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Accounting fraud in business
Disadvantages of fraud in a business
List of types of fraud
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Business Fraud
Business fraud basically involves acts that are a breach of ethics and integrity in a business environment. According to Investopedia, business fraud is any activity undertaken, unethical or illegal in most cases that gives an unfair advantage to the undertaker of the action (Investopedia). Action Fraud, a “fraud report center” in the UK reports businesses of all sizes are vulnerable to fraud and as much as 25% of SMEs in the UK fall victim to fraudsters (Action Fraud).
This paper discusses three common types of business fraud, which include Pyramid schemes, tax fraud and money laundering. Business fraud is highlighted by illegal and unethical business behavior which is very serious in the business world and calls for very punitive measures like lengthy jail sentences, being blacklisted in business and end to very promising careers.
Pyramid Schemes
These are business fraud cases that involve the perpetrators pitching a false or non-existent business to unsuspecting investors who they convince to invest in this business with an apparently huge potential for high returns in the short run. The perpetrators also convince those who have invested in the “business” to recruit others as well. The scheme is successful at first because the perpetrators use new cash flowing in as investment to pay off those who invested earlier. However, this model is not sustainable because the investors tend to grow exponentially until a level when not enough money is raised to pay off all those who invested earlier (SEC, 2013).
It is apparent that pyramid schemes are marketed as investment opportunities with very high potential for huge turnovers in a short time span. This is the reason why so many people buy into these ideas. Th...
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...On Hispanic Community." Www.sec.gov. 11 Dec. 2007. US Securities and Exchange Commission (SEC). 19 Feb. 2014 .
Sharma, Shantanu N. "How is money laundering done and why is it a difficult crime to commit?" 5 Aug. 2012. EconomicTimes IndiaTimes. 19 Feb. 2014 .
Stock, Stephen, Julie Putnam, and Jeremy Carroll. "Inmate Tax Fraud: $100 Million Crime." Www.nbcbayarea.com. 5 Apr. 2013. NBC Bay Area. 19 Feb. 2014 .
Viswanatha, Aruna, and Brett Wolf. "HSBC to pay $1.9 billion U.S. fine in money-laundering case." 11 Dec. 2012. Reuters. 19 Feb. 2014 .
Rexrode, C. (2010, June 16). Former Wachovia exec pleads guilty in embezzling scheme | WCNC.com Charlotte. Charlotte News, Weather, Traffic, Sports WCNC.com. Retrieved January 13, 2012, from http://www.wcnc.com/news/business/Former-Wachovia-exec-pleads-guilty-in-embezzling-scheme-96497129.html
One of the most recent white-collar crime involved Wells Fargo, a banking and financial services provider. In 2016 San-Francisco based bank Wells Fargo (WFC) employees secretly created millions of unauthorized bank and credit card accounts without permission of their customers. Opening about 1.5 million fraudulent deposit accounts and submitting 565,443 credit card applications allowed Wells Fargo employees to boost their sales targets and receive bonuses. Consequently, customers were wrongly charged fees for accounts they did not know existed. In this business crime scenario, Wells Fargo involved to pay $185 million in fines and refund $5 million to affected customers. Also, around 5,300
The case that was provided in the Stanwick textbook provided information on the Madoff Ponzi scheme which is said to be the largest of Ponzi schemes in the world. This case was a very interesting case. It showed how Bernard Madoffs massive falsehood created disaster for around 13,600 clients. The impact from Madoff did not end with his clients being impacted but also people far and in between. Madoffs Ponzi scheme was controlled through his company that consisted of his family being the head of the company, friends, and employees. This scheme was a result for the recession that hit in 2008. The two sons of Madoff that were top employees claimed to have no connections with the Ponzi scheme.
Ulinski, Michael. "AN ANALYSIS OF SMALL COMPANY FRAUDS AND." American Society of Behavioral Society. Dept of Business, Pace University. 05 Feb. 2008.
First of all, it is important to highlight that Colombia plays a particular role in the chain of money laundering globally. Colombia has been classified by many as the main producer and exporter of cocaine in the world ; in consequence, it should be expected to find generous literature and articles regarding money laundering which support this assertion. Surprisingly, a specialized database as Jane’s Information Group only lists a few more than one hundred results regarding this topic for the last twenty years. On the contrary, Factiva database lists more than five thousand results under the same parameters of search. Similarly, the United Nations Office on Drugs and Crime presents more than five thousand articles related to money laundering in Colombia. Hence, it is possible to visualize the limited resources and effort that Jane’s allocates to cover this important issue of international crime in comp...
...Money Laundering Investigations - Fiscal Year 2012. (2012, October 5). IRS. Retrieved March 30, 2014, from http://www.irs.gov/uac/Examples-of-Money-Laundering-Investigations-Fiscal-Year-2012
Throughout history, the swindler has financially plagued society. Whether it is the get rich quick scheme or the carnival worker’s impossible challenge, people have been cheated out of uncountable sums of money. In the 1920’s a man named Victor Ludsig, posing as a French official, sold the Eiffel Tower to a gullible scrap ironworker for $50,000. Even today con artists are thriving using the Internet to borrow from Peter to pay Paul. This is a scheme made famous by a crook so successful that his name now graces the age-old fraud, the Ponzi scheme. Webster’s Dictionary defines Ponzi Scheme as
Most people consider this crime to consist of CEO’s manipulating their way to making a large fortune. This of course, is true most of the time in high-profile cases. For example, in late 2001 Enron Corporation executives confessed to overstating the company’s earnings. This lead to artificially inflating what the company was worth and deceived the investors. It took some time to unravel all the fraud put behind this devious act but shows how sophisticated white-collar crime can be. Although it’s usually associated with upper management of corporations, people from all different levels and occupations can perform this crime ("How White-collar Crime Works").
Before being cultivated with cocaine and hookers as the key to success in Wall Street, Jordan Belfort demonstrated the incontrovertible advantages of positive business communications. One of which pertains to the effectiveness of corresponding with customers over the telephone. Especially for stockbrokers, having a conversation over the phone is pivotal when trying to sell a stock to a potential investor. Jordan Belfort began his process with a potential client by stating his name, where he was from, and what he had to offer. This was a method of gaining the trust of a customer that he did not know. Furthermore, he engaged the customer with an optimistic attitude and stated how the stock could affect him or her in the best way possible. Jordan coul...
This particular kind of scheme has been around for a long time dating back the 1920's. They are fraudulent investment operations , operated by a person or an organization, they promise significantly high return rates to investors to draw them in. They are able to pays returns to investors from new capital paid to the operators by new investors, rather than from proceeds obtained by the operator. The scheme was named after Charles Ponzi , who became notorious for using the technique in 1920's. Ponzi's became the first scheme to be widely known across America despite other schemes being done before, because the staggering number of money and people he defrauded. Ponzi's original scheme was based on the arbitrage of international reply coupon however, he soon redirected investors' money to make payments to initial investors and himself. A wide variety of investment vehicles or strategies, usually legitimate, have become the basis of Ponzi schemes.For example, Hedge funds which can degenerate into ponzi schemes if they unexpectedly lose money or fail to properly earn the returns promised or expected by investors. The promoter might decide to fabricate fals...
Before being cultivated with cocaine and hookers as the key to success in Wall Street, Jordan Belfort demonstrated the incontrovertible advantages of positive business communications. One of which pertains to the effectiveness of corresponding with customers over the telephone. Especially for stockbrokers, having a conversation over the phone is pivotal when trying to sell a stock to a potential investor. Jordan Belfort begins his process with a potential client by stating his name, where he was from, and what he had to offer. This is a method of gaining the trust of a customer that he does not know. Furthermore, he engaged the customer with an optimistic attitude and stated how the stock could affect him or her in the best way possible. By providing the customer with onl...
The principle territory we are planning to address is accounting fraud and how it could impact an organization by answering, the who, what, when and how. Its goal is to increase the awareness of accounting fraud and fraud counteraction. The intriguing thing about accounting fraud is that little disclosure as a rule usually leads to an enormous increase in fraud. A number of categories and sub-categories can be divided up for fraud.
Every day I see someone that is trying to sell something on a social media website. Not only does it get very annoying, but there is always that thought in the back of my mind; does it really work and can I really make THAT much money? Trends are a way of life for most people. Everyone is trying to find the new thing to do, wear, say, etc. Whether you do it knowingly or subconsciously you have probably followed a new trend one time or another. It is not that you want to be like someone else, but you do not want to fall behind either. Although there are many trends from the things people eat all the way to what they wear the trend that seems to stick out to me the most is pyramid schemes.
Fraud and white-collar crime are common forms of crimes that people commit in various aspects and positions in the corporate world. Fraud and white-collar crimes have similar meaning as they refer to the non-violent crimes that people commit with the basic objective of gaining money using illegal means. The cases of white-collar crimes have been increasing exponentially in the 21st century due to the advent of technology because fraudsters apply technological tools in cheating, swindling, embezzling, and defrauding people or organizations. White-collar crime is a complex issue in society because its occurrence is dependent on many factors such as organizational structure, organization culture, and personality traits. Thus, the literature review examines how organizational structure, organizational culture, and personality traits contribute to the occurrence of white-collar crimes.
Many groups of people use money laundering today, and many ways exist to launder money. Money laundering has become more sophisticated over the years. It is much different then when Al Capone laundered his bootleg profits. The United States is doing what they can to combat this illegal activity but without the help of others it is an impossible task. Many countries have teamed up with the Unites States to help. The only way to truly combat it is to persuade the other countries to develop anti-laundering standards. Along with developing these standards, banks need to train their staff on how to catch different transactions and policies to catch money laundering. Because laundering is so easy in these less developed countries laundering will continue, and while this illegal activity continues the activity itself will continue to destroy the economy in which it exists.