Fool Me Once, Shame on You; Fool Me Twice…

GUEST BLOGGER

Sheila Keefe, CFE, CPA
Principal, BDR Advisors LLC

Lousy Tone at the Top Breeds Fraud

Pamrapo Savings Bank of New Jersey first made headlines last March when pleading guilty to conspiracy to commit Bank Secrecy Act (BSA) violations and forfeiting $5 million. Pamrapo admitted it had willfully violated the BSA to avoid the expenses associated with compliance (those pesky compliance expenses). It concealed its customers’ illegal or suspicious activities by failing to file Currency Transaction Reports (CTRs) and Suspicious Activity Reports (SARs) and willfully failed to maintain adequate anti-money laundering programs.

Per Assistant Attorney General Lanny A. Breuer, DOJ Criminal Division, “This case is a good example of how disregarding reporting and compliance can turn into a crime. [The] guilty plea by Pamrapo Savings Bank should remind financial institutions, large and small across the country, of the high price they will pay for ignoring the law.” Read the full article here.

Well, perhaps the DOJ enforcement action did remind other financial institutions of the importance of ethical business practices, but unfortunately for Pamrapo Savings Bank, the lessons were quickly forgotten. Within a year of the DOJ settlement, a Pamrapo Savings Bank affiliate, Pamrapo Service Corporation, was in the news when a former managing director embezzled more than $600,000 in commissions and was convicted of 33 counts of mail fraud.

Lousy tone-at-the-top was definitely the culprit with the Pamrapo Service Corporation embezzlement, with the ill-gotten gains in the form of ‘commissions’ approved by the bank founder and fraud perpetrator’s father. The ‘commission’ compensation arrangement was developed when the son went to the father seeking additional income in response to a pay cut.  The ‘commissions’ were deemed fraudulent because: (a) the commissions represented a change in accounting treatment for ongoing business activities for which the son had previous received no personal economic benefit and (b) no other officer or director of either the bank or the subsidiary was aware of the new arrangement. 

Other organizations have suffered similar losses due to unreported conflicts-of-interest and improper related party transactions. It is notable with the Pamrapo organization because they had so recently been reprimanded and apparently made little effort to change their ways.  In the aftermath of a fraud detection, it is crucial that organizations take action to prevent additional fraud. Lousy tone-at-the-top can be especially difficult for companies to correct.  However, little can change without it.

Read more of Sheila's insights on her blog, Business Done Right.

The Best — and Biggest — on Earth

PRESIDENT'S BLOG

James D. Ratley, CFE

ACFE President and CEO

If the International Space Station passes over San Diego next week those on board just might be able to make out the largest group of fraud fighters ever assembled. Well, maybe I’m exaggerating a little. But 2,300 fraud fighters will indeed set an all-time attendance record when they gather in “America’s Finest City” for the 22nd Annual ACFE Fraud Conference, June 12-17.

We’ll welcome you with insights on the latest forensic, legal, regulatory and political developments, combined with enough networking and other fun to make your conference a personal and professional success.

We are also proud to announce the publication of ACFE Founder and Chairman Dr. Joseph T. Wells’ 19th book, Fraud Fighter: My Fables and Foibles. Dr. Wells’ autobiography will be on sale at the Conference, and he will attend a book signing Monday afternoon.

Our internationally renowned keynote speakers also have much to share with you. “America’s Most Wanted” host John Walsh will tell how he became an anti-crime activist, and Joan Pastor, PhD, will explain the fraudster psychology insights she developed during her career in government and law enforcement. Likewise, forensic accounting specialist Dr. Howard M. Schilit will spotlight the early signs of financial statement fraud.  And Assistant Attorney General Lanny Breuer will offer an inside perspective on his leadership of the Criminal Division of the U.S. Department of Justice (DOJ).

As you know, insider tips are a prime source of investigative leads for the DOJ and all fraud fighters. That’s one reason for the wide interest in the SEC’s new Whistleblower Program rules, which take effect Aug. 12. As the number of SEC whistleblower cases rises, so will the potential for sometimes controversial parallel proceedings by the DOJ and SEC. More than ever, because of this and other legal complexities, CFEs need to understand factors governing the admissibility of whistleblower-provided evidence that may lead to federal charges against their employers or clients.

Along with the DOJ perspective Breuer will provide, the conference session, “Whistleblowing After Dodd-Frank: A New World,” will help attendees understand the SEC's approach to this important topic. One discussion item you won’t want to miss is the new rules’ position on whether whistleblowers should have to report fraud internally before they do to the SEC.

You’ll find me chatting with members at this and other conference events. I hope to see you soon.

Networking 2.0: How to Mingle in the New Millennium

GUEST BLOGGER

Kerrie Metschan

ACFE Event Marketing Manager

When I look back to my early days of networking in the professional world, images of shoulder pad clad business suits, clunky shoes and dreaded panty hose come to mind. My mentor at the time advised me to get my business cards into as many hands as possible and to approach everyone with a firm handshake. My first networking event, a professional women’s mixer, left me with a shortage of business cards within the first hour. (Note to professionals just starting out: let the discussion lead to exchanging contact information; don’t shove your business card into every hand you shake!) 

A lot has changed since my early days of networking. I have gained a few more savvy tips and have lived to reap the benefits of investing my time and money into solid networking opportunities. With this in mind, we took a step back and considered a variety of fun and innovative networking tools to provide attendees at this year’s 22nd Annual ACFE Fraud Conference & Exhibition, June 12-17, in San Diego.

• Network ahead of time in the ACFE’s LinkedIn group set up exclusively for attendees of the 22nd Annual ACFE Conference. There is quite a bit to talk about: this year’s keynote speakers (John Walsh and Lanny Breuer, just to name a couple), the impressive line-up of instructors, breakout sessions, and all of the fun planning to be done to ensure everyone takes advantage of some fun in the sun in beautiful San Diego.   
• Safely and securely exchange contact information at the conference with a simple click of a button on the Mingle360. There will be no need to schlep around business cards or vendors’ collateral this year, as every attendee will receive a Mingle360 to record every connection you choose to make.

Be sure to visit www.fraudconference.com to register or to learn more.

What is your favorite early memory of networking? Leave us your comments below.

Keynote Speakers Announced for 22nd Annual ACFE Fraud Conference & Exhibition

GUEST BLOGGER

Kerrie Metschan
ACFE Event Marketing Manager

Record breaking cold temperatures had us bundled up at the ACFE headquarters in Austin, Texas, diligently putting the final touches on an Annual Conference that will go down in ACFE history. After weathering one of the coldest winters to date, we look to our upcoming 22^nd Annual ACFE Fraud Conference and Exhibition, June 12-17, with heightened enthusiasm, as we dream of beautiful, sunny and always pleasantly warm San Diego, Calif.

Some of the most exciting highlights will be the inspiring and relevant keynote speakers:

• John Walsh, host of America’s Most Wanted, will share how he channeled the most painful event of his life into a mission that would change law enforcement, legislation and television as we know it.
• Lanny Breuer, Assistant Attorney General for the Criminal Division of the Justice Department, will bring the tenacity of a national leader to this year’s conference and share insights on a range of federal law enforcement priorities.
• Joan Pastor, Ph.D., President, JPA International, Inc. will provide a comprehensive model and approach to addressing fraud that allowed her to uncover numerous embezzlement and other fraudulent schemes over the years.
• Dr. Howard M. Schilit, Author, and widely known as “The Sherlock Holmes of Accounting,” will arm you with his investigative tactics to allow you to identify the causes and early warning signs of accounting tricks in public filing.

We look forward to motivating and inspiring attendees to charge forward with new insights and knowledge from the conference that began in San Diego 21 years ago.

Speaking of ACFE history, we are excited to announce our first-ever Annual Photo Contest. For anyone who has attended a previous ACFE Annual Conference and captured some special moments, we invite you to enter your photos for a chance to win a Flip Digital Camera. To submit your photos and to learn more about our contest, go here.

We hope to capture some great moments with you in San Diego this year! Stay tuned for more annual updates, as I will be blogging every month leading up to the ACFE Annual Fraud Conference.