Fraud Fighters to Hear From Actor Richard Dreyfuss, U.S. District Judge and More

GUEST BLOGGER

Sarah Hofmann
ACFE Public Relations Specialist

Academy Award-Winning Actor Richard Dreyfuss, Judge Jed S. Rakoff, New York Times investigative journalist David Barboza and other experts will address more than 3,000 anti-fraud professionals gathering for the 27th Annual Association of Certified Fraud Examiners (ACFE) Global Fraud Conference in Las Vegas, June 12-17.

Most recently acclaimed for his portrayal of notorious fraudster Bernie Madoff in ABC’s miniseries Madoff, Dreyfuss immersed himself in the role. On portraying the ringleader of the $18 billion Ponzi scheme that would bankrupt hundreds of people and organizations, he said, “I’ve never played such a vivid and living legend of monstrosity … His ability to inflict pain on others was unbelievable.” Dreyfuss is not only known for his acting, but for his political and social activism as well.

Judge Jed S. Rakoff, U.S. District Judge of the Southern District of New York, has made a name for himself rejecting Securities and Exchange Commission settlements with big banks and fighting for the Department of Justice to crack down on fraud, specifically suggesting individual executives should be held accountable in lieu of the corporation as a whole. In an interview with Fraud Magazine, he explained, “While the government never approved fraud per se, it helped create some of the conditions that invited fraud.”

Other keynote speakers include New York Times investigative journalist and author David Barboza, body language expert Steve van Aperen and Halliburton whistleblower Anthony Menendez, CFE, CPA. Convicted fraudster Roomy Khan, who was involved in the Galleon Group insider trading scandal, will also address attendees. She will speak without receiving compensation from the ACFE.

The conference is the world’s largest gathering of fraud fighters and will feature more than 80 educational sessions presented by top experts in the anti-fraud field. Educational sessions will focus on subjects including cyberfraud and cybersecurity, white-collar crime, anti-bribery and anti-corruption practices, risk management, and fraud detection and prevention.

Don’t miss your chance to hear from experts on today’s most pressing fraud and corruption issues. Visit FraudConference.com for more information, video clips, articles and live updates from the conference.

One Whistleblower's Story: Losing a job, but not losing hope

LETTER FROM THE PRESIDENT

James D. Ratley, CFE
ACFE President

You might eventually have to make a tough decision that could jeopardize your job and disrupt your life.

Let's say you find an accounting regulation violation that your organization might have ignored for years. You bring your concerns to your boss who agrees you've discovered a problem. Other accounting department staff members concur until they figure out the restatement costs. You stew over this and realize that your organization is breaking the law.

You secretly report the violation to the U.S. Securities and Exchange Commission (SEC) and the audit committee of your company's board. Somehow your boss finds out and sends an email to the accounting department's executives. The attorneys review and decide that the company is in compliance. The SEC decides not to investigate the case. You lose your job and your hope.

This is the story of Tony Menendez, CFE. Except he never lost his hope. "In 2005, I was asked to approve a bill-and-hold sale [at Halliburton], and it was at least six years after the SEC issued SAB 101," Menendez says during a recent Fraud Magazine interview. This Staff Accounting Bulletin describes regulations on revenue recognition in financial statements.

He says unassembled equipment wasn't even ready to be shipped to a customer. "Halliburton was holding the equipment in anticipation of performing future oil field services for its customer," he says. 

Menendez shared his findings with his bosses, and they initially agreed with him. But they later backpedaled when they realized that correcting the accounting would've required a costly and embarrassing restatement. Menendez went to the SEC, which eventually decided it wouldn't pursue the case. A Halliburton internal investigation cleared the company. Menendez's boss outed him to the company in an email. Halliburton stripped him of many of his duties and banned him from meetings. Colleagues ostracized him. Menendez left Halliburton in 2006 and brought a whistleblower claim under the anti-retaliation provisions of the Sarbanes-Oxley Act.

In September 2008, an administrative law judge determined that Halliburton hadn't retaliated against Menendez. Menendez then represented himself in appealing the case to the Administrative Review Board (ARB). In September 2011, the ARB overturned the original trial judge. Halliburton appealed to the Fifth Circuit Court of Appeals, but the panel ruled that the company had retaliated against Menendez for blowing the whistle. After almost nine years, he'd won his battle.

"The stigma of whistleblowers hasn't changed nearly enough," Menendez says. "As long as employers see whistleblowers as a rare breed to be feared instead of individuals who add great value to the working team as a whole, it can be hard for them to prevail, and society as a whole bears the greater risk."

The ACFE will award Menendez the 2016 Sentinel Award for "Choosing Truth Over Self" at the 27th Annual ACFE Global Fraud Conference. Read more about Menendez's story in the latest issue of Fraud Magazine.

Wall Street Jed(i) to Keynote ACFE Global Fraud Conference

AUTHOR'S POST

Mandy Moody, CFE
ACFE Media Manager

The man “waging a one-man war on bank-friendly SEC settlements.”

“The judge known for holding Wall Street to account.”

“He has the courage of his convictions.”

These flattering descriptions tell me a few things about upcoming conference keynote speaker Judge Jed S. Rakoff, the U.S. District Judge of the Southern District of New York. First, there actually is someone out there who is trying to hold Wall Street’s wanderers accountable. Second, the media is capable of paying compliments. And, lastly, that he has a few things in common with many of the attendees I have met at the ACFE Global Fraud Conference over the past few years.

More than 3,000 fraud fighters from the around the world will all come together to network, learn and share war stories exactly like the ones Rakoff has fought at the 27th Annual ACFE Global Fraud Conference, June 12-17, 2016, in Las Vegas.

But, the agenda doesn’t just stop with Rakoff. He will be joined by other keynote speakers including:

• Steve van Aperen, Body Language Expert
  Van Aperen has appeared on CNN, Access Hollywood, The News Room and many other programs and is affectionately referred to as the “The Human Lie Detector”. He is known as an expert in the field of behavioral interviewing, reading body language, detecting deception and changing behaviors through rapid induction hypnosis. He has conducted behavioral interviews on 68 homicide and two serial killer investigations and consults his services to Fortune 500 companies, police departments, intelligence agencies and government departments throughout the world on how to read body language and detect deception by analyzing verbal, nonverbal and paralinguistic behaviors.
• David Barboza, Investigative Journalist, The New York Times, Pulitzer Prize Winner
  Barboza has been a correspondent for The New York Times based in Shanghai, China, since November 2004. In 2013, Barboza was awarded the Pulitzer Prize for International Reporting “for his striking exposure of corruption at high levels of the Chinese government, including billions in secret wealth owned by relatives of the prime minister, well documented work published in the face of heavy pressure from the Chinese officials.” He was also part of the team that won the Pulitzer Prize for Explanatory Reporting. In 2002, he was part of a team that was named a finalist for a Pulitzer Prize for coverage of the Enron scandal.
• Tony Menendez, the "Accountant who Beat Halliburton"
  Menendez is widely recognized for his decade long legal battle with Halliburton as a corporate whistleblower under Sarbanes-Oxley. Despite having no formal legal training, as a pro-se litigant during the appeals process, he ultimately prevailed in the Fifth Circuit Court of Appeals. An in-depth profile of Menendez published by ProPublica provides insight into what motivated him to stand up against a corporate behemoth while shedding light on the difficult journey so many whistleblowers experience after coming forward.

Along with the keynotes listed above, the ACFE Global Fraud Conference will pack in more than 70 educational sessions, three Pre-Conferences, three Post-Conferences and an unlimited amount of networking into five days. I look forward to seeing you, and hearing even more stories about your individual fight against fraud, at the conference in June. Register by March 28 to reserve your spot and receive the latest savings.

Tech Companies Latest Targets of FCPA Enforcement

GUEST BLOGGER

Sheila Keefe, CFE
Principal, BDR Advisors, LLC
Lake Geneva, WI

The Federal Bureau of Investigations and the Justice Department are investigating Oracle Corp. for possible Foreign Corrupt Practices Act (FCPA) violations related to payments made by Oracle and/or its agents to secure sales of database and applications software. Oracle is not alone in the tech world; enforcement agencies are increasing scrutiny for other tech companies including a pending investigation against Hewlett-Packard Co. and a $10 million settlement against International Business Machines Corp.

Try as they may, many businesses find it hard to compete on an unlevel playing field without engaging in corruption, as reported in the 2009 Global Corruption Report issued by Transparency International: “Nearly two in five polled business executives have been asked to pay a bribe when dealing with public institutions. Half estimated that corruption raised project costs by at least 10 percent. One in five claimed to have lost business because of bribes by a competitor.”

Since exiting lucrative global markets is not an option for many organizations, it is best to proceed with caution by enhancing FCPA specific compliance and detection programs. In terms of detecting corruption, two expense descriptions tend to be associated with bribes: gifts and travel. In examining gifts it is important to know the generally permissible gifts, which include items or services less than $100 that are given after obtaining approval. Bestowing a gift upon a foreign official is much different after approval is granted than before, with less scrutiny placed on gifts given after obtaining approval.   Regardless of timing, the exchange of a gift for a business favor often comes down to whether or not the public official had the right to say “no.” If the public official had to say “yes,” most likely because the organization qualified for approval without any favors, the gift is less likely to be deemed a bribe.

As for travel, the FCPA does not prohibit U.S. companies from paying for travel expenses of foreign officials that are legitimate business expenses, such as traveling to meet company personnel, inspecting products or company facilities or executing a contract. As outlined on the SEC Whistleblower Blog on December 6, 2010, travel expense policies must be established to simplify FCPA compliance. A few of the suggestions listed include:

• Use a central travel office rather than allowing foreign officials or other third parties to book travel
• Have a clearly articulated travel policy, requiring detailed expense reports especially when foreign officials are entertained
• Additional care when families or spouses of foreign officials are included in the travel plans
• Consistent vigilance for international travel even travel between foreign countries

In some cases, organizations can qualify for deferred prosecution agreements (DPA). DPAs involve prosecutors dropping charges in exchange for full cooperation. Halliburton Co. and its subsidiary Kellogg Brown & Root LLC took advantage of a DPA and paid a fine of $579 million. The philosophy behind DPAs is that fraud prevention is better than punishment. Companies that do not have stringent compliance programs in place before a FCPA violation typically have the establishment of a compliance program as a condition of their DPA. 

When it comes to FCPA compliance, organization will save themselves a lot of time and money by proactively setting up stringent FCPA compliance programs that will alert them to potential FCPA exposure. The alternative can be very expensive. 

To read more about Sheila or to follow her blog, Business Done Right, go here.