations for a fix. Finally, the paper looks at internal and external controls violated and ends with a conclusion.

Albert Miano was the trust facilities supervisor for nearly 15 years when his fraudulent activities were finally detected. It is estimated that he embezzled somewhere in the neighborhood of 4 million dollars from a magazine publisher over the course of his employment with a simple false billing scheme (Wells, 2014, pp. 106-107). “What measures could have been taken to prevent the fraud committed by Albert Miano or detect it earlier?” (class question)

Dissertation Overview............................................................................................... 1 1.1. 1.2. 2.1. 2.2. 2.3. 2.3.1 2.3.2 2.3.2.1 2.3.2.2 2.3.2.3 2.4. 2.4.1 2.4.2 2.4.2.1 2.4.2.2 2.4.2.3 2.4.2.4 2.4.3 2.4.3.1 2.4.3.2 2.4.3.3 2.5. 2.5.1 2.5.1.1 Research Framework.......................................................................................... 1 Overview of the Three Essays ............................................................................ 3 Introduction ........................................................................................................ 5 Related Research ................................................................................................ 7 Information Market Based Fusion...................................................................... 8 Information Markets .................................................................................... 8 Information Market Based Fusion ............................................................... 9 Determining Final Odds.......................................................................... 10 Classifying Objects................................................................................. 14 Distributing Payout ................................................................................. 14 Base-Classifiers and Data

To auditors, investors, fund managers, short sellers, and other external users, fraud and bankruptcy models may serve as important tools in analyzing the financial information presented by companies. Along with the earnings management ratios, quality of earnings and quality of revenue (Schilit 2003), more elaborate models and metrics (Altman 1968 and 2005, Dechow, Sloan and Sweeney 1996, Sloan 1996, Beneish 1999, and Dechow, Ge, Larson, and Sloan 2007, and Robinson 2007) may serve as a veritable arsenal of techniques for detecting financial problems

This research paper will explore the fraud at Tyco and focus primarily on accounting and auditing issues related to the fraud. One thing worth noting about this case is that fraudulent financial reporting was not at the core of the fraud, which was the case with majority other big frauds at the time, such as Enron and Waste Management. On the contrary, fraud consisted of misappropriation of assets, and fraudulent financial reporting came as a consequence of trying to hide misappropriation of assets and the use of corporate money for personal benefit.

First it should be noted that there are three types of fraud that result in losses for companies and organizations. Those three are: a) "theft of physical assets" (theft occurs in 24% of fraud cases worldwide and 26% in the U.S.); b) "information theft" (21% of digital fraud cases worldwide and 24% in the U.S.); and c) "management conflict of interest" (14% of cases worldwide and 16% in the U.S.) (Verschoor, 2013, p. 13).

Over time, Minkow moved on to bigger and bigger frauds like having his trusted cohorts confirm to banks and other interested parties that ZZZZ Best was doing insurance restoration jobs. Minkow used the phony jobs and phony revenue to convince bankers to make loans to ZZZZ Best. He had cash remittance forms made up from non-existent customers with whatever sales amount he wanted to appear on the document. He even had a co-conspirator write on the bogus remittance form, “job well done.” Minkow could then show a lot more revenue that he was really making.

Carmen Diaz, with a ten thousand dollar loan from two of her cousins, and one thousand dollars that she invested in equity, was able to open a specialty store called Ribbons an’ Bows, Inc, which was located in Coconut Grove, Miami, Florida. Four months after opening the business, Carmen’s relatives requested a financial report, which was part of the original business arrangement. Within a short time, Carmen had expanded the business, purchased small equipment, paid wages to a part-time employee, and by all outward indicators, had been running a flourishing business. As Carmen gathered the necessary information to prepare financial statements, she started to scrutinize the transactions and was somewhat perplexed. Carmen