Forensic Accounting

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					What makes a Forensic
   Background in accounting
   Background in Information Systems
   Preference to certifications:
       CPA
       CIA
       CFE
           Obtaining the credential involves passing a four-part,
            10.5-hour exam that covers law, financial transactions,
            investigation, criminology and ethics
   The forensic field of accounting, currently
    enjoying a plethora of opportunities, is on the
    hunt for technically proficient, intellectually
    curious, persistent, creative and discrete
   Fortune 500 Companies
   FBI
   Starting salaries, Svendson says, can range
    between $50,000 and $60,000. After that, “It
    depends on how well you’ve progressed. Six-
    figure salaries are not unusual, and they go
    much higher the higher up you get.”
Forensic Accounting –
Applications and Consequences
   Interesting case involving father/son defendants.
   Father John Rigas and son Timothy convicted on
    federal charges of conspiracy, bank fraud and
    securities fraud.
   Consequences?
       Father, John Rigas = 15 years in prison.
       Son, Timothy Rigas = 20 years in prison.
       Rigas family forfeits $1.2 Billion in assets to settle cases
        brought by federal regulators.
Forensic Accounting –
Applications and Consequences
Adelphia, continued
 Consequences?
     Scheme resulted in tax fraud – failing to report
      and pay income taxes on funds the pair diverted.
     Three of John Rigas’ other children are being
      charged as part of the tax fraud.
     Adelphia has been sold to Time Warner and
      Comcast for more than $17 Billion.
IRS Special Agent Peter Alvarado Quote: “They are not
  above the law.”
Forensic Accounting –
Applications and Consequences
 Instigated much of the reporting legislation we know
  as Sarbanes-Oxley.
 Trials pending January, 2006 on federal charges of
  fraud and conspiracy for:
       Former Chairman and CEO Kenneth Lay
       Former CEO Jeffrey Skilling
       Chief Accounting Officer Richard Cousey
   Consequences?
       Finance Chief Andrew Fastow pleaded guilty to conspiracy
        charges (turned evidence), faces 10 years.
Forensic Accounting –
Applications and Consequences
Enron, continued
 Consequences?
     Andrew Fastow reached his plea bargain only after working
      out a plea bargain for his wife.
     Lea Fastow, wife of Andrew, served one year on tax
      charges – has been released.
     Mrs. Fastow only person charged not employed by Enron
      at time scandal broke.
     Mrs. Fastow’s attorney attempted reduced sentence when
      Martha Stewart received 5 months – unsuccessful.
     Former treasurer Ben Glisan pleaded guilty – serving 5
Forensic Accounting –
Applications and Consequences
 Founder (and fired) Chief Executive Richard
  Scrushy charged with fraud, false corporate
  reporting and making false statements to
 First CEO charged under Sarbanes-Oxley
  reporting law.
 HealthSouth case was the law’s first court
Forensic Accounting –
Applications and Consequences
HealthSouth, continued
 Consequences?
     Accounting scheme resulted in $2.7 Billion overstatement
      in earnings – company near bankruptcy.
     Since 2003, 15 former HealthSouth executives have
      pleaded guilty to charges.
     Scrushy blamed massive accounting scheme on
     “SOX” first court test failed – Scrushy acquitted on all
Forensic Accounting –
Applications and Consequences
Martha Stewart Living Omnimedia
 Founder Martha Stewart sentenced to 5
  months in prison, 5 months house arrest.
 Convicted of conspiracy, obstruction of
  justice, making false statements.
 Former Merrill Lynch broker, Peter
  Bacanovic, was also sentenced to 5 months.
Forensic Accounting –
Applications and Consequences
Tidbits, continued
 Former Chief Executive Dennis Kozlowski and
  former CFO Mark Swartz were convicted on 22/23
  counts of grand larceny, conspiracy, securities
  fraud, and falsifying business records.
 Prosecutors accused the two of conspiring to
  defraud Tyco in order to fund extravagant lifestyles.
 The two each face up to 30 years in prison.
Forensic Accounting –
Applications and Consequences
Tidbits, continued
 Former CEO Bernard Ebbers was convicted in
  March 2005 of federal fraud and conspiracy
 Massive accounting fraud estimated at $11 Billion.
 Ebbers was sentenced to 25 years in July 2005.
 Finance Chief Scott Sullivan was sentenced to 5
  years in prison.
 Company now operating as MCI.
Forensic Accounting