Corporate Fraud Detection For Shareholders
Understand how to protect yourself from corporate fraud, by learning the accounting tricks used by white colloar fraudsters. See how phony profits underpin most corporate fraud schemes.Corporate Fraud... At The Margins
Most businesses play the game straight and do not submit to greed and corporate fraud. In this broader view of business, corporate fraud operates at the fringes of American business.
However, when corporate fraud reaches more sensitive industries such as the Enron corporate fraud scandal involving energy supply contracts, then the government and public thirst for punishment becomes accentuated when the "talking heads" of media weigh in with opinions and analysis.
* Bilking The Company's Assets - Cooking The Books. Straight corporate fraud involves a plan and resulting willful actions by senior management to utilize the corporation's assets and/or credit capabilities to undertake trades or developments that are both abnormal as well as detrimental to shareholders' interests.
* What Prosecuturs Do. In the cases such as Enron or Tyco or the Martha Stewart case or any number of currently running cases, federal prosecutors make a corporate fraud submission to the federal court in order to obtain a court order seeking a grand jury investigation of the case.
The grand jury undertakes a corporate fraud investigation where corporate records are subpoenaed and depositions of management are taken. In particular, the investigators focus on corporate fraud accounting methods used to mask the activities, or to obfuscate the transaction and accounting records so that no obvious irregularity exists.
In a typical corporate accounting case such as with Enron, investigators discover that "back room" deals with suppliers combined with offshore company dominated entities were key to the corporate fraud submission made to the court when seeking indictments.
* Fraud Can Occur Anywhere... Any Time. Corporate fraud cases are as diverse as business itself. Corporate fraud can be found in material supplier arrangements, especially where vendors receive pressure to either bill or record deliveries or sales in a fraudulent manner, in order to maintain a vendor supplier relationship with a large purchaser.
* Manipulating Public Stock Prices. Companies' management judges its performance based on its current stock price. The typical larger firm perceives pressure from Wall Street to match or increase revenue and earnings performance, therefore management results to bullying and pressure tactics on suppliers.
Corporate fraud accounting submissions invariably implicate senior corporate management from CEO to CFO to COO positions along with outside 3rd party accounting advisors, such as Arthur Andersen which tumbled into bankruptcy due to its complicity in the Enron corporate fraud scandal.
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