Financial Statement Fraud Casebook

This collection of revealing case studies sheds clear insights into the dark corners of financial statement fraud.

• Includes cases submitted by fraud examiners across industries and throughout the world
• Fascinating cases hand-picked and edited by Joseph T. Wells, the founder and Chairman of the world's leading anti-fraud organization ? the Association of Certified Fraud Examiners (ACFE) ? and author of Corporate Fraud Handbook
• Outlines how each fraud was engineered, how it was investigated and how the perpetrators were brought to justice

Providing an insider's look at fraud, Financial Statement Fraud Casebook illuminates the combination of timing, teamwork and vision necessary to understand financial statement fraud and prevent it from happening in the first place.

Preface xi

Chapter 1 Keep On Trucking 1
Ralph Wilson

Chapter 2 Too Good to Be True? 13
Carolyn Conn

Chapter 3 Trust Us . . . We Wouldn’t Lie to You 25
Stephen Pedneault

Chapter 4 Rotten from the Core 35
Paul Pocalyko and Colleen Vallen

Chapter 5 The Broken Trust 45
Aaron Lau

Chapter 6 The Perfect Family Business 57
Alejandro Morales

Chapter 7 Auditor’s Loyalty 67
Jyoti Khetarpal

Chapter 8 Easy Come, Easy Go 75
Brad Mroski

Chapter 9 Organized Crime Is Not Just for the Usual Suspects 83
David Shapiro

Chapter 10 The Spinster and the Investment 95
Eric Sumners

Chapter 11 This Might Sound Familiar . . . 103
James M. Brown

Chapter 12 Pulling the Strings 113
Jay Dawdy

Chapter 13 A Tale of Two Books 123
John Beard

Chapter 14 The Family Man Behind Bars 131
Antonio Ivan Aguirre

Chapter 15 Net Capital Requirements 141
Kevin G. Breard

Chapter 16 Delaying the Inevitable 149
JoLynn Runolfson

Chapter 17 Power and Corruption in the Publishing Industry 159
Kenneth Biddick

Chapter 18 It Starts and Ends at the Top 169
Kimiharu Chatani

Chapter 19 The Triple-Three 177
Leonard Rang’ala Lari

Chapter 20 What Is 1 þ 1? What Do You Want It to Be? 187
Robert Barr

Chapter 21 Take Two 197
Matthias Kopetzky

Chapter 22 Wade’s WMD 207
Michael Spindler

Chapter 23 Fraud Under the Sun 217
Oscar Hernández Hernández

Chapter 24 Franklin County Contractors: A Case of Concealed Liabilities 227
Patricia A. Patrick

Chapter 25 The Fall Man 237
Nearchos A. Ioannou

Chapter 26 The Happy Life 245
Tamer Fouad Gheith

Chapter 27 A Very Merry Fraud 255
Clive Tomes

Chapter 28 Missing Ingots 265
Prabhat Kumar

Chapter 29 When Silver Spoons Are Not Enough 273
Walter Pagano and Deborah Kovalik

Chapter 30 Sales Commission and Fraud Perpetration 283
Tarek El S.M. El Meaddawy

Chapter 31 Like Two Sides of the Same Coin 291
Patrick Wellens

Chapter 32 A President Illuminated 301
Theodore G. Phelps and Cindy Park

Chapter 33 Trouble in Tallahassee 313
Dr. Tim Naddy

Glossary 325

Index 329

DR. JOSEPH T. WELLS, CPA, CFE, is the founder and Chairman of the Association of Certified Fraud Examiners (ACFE) and a former adjunct professor of fraud examination at the University of Texas at Austin. He writes, researches, and lectures to business and professional groups on fraud-related issues and is frequently quoted in the media. He has won top writing awards from both Internal Auditor and the Journal of Accountancy magazines, and is a winner of the Innovation in Accounting Education Award presented by the American Accounting Association. For his landmark research in fraud detection and deterrence, Dr. Wells has been inducted into the American Institute of CPAs Business and Industry Hall of Fame and named to Accounting Today's list of top 100 most influential people for nine years in a row.

FINANCIAL STATEMENT FRAUD CASEBOOK

BAKING THE LEDGERS AND COOKING THE BOOKS

It might seem that accounting fraud only occurs at mega-companies such as Enron, Tyco, and WorldCom, but as Financial Statement Fraud Casebook: Baking the Ledgers and Cooking the Books reveals, that is entirely inaccurate. Edited by Dr. Joseph T. Wells—founder and chairman of the Association of Certified Fraud Examiners (ACFE)—this eye-opening casebook exposes you to the shady world of financial statement fraud—and its occurrence within companies of all shapes and size.

Reflecting the scams that happen in public organizations, private companies, nonprofits, and even charities, the cases in this book are written by those who have been on the frontlines of the described financial statement fraud investigations. Their unique insights are pulled from years of practical involvement, presenting important perspectives from cases, including:

• Trust Us . . . We Wouldn't Lie to You: Independently and Objectively Research Every New Client, Stephen Pedneault
• Franklin County Contractors: A Case of Concealed Liabilities, Patricia A. Patrick
• Organized Crime Is Not Just for the Usual Suspects, David Shapiro
• The Spinster and the Investment, Eric Sumners
• The Perfect Family Business, Alejandro Morales

Over the last hundred years, financial statement fraud has gotten larger and more frequent. Outlining each case—from how the financial statement fraud was engineered, to how it was investigated, and how the perpetrators were brought to justice—Financial Statement Fraud Casebook forms an educational and entertaining picture of this kind of fraud, its destructive impact on organizations, and what you can do to prevent it from starting in your own business.