Fortis bank announces €28bn loss

Another Bank on the way to bite the dust.

BRUSSELS: Belgian-Dutch financial holding group Fortis said Tuesday it made a net loss last year of 28 billion euros (37 billion dollars), larger than the 22.5 billion euros forecast in mid-March. 

"The loss in 2008 was due to the 27.4 billion euro negative result of discontinued operations, caused by the loss on sale of the banking activities," it said in a statement. 

The bank had made net profits of four billion euros in 2007. 

It was broken up last October as a major casualty of the global financial crisis. The Dutch state took over its Dutch banking assets and Belgium took the Belgian assets, planning to sell them to French bank BNP Paribas in a move that is being hotly contested by shareholders. 

The net profit for the year from the company's insurance activities in Belium was six million euros, it said. It broke even in its international insurance operations but losses on investments weighed on its books. 

"The operational results of our insurance companies were satisfactory taking into consideration the market turbulence and the uncertainty surrounding Fortis," Chief exective Karel De Boeck said in the statemente. 

"Total gross inflows were 14.6 billion euros despite challenging market conditions," he said. 

Boeck added that a new deal being drawn up for the sale to BNP Paribas, which is to be put before shareholders at a meeting on April 8 and 9, "will provide a strong foundation for the future."

Source: www.timesofindia.com

Fraud fighters: Forensic accountants on front line in the fight against fraud

As economy drops, forensic accounting is expected to grow

When Ron Forster conducts interviews, he watches his subjects as much as he listens to them. He monitors their eyes. He watches their arms. He notes where they place their hands.

Even a seemingly innocuous gesture -- an interviewee moving his hand away from his face right before answering a sensitive question -- could be a sign that a subject is lying.

And you thought accounting was boring.

Mr. Forster is a forensic accountant -- a growing subset of the accounting field focusing on uncovering financial fraud.

And while forensic accountants do their share of number crunching and computer analysis, they also do work that resembles television crime show investigations more than it does the world of the proverbial green eyeshade.

"We look at documents, we look at e-mails, we do interviews," said Mr. Forster, a partner with KPMG in Philadelphia who leads the firm's mid-Atlantic forensic accounting practice. "Between all of that, you come to discover what facts make sense."

As the economy plummets, forensic accounting is one field that is expected to grow.

Forensic accounting is now the most popular specialty in Duquesne University's master of accountancy program. And the University of Pittsburgh plans to add a class in forensic accounting when it starts up its own master's program this fall.

When the going gets tough, it seems, financial fraud gets going.

"When the economy starts to tank, a couple things happen," said Marc Brdar, a forensic accountant with the Downtown firm Schneider Downs. "First of all, people in positions of trust are more likely to rationalize going over that line and No. 2, during a declining economy, fraud activity more often comes to light. Prosperity typically can hide a multitude of sins."

Mr. Brdar got into forensic accounting nine years ago after working as a controller of a company and investigating a manager who was engaging in fraud.

"I just really got a charge going after him, especially through the lies and deceit," he said.

The field has grown in recent years, with a general awareness of financial fraud jump-started by mammoth accounting scandals at Enron and WorldCom and changing auditing standards that emphasized fraud detection.

"We really have a more heightened sense of accountability now than we did 10 years ago, a greater sense that fraud can occur," said Bob Kollar, director of the master of accountancy and taxation programs at Duquesne University's Palumbo-Duquesne School of Business.

That same awareness has drawn students to the field.

"They want to be fraud fighters," he said. "It's interesting to follow the trail, detect what's happened and help convict someone. You have to peel back all the layers of the onion."

In the last five years, the number of fraud examiners certified by the Association of Certified Fraud Examiners has jumped 64 percent, from 15,148 to 24,797.

The American Institute of Certified Public Accountants started issuing certifications in Financial Forensics in June 2008, and already has 2,900 members with the CFF credential.

Salaries for forensic accountants can start around $50,000, and more experienced people can earn into six figures.

Financial fraud is more likely to be detected through whistleblowers or other tipsters than through routine audits, according to the institute.

While many forensic accountants are called in at that point to investigate potential fraud, others work with businesses on preventive strategies to deter employees from committing fraud or detect it in its earliest stages.

And though instances of fraud most often reported in the media are those on the million- or billion-dollar level of Bernard Madoff or Enron, fraud is statistically more common at smaller companies, said Valerie Williams, who teaches forensic accounting classes at Duquesne.

In her classes, Ms. Williams teaches techniques for identifying someone likely to commit fraud (someone with financial difficulties at home, for example) and puts her students through mock interviews with an employee (played by her) who is stealing money from a dry cleaning company. In four years of doing the exercise with 80 students, only four have interviewed her well enough to leave her no option but to confess.

Though the University of Pittsburgh hasn't had a standalone forensic accounting class, it's a topic of perennial interest to students, said Vicky Hoffman, an associate professor who will teach forensic accounting there this fall.

"They think it's 'CSI' or something," she said. "They find out it's still accounting, but it has a Sherlock Holmes aspect about it."

Just the word "forensic" now draws people to the field, given its association with popular television, said Mr. Forster. That said, he isn't expecting "CSI: Pittsburgh Accountants" anytime soon.

"Rarely are the bean counters highlighted," he joked.

Bob Donaldson/Post-Gazette

Schneider Downs forensic accountant Marc Brdar: "During a declining economy, fraud activity more often comes to light. Prosperity typically can hide a multitude of sins."

Source : www.post-gazette.com, By Daniel Marsula/Post Gazette

Safety Tips to Keep Hackers Away

The comfort of an internet transaction — be it for transferring funds from a bank account, buying an air ticket or just ordering a bestseller — is matchless. But, as most of us know and recent spate of internet frauds reinforce, etransactions can be very risky. 
    

Data theft is a reality and will only increase with time. Today banks, for one, are definitely opting for more and more net transactions. Says internet guru Vijay Mukhi, “In America, for instance, banks never liked to deal with you physically because it was expensive. You could get a loan without anybody even seeing you. That kind of trend is starting in India.” While banks have mostly foolproof security systems in place, such as digital signatures and cryptic keys, hackers always manage to stay ahead of technology. “There are always going to be programming errors in websites that allows the bad guys to know your password,” says Mukhi. And, they don’t limit themselves to just bank transactions. 

How they do it 
Hackers have moved beyond phishing — where a bogus site or email masquerades as the original to make you part with sensitiveinformation. Altaf Halde, country manager at Utimaco Safeware, a data security company, says these days, hackers prey on social networking sites, which he deems as “the weakest link” as far as data security is concerned. 

Personal information put up on these sites can be used to crack email id and then password, says Halde. The other preferred hacker method involves the use of tickers that popup at various websites. If you click on a ticker, you may reach an innocentlooking site which in turn may tempt you to download, say, a simple e-greeting card. This action may release an ‘.exe’ (selfexecutable) file into your computer. It will keep a track of all the keywords you type in, including usernames and passwords. 

These trojan programmes can also sneak into your system when you download music or movies at peer-topeer sites (where you share data between individuals). “They simply collect your information and upload it to the hacker.” 
Amuleek Bijral, country manager, RSA, the security division of EMC, a security solutions provider, cites a study by InfoWave in February 2007. It says that more than 785,000 people in 2006 were potentially victims of identity theft due to thousands of personal information leaks occurring at numerous large corporations. “The most common reason for these information leaks: internal employees or process issues, not external hackers.” 

How to dodge ’em 
Some good internet habits that you must internalise. 
    

Exercise restraint in the amount of personal information you upload on the web to minimise misuse. 
Always check whether a web address begins with ‘http’ or ‘https’ before executing any transaction, advises Mukhi. 

‘Https’ means a site is secure and the data you key in, travels to the final destination in an encrypted form. In other words, nobody can access it along the way. Also, ensure there is a ‘lock’ symbol at the bottom of the browser. Only then key in your user name.     

Never click on a link, as the chances of reaching an unknown, potentially phishing site, are higher. Always key in the site name. 

Ideally, delete all emails from an unknown source. If opening one out of curiosity, never give personal data. Banks, for one, never ask for such information as they already have it. “While we think twice before giving out personal information to a stranger on the streets, we are quite comfortable doling out information online,” says Halde. 
Don’t shop at an unknown shopping site even if it offers a dream deal. If still tempted, google the site’s security performance and whether there were any hacking attempts on it. 
“Never leave receipts at bank machines, bank wickets, in trash cans,or at unattended gasoline pumps; ensure you destroy paperwork you nolonger need,” says Bijral. 

Source : The Times of India, By Rucha Biju Chitrodia, 29.03.09

Housing " Rescue Scams" spring up

In Early 2008, Cheryl Ann Montero, a California mortgage broker, held a series of free seminars in the clubhouse of the Lone Tree Golf Course in Contra Costa County, a suburban area near San Francisco. The attendees, homeowners facing foreclosure, were desperate for a rescue from their woes. Using a PowerPoint presentation, Montero delivered one. 
    

She said her firm, Freedom Financial Solutions, could pressure lenders to stop foreclosures by challenging the legality of loan agreements, according to court records. Her fee: $2,500 upfront and a $2,000 monthly payment to cover legal costs. Promoting her services on the Web site Craigslist, Montero, a blond-haired, blue-eyed woman who looked like a soccer mom, became known as a foreclosure escape artist. “All the real estate agents knew about her classes,” says Kay Trail, a realtor in Antioch. “She was one shrewd sister.” 
    

She was also ripping people off, says Ken McCormick, a prosecutor in the Contra Costa County District Attorney’s office. A player in a new confidence game exploiting soaring defaults, Montero didn’t have a team of attorneys to confront lenders. Instead, her firm took a small ownership stake in some of her clients’ houses and filed for bankruptcy, temporarily suspending foreclosure proceedings on those homes, according to an investigative report filed in court by prosecutors. 
    

In the end, she didn’t deliver lower mortgages for the 10 homeowners who paid a total of $52,000 for her services, McCormick says. Montero did have mounting financial woes of her own: In September, she filed for personal bankruptcy, according to court records. 
    

“She couldn’t make it in real estate anymore, so she just changed hats,” McCormick says. “But she was taking money and doing nothing.” The prosecutor charged Montero with 36 counts of grand theft and related charges. She pleaded not guilty and is free on $100,000 bail. Her lawyer, Cameron Bowman of San Jose, didn’t return telephone calls for comment. 
    

Rescue scams are springing up across the US, says California Deputy Attorney General Angela Rosenau, exacerbating a housing crisis in its third year. The predators are persuading troubled borrowers they can intervene with their lenders and negotiate lower payments on their mortgages, law enforcement officials say. Instead, the players, often out-of-work real estate professionals who peddled subprime mortgages during the boom, pocket hundreds of thousands of dollars in advance fees and disappear or bleed their victims by charging monthly payments. 
    

“There’s just been an explosion of vulnerable homeowners and people preying on them,” says Terry Goddard, the attorney general of Arizona, which recorded the thirdhighest rate of residential foreclosures in 2008, after Florida and Nevada. “People miss their payments, and they are about to be repossessed, and someone walks in the door and says, “I’m here to help.” You just can’t underestimate the power of desperation.” 
    

The swindlers are thriving largely because the lenders and banks that inflated the housing bubble with subprime loans have been slow to help homeowners as those mortgages blow up. 

Source: The Economic Times, Mumbai - 28.03.09, By Edward Robinson - San Francisco

Stanford's finance chief cooperating with feds

DALLAS — The chief financial officer of the troubled companies owned by Texas billionaire R. Allen Stanford has promised full cooperation with federal investigators looking into an alleged $8 billion investment fraud, the man's attorney said Tuesday.

Finance chief James M. Davis' decision to work with investigators comes nearly two weeks after a court filing indicated he would assert his Fifth Amendment right against self-incrimination. Court documents said Davis would not "testify, provide an accounting or produce any documents" related to the Securities and Exchange Commission's civil case, which accuses him and Stanford of running a Ponzi scheme.

Dallas attorney David Finn, who recently began representing Davis, said he could not comment on his client's previous stance.

"We are fully cooperating with federal investigators," Finn said. "It's a massive investigation that will take some time to resolve. We are ready, willing and able to answer questions truthfully and provide whatever assistance we can."

Finn said there will be "a time and a place" to address allegations of Davis' involvement in what the government has alleged is an investment fraud centered on certificates of deposits sold at Antigua-based Stanford International Bank.

Davis was not promised leniency, Finn said. He is cooperating with both the SEC and the Department of Justice's fraud unit, which has begun a criminal investigation.

"Nothing has been promised and nothing has been asked for," Finn said. "It's premature to be discussing or contemplating any sort of negotiations along those lines."

An SEC spokesman and a Justice Department spokesman declined to comment. In a criminal complaint filed against Laura Pendergest-Holt, the chief investment officer of the Stanford Financial Group, the FBI revealed it has been investigating Stanford's companies since June.

Only Pendergest-Holt has been charged with a crime — obstructing the SEC's investigation. Her attorney did not immediately respond to a request for comment.

Davis' cooperation could help the government advance its case against Stanford, who has no attorney listed in connection with the investigation. Chuck Meadows, a Dallas attorney who represented Stanford at a hearing earlier this month, has withdrawn from the case.

About 85 percent of the 32,000 Stanford accounts that were frozen after a federal judge placed Stanford's assets under control of a receiver have been released to investors. The remaining accounts are mostly CDs or bank accounts at Stanford International Bank in Antigua.

Although the names of some investors have been publicly reported, the receiver has agreed to keep their identities confidential. That's a victory for those wishing for privacy, said Steve Malouf, a Dallas attorney who represents hundreds of South American investors, mostly from Ecuador and Venezuela.

"We all want the same thing," Malouf said. "We want the receiver to collect as much as he can and return it to the account holders with as little deductions as possible."

Source:  www.chron.com, By Jeff Carlton

E&Y Settles HealthSouth Case for $109M

Ernst & Young agreed to pay $109 million as part of a settlement with HealthSouth shareholders stemming from the health care provider's earlier accounting scandal.

The accounting firm, which agreed to the settlement without admitting to or denying the allegations, had been named in a class-action lawsuit also brought against HealthSouth founder and former CEO Richard Scrushy; UBS, one of Healthsouth's former investment bankers; and three former UBS employees. The class is led by the New Mexico State Investment Council, Central States SE and SW Areas Pension, and several Michigan pension funds. Last October, UBS agreed to pay $100 million for its role in the fraud.

E&Y was HealthSouth's auditor from 1996 to 2002.

Terms call for a fund to be created for investors, according to court papers filed this week in the Birmingham, Ala., federal court case, the Birmingham News reported. The paper quoted Rob Riley, a Birmingham attorney for the plaintiffs, as saying that the deal is "a good settlement for the shareholders, many of whom thought they would never see any return of their investment."

"This settlement allows us to resolve the litigation brought by the shareholders of HealthSouth," Charles Perkins, an Ernst & Young spokesman, told the paper in an interview. U.S. District Judge Karon Bowdre scheduled a hearing for Thursday on whether to give preliminary approval to the accord.

In September 2006 HealthSouth agreed to pay $445 million to settle several lawsuits stemming from the accounting scandal. In that deal, HealthSouth agreed to shell out $215 million in common stock and warrants, and its insurance carriers paid $230 million in cash. HealthSouth was to pay 25 percent of the net proceeds to the plaintiffs, after deducting its costs and expenses in connection with the litigation.

The latest payout was the result of the terms of that earlier settlement.

In June 2005, HealthSouth had agreed to pay $100 million over two years to settle Securities and Exchange Commission civil charges stemming from the accounting scandal. The SEC alleged that HealthSouth overstated earnings by $2.7 billion from 1999 to 2002 to meet Wall Street projections and boost its share price. Earlier in that year, Ernst & Young had turned the tables by suing HealthSouth for alleged damages stemming from the medical rehabilitation chain's huge accounting fraud. E&Y claimed that the scandal exposed it to lawsuits and damaged its reputation.

As part of the June 2005 settlement, HealthSouth — which admitted no wrongdoing — also agreed to retain the services of consultants in the areas of governance, internal controls, and accounting to review policies and practices implemented under the new management team; provide training and education to appropriate officers; and continue to cooperate with the SEC and Department of Justice in their respective, ongoing investigations.

In 2005, Scrushy himself was acquitted of all charges linked to the accounting fraud. He and several executives had been accused of recording as much as $2.7 billion of fake revenues on the company's books over six years, and correspondingly adjusting the balance sheets and paper trails. He later was convicted on fraud and bribery charges, and is now serving his sentence in a Beaumont, Tex., federal prison.

In May 2006, HealthSouth agreed to pay $3 in a deal with the U.S. Department of Justice, which agreed to not indict the company on criminal charges.

Source: www.cfo.com, By Stephen Taub & Roy Harris

A Help-Wanted Sign for Fraud Investigators

Daniel Rosenbaum for The New York Times

Pam Verick, who directs the fraud risk management practice at Protiviti, conducts classes to help clients watch for possible financial schemes.

AS the financial crisis has continued to unfold, new suspicions of fraud have been emerging — and with them a need to find whether there is evidence of wrongdoing. That’s why the demand for fraud investigators is rising.

Recently, the Federal Bureau of Investigation announced that the number of open mortgage-fraud investigations was more than 1,600 at the end of fiscal 2008, which ended Sept. 30, compared with 881 two years earlier. In addition, 530 corporate-fraud investigations were open, it said.

The bureau is recruiting people to help with these investigations, including those with experience in computer science and accounting. People who speak a foreign language and those who are certified fraud examiners also have an advantage. Certification is a credential offered by the Association of Certified Fraud Examiners that notes proficiency and experience in fraud prevention, detection and deterrence.

Outside the government, fraud investigators work for security consulting firms like Kroll; at accounting firms like Deloitte Touche and Eisner; and at global business consulting and internal audit firms like Protiviti. Some hang out their own shingle. These firms may be retained by lawyers or by companies pursuing an internal investigation.

The number of certified examiners is up 10 percent compared with last year, according to the association, a trade group based in Austin, Tex. Median compensation for full-time certified fraud examiners in 2008 was just over $90,000 a year, the association says.

Corporate fraud investigators say the work requires curiosity and tenacity. And they warn that it can be time-consuming and even tedious. Because they are retained on the recommendation of corporate or outside counsel, they are bound by lawyer-client privilege and do not have a say in whether to prosecute a crime. Still, they say, their efforts can be rewarding.

A hero of the breed recently emerged in the form of Harry Markopolos, who repeatedly warned the Securities and Exchange Commission that Bernard L. Madoff was running a giant Ponzi scheme at the expense of investors. Mr. Markopolos, who was working for an investment company when he started looking into Mr. Madoff’s activities, left in 2004 to start his own investigation firm.

Although the S.E.C. did not act on Mr. Markopolos’s warnings, he has helped ease the way for investigators in his wake who may suspect various “mini-Madoff” scandals and other types of fraud.

While many investigators have backgrounds in forensic accounting, internal audit and law enforcement, experts say the field also draws finance executives, paralegals, librarians and former journalists. “What you need is an uncanny ability to get people to talk,” said Jules Kroll, the recently retired founder of the firm that bears his name.

Two years ago, after Annie Cheney, a freelance writer, completed a book called “Body Brokers: Inside America’s Underground Trade in Human Remains,” she considered what to do next. She found writing a book to be a solitary experience. “It was very lonely,” she said. “I needed a job.”

Because she loves reporting and figuring out puzzles, Ms. Cheney sent a résumé to Kroll, the risk management and fraud investigation company. Hired as an analyst, she was recently promoted to director.

Philip S. Deming, who runs Philip S. Deming & Associates of King of Prussia, Pa., started his career with the Treasury Department and has advanced degrees in human resources development and human resources management. In one case that he investigated, he found that an employee had padded an expense account. In another, he discovered that a woman had fabricated a college degree.

The need to investigate fraud these days is so great that Mr. Deming has hired temporary workers — including lawyers, private investigators and certified fraud examiners — who are paid $150 to $275 an hour.

Teaching can also be part of a fraud investigator’s job. Pam Verick, who directs the fraud risk management practice at Protiviti, also conducts training sessions for employees of clients. In these sessions, she guides them through the possible workings of schemes involving bribery, kickbacks and fraudulent financial reporting.

Occasionally, during a break, a participant in the class will take her aside and say, “I have a concern that something we just talked about is happening,” she said. The concern is then referred for investigation to the internal counsel at the participant’s company.

WHEN Ms. Verick conducts her own fraud investigations, she is always alert for fact patterns. And the technology she uses to obtain them has become more sophisticated. She says she now recovers trace evidence from cellphones, BlackBerrys, hard drives and network files.

Ms. Verick said that in her experience, if fraud is uncovered, most companies do not prosecute. Instead, they make individual agreements with employees who make restitution.

The 18-hour days spent and the vending-machine meals eaten during investigations are worth it, she says, when a client says, “Thank you, we needed to hear that message.”

Dina Blake, a graduate student in accounting at West Virginia University in Morgantown, W.Va., hopes to investigate fraud one day. She plans to pursue forensic accounting and to receive a fraud-investigation certificate; she has an entry-level job lined up this fall at Ernst & Young, the auditing firm, in Washington.

She said her studies had given her an understanding of the hardships of those who lost retirement savings as a result of corporate fraud. She says she is approaching her new career with idealism. “I’m going to help straighten out the business world one way or another,” she said.

Source: The New York Times, By Amy Zipin

The Normal Approach By A Tax Fraud Lawyer

Although we would like to believe that just the odd few people decide they do not want to pay their taxes to the government, this is not the case as many businesses fall foul of tax laws as well. Anyone found doing this is committing an offence under the tax laws of the United States. Perpetrators can be punished severely for this type of offence as it can have serious consequences on the running of government. Most often these so called ‘clean crimes’ are carried out by what are considered respectable people that have not been in trouble with the law in the past.

Although there are many aspects to Tax Fraud, some of the offences are more serious than others with tax evasion at the top of the list and someone forgetting or late with their tax return at the bottom. Tax fraud lawyers are specialized attorneys that deal with issues of tax fraud and represent clients who are accused of tax fraud.

Unlike other kinds of tax lawyers, tax fraud lawyersdo not advise on tax planning or filing of income tax returns. There are two situations where a person or firm will seek their help; when they suspect their affairs are being looked into by the IRS or where they have been formally charged with the offence of tax fraud. The offence, even though serious, does not mean that imprisonment is necessarily the only course of action and a tax fraud lawyer will try to ensure this does not happen.

It is not uncommon for people and even companies to fail in their tax responsibilities through lack of knowledge or understanding of their responsibilities. Some individuals and firms also fall foul of poor advice for their tax planning form the tax specialists they employ to represent them.

When this is the situation then the lawyer will attempt to have the punishment reduced and sometimes dropped altogether. The need to choose a tax consultant that has proper qualifications cannot be underestimated in circumstance like this if investigation by the IRS is too be avoided.

The normal approach by a tax fraud lawyer will be too reason the argument that prosecuting the individual or company will not serve the public interest as recovery of the taxes owed is less likely. Sending a tax evader to prison just places additional costs on the system which are paid by other tax payers with little chance of the tax owed being paid so the argument to allow the offender to pay by installments will be made by a good attorney as the best in the public interest.

Source: Business News, By Will Smith

It’s high time ICAI set house in order

A Watershed incident is usually one which alters the course of events forever. Champions for improved corporate governance norms had hoped that the Satyam episode would probably turn out to be a defining moment in the history of Corporate India, a turning point that would help introduce better compliance and disclosures. What a delusion, a load of nonsense, that’s been! 
    

Soon after the Satyam episode came to light, the most indignant lot seemed to be some of the regulators. For instance, the Institute of Chartered Accountants of India (ICAI) — which regulates all the auditors in the country and lays down all accounting rules and audit norms — tried deflecting the blame by pointing fingers at certain firms and individuals, instead of introspecting about the quality of accounting and reporting norms that it endorses. Sure, there is the possibility of an unholy collusion between the Satyam management and its auditors — which is still the subject of an investigation by the police — but in the absence of any proof, ICAI launched a broadside, through calculated leaks to the media, about the culpability of certain individuals, some of whom are important elected ICAI members and have therefore cultivated bitter rivals, eager on usurping those coveted positions. 
    

In the meantime, the minister for corporate affairs PC Gupta also publicly lamented the lack of corporate governance in many Indian companies and dropped broad hints about how his ministry would vigorously pursue and bring to book some 100-odd companies that had violated accounting guidelines blatantly. It did not occur to him to also add that this broad-based abuse of regulations had transpired under his watch as minister over the past five years, and that they had gone unnoticed, unreported and unpunished by his ministry. Or, that these “gross” violations had been endorsed by numerous auditors, who remain affiliated to — and licensed to practise by — the ICAI. To the astute and the cynic, the outpourings seemed to have been made with an eye on the forthcoming elections, rather than with an honest intention of improving corporate governance or the state of disclosures in Corporate India. 
    

One of the issues with India Inc that will continue to plague investors will be the extent of comfort they can draw from the published accounts and the degree to which they can trust these numbers. In this high season of righteous anger, one doubtful accounting practice continues unabated and untrammelled. This is writing off impairment to assets through the balance sheet rather than bringing it to the profit and loss account. While the bull run was rampaging through valuations, many companies used this accounting sleight to botox their revenue and profit numbers. And, minister Gupta, as well as, ICAI continue to look the other way as camouflaged corporate numbers hide losses and dupe investors. 
    

Here’s how it happens. Suppose, Company A bought 75% of Company B, which is a foreign company, about 18 months ago. At the time of acquisition, an exuberant A had paid $500 for B. But, given the economic cataclysm in the global system, B’s value today stands reduced to $100. In effect, what A bought for $500 has now become $100. How does A account for the $400 that has vapourised because of the global economic meltdown? Well, normally, best practice should have required him to deduct that amount from his net profit, or add to the loss. But, since he’s in India, he does things differently — he deducts the amount from the share premium reserve, an account created from the money that a company receives for issuing shares at a premium — the face value is credited to paid-up share capital and the balance goes to share premium reserve. In short, the loss in the value of A’s investment is not reflected in the bottom line at all. 
    

The objective of such account-brushing is to get a better reception at the fancy ball, known as the stock market. Companies relentlessly pump up revenues and profits while masking losses and brushing accounting misdemeanours under the carpet. Sure, some auditors do raise some flags, but companies are able to use the legal cracks in the system to wriggle out. In such cases, the auditors should voice their reservations loudly and clearly; the ICAI should back them with clear rules that favour investors and not audit firms that tone down their criticism for fear of losing a client. 

So, the issue here is: 

A> Does ICAI frame rules and guidelines that eventually benefit its member firms over the interest of minority shareholders? 

That raises another pertinent point: 

B> Should ICAI then be governed solely by elected representatives from member firms, as is the norm for all other self-regulated organisations? 

These questions must be answered if we are serious about corporate governance, and if we want to avoid the next Satyam. 

Source: The Economic Times, India's Enron, 23/03/09

Satyam Fraud may be much bigger: CBI

New Delhi: 

Its probe into the accounting fraud in Satyam Computer's has given Central Bureau of Investigations enough reason to believe that the scam involves a much bigger amount, close to Rs 10,000 crore, than what was disclosed by the IT company’s founder B Ramalinga Raju, who is now awaiting trial. 
    

Sources said the agency has retrieved over 7,000 fake invoices and forged documents showing fixed deposits and bank balances and their evaluation shows that the size of the scam is over Rs 9,600 crore, much more than the Rs 7,800 crore disclosed by Raju. 

They said the investigating agency during the probe found that the accused relied heavily on technology to generate nearly 7,000 fake invoices to the tune of Rs 4,500 crore and fed the same into Satyam’s books. 
    

These inflated figures were also reflected in the balance sheet in the form of audit reports which helped the company to cheat the public who were purchasing its shares. 

The accused have also given false and fabricated statements, found by CBI, about high capital of the company. 
The accused forged documents and created fake fixed deposit receipts to the tune of Rs 3,300 crore. 

Source: The Times of India, 23/03/09

Regulatory Reform Sought In Wake of Fraud Cases

In both multi-billion dollar cases, there were common warning signs.

Bernard L. Madoff and R. Allen Stanford promised customers safe, consistent returns that were higher than competitors offered. The men divulged little about how they worked. The auditors they said were in charge of ensuring that everything added up turned out to be inadequate.

Despite the ominous signs, authorities have alleged in recent months, Madoff and Stanford were able to pull off frauds that have devastated people and charities around the world. The Securities and Exchange Commission and other regulators didn't stop the activities until it was too late.

The cases are among a series of recent alleged frauds at financial firms. While they have been handled differently, they have shined a light on loopholes in federal regulations, such as fragmented regulations governing brokers, investment advisers, auditors and other firms. And the cases have underscored obstacles facing authorities, including inadequate resources for detecting wrongdoing and difficulties in gaining access to foreign financial accounts.

"Reform is needed to close the existing regulatory gaps that expose investors to risk," said Richard Ketchum, chief executive of the Financial Industry Regulatory Authority, Wall Street's self-policing agency.

SEC Chairman Mary L. Schapiro is looking to work with lawmakers to overhaul the nation's financial regulatory system. This week, the SEC announced that it would partner with a government-funded research center to study ways to better assess the thousands of tips and complaints that come in each year. The House and Senate plan to consider legislation as early as late spring that would bring all financial activities under federal regulation. The details, however, aren't clear.

At the SEC, Schapiro plans a new focus on spotting fraud and other market manipulation early on. She plans to create a large team to seek out where abuses might be occurring. Then she plans to direct the SEC's limited examination staff toward those places. "We've got to be able to conduct risk assessment that allows us to understand where problems might arise and connect the dots between different problems in different places -- whether they're generated by different products, different firms or different trends in the economy," Schapiro said in a recent interview.

Anti-fraud experts say investment performance that consistently beats the market is one of the most visible red flags. "If there's a 10-year period and the returns are within a narrow window, that's problematic. That's never the way the market works," said Fiona A. Philip, a former SEC enforcement official.

But, as several recent cases have shown, the SEC didn't stop a number of allegedly fraudulent activities until billions of dollars had been compromised.

The SEC largely relies on people coming forward to warn them of unusual patterns of investment returns. Madoff and Stanford, who allegedly conducted their schemes for years, didn't report returns to the SEC because they were not required to make such disclosures.

The SEC received tips that Madoff was running a Ponzi scheme and looked into the charges years ago, but didn't discover the scheme. It is not clear why, but an SEC inspector general's investigation is trying to find the reason. By contrast, federal authorities were probing Stanford's businesses for years, suspicious about his returns, but didn't act because of jurisdiction questions.

Barbara Roper, head of investor protection for the Consumer Federation of America, asserted that part of the problem was that regulators were not aggressive enough. "The quality of oversight that's provided -- in terms of exams, questioning, paying attention to tips -- is not what investors have come to expect," Roper said.

But others say that what tripped up investigators was not a lack of aggressiveness but regulatory barriers and loopholes. For instance, Madoff's firm was split into two parts: a brokerage and an investment advisory, or money management, wing. Under federal law, brokers face scrutiny and oversight, but investment advisers are more lightly regulated. Madoff's advisory business, which was forced to register by the SEC in 2006, was not examined.

The number of investment advisers has nearly doubled in the past decade to 11,300, according to the SEC. While nearly half of all brokers are examined each year by the SEC or another regulator, only one in 10 investment advisory firms is. A fragmented regulatory system also exposed investors to Stanford's certificates of deposits. Stanford operated through a Houston broker that sold CDs offered by a bank in Antigua, which is legal. The SEC does not regulate CDs or foreign banks, and the Federal Deposit Insurance Corp. doesn't protect foreign CDs. The SEC doesn't have the authority to stop a broker from selling a product that's outside its jurisdiction.

"When your Aunt Millie walks into the local financial professional to ask for advice, she has no idea -- nor should she -- which set of laws governs the conduct of the person on the other side of the table," SEC Commissioner Elisse B. Walter said in a recent speech. "What she does need to know is that no matter who it is, or what product they are selling, she will receive a comparable level of protection. I don't think that we can give Aunt Millie that assurance today."

A separate challenge concerns the oversight of auditors for private financial companies, such as those of Madoff and Stanford. Corporate wrongdoing at Enron and other companies in the early 2000s led to new auditing rules and a board to oversee auditors of only public firms. Madoff's firm allowed a three-person storefront operation on Long Island to audit his multi-billion-dollar operation. Stanford's firm had a small accounting firm in Antigua oversee its investments, contrary to what it told investors.

"Inspection and examination of Mr. Madoff's accountant by the [accounting oversight board] could have identified his Ponzi scheme much earlier," said Rep. Paul E. Kanjorski (D-Pa.), chairman of the House capital markets subcommittee, who has introduced legislation to increase regulation of auditors.

Source: www.washingtonpost.com, By Zachary A. Goldfarb

UPDATE 1-U.S. Senate panel approves finance fraud bill

A U.S. Senate committee on Thursday voted to tighten laws against financial fraud, sending legislation to the full Senate for consideration.

The bipartisan Fraud Enforcement and Recovery Act would place mortgage lenders who are not federally regulated within the scope of bank-fraud laws applying to "financial institutions." It passed the Senate Judiciary Committee on a voice vote.

"When people rob banks, they know they'll go to jail. When bankers rob people, they should know they'll go to jail, too," said committee member Edward Kauffman, a Democrat.

A two-year $490 million funding package would authorize the the FBI, the Justice Department and other law enforcement agencies to hire more fraud prosecutors and investigators, and FBI mortgage-fraud task forces would receive more assistance from federal prosecutors.

The proposal would also expand the main federal fraud law to protect money spent through the bank-bailout Troubled Assets Relief Program and the $787 billion economic stimulus package.

The bill aims to help the government "investigate and prosecute the kinds of financial frauds that have so severely undermined our economy and hurt so many hard-working people," Democratic committee Chairman Patrick Leahy said.

A Justice Department official supported the legislation at a hearing last month.

It is unclear when the full Senate will take up the measure, committee spokeswoman Erica Chabot said. The House of Representatives also must approve the measure for it to become law. Spending to fund the authorized increases would have to be approved separately.

Other provisions in the legislation would:

-- Cover commodities futures and options under federal securities law.

-- Clarify the criminal money-laundering law to ensure that "proceeds" of an unlawful activity refer to total revenues, not just profits.

-- Widen the reach of the federal False Claims Act, which allows private individuals to sue businesses for submitting phony bills to the government. (Editing by Cynthia Osterman)

Source: www.reuters.com, By Randall Mikkelsen

Beyond Corporate Frauds

Human greed is as old as human civilisation. A fraud is a manifestation of greed coupled with cunning and deception. No system of corporate governance can be evaluated on the basis of big corporate frauds. Such frauds are aberrations. They have to be tackled with speed, focus and condign punishments of a career-ending nature by a credible single institutional agency like the Serious Fraud Investigation Office (SFIO) established by statute. Special courts have to be set up for effective and speedy prosecution of those guilty.

The SFIO could be set up on the lines of the Serious Fraud Office of the UK, established under the Criminal Justice Act, 1987, with expert teams comprising of various professionals such as lawyers, forensic accountants and police officers seconded from police forces. To assume that a system of corporate governance would be a foolproof protection against big corporate frauds would be naïve. Hence, to tinker with corporate governance regulation as a knee-jerk reaction to big corporate fraus may not be wise.

BEYOND CLAUSE 49
It is self-evident that the institution of independent directors and audit are the pillars of corporate governance without which corporate governance becomes a sham — an edifice in quicksand. Clause 49 of the Listing Agreement has no doubt brought about a conceptual primacy in this regard. However, in practice these two institutions have been rendered a farce of sorts.

The way independent directors are appointed in India does not inspire much confidence. If a modicum of independence on the part of independent director is to be ensured, a total revamping of the process is called for. Only the nomination committee of the Board, consisting solely of independent directors, should have the responsibility to propose the names of independent directors.

The principal promoter of the company should disclose to the nomination committee, the nature of any relationship that he has with the person(s) proposed to be appointed as independent directors of the company. For ensuring better independence, both real and perceived, it would be appropriate that an independent director should not continue as such for more than two terms of three years each.

It is also important that an independent director should not be on more than five boards so as to allow him/her sufficient time and focus to be an effective independent director on the existing boards. It is also desirable that the remuneration of the independent directors is reasonably attractive.

TRAINING INDEPENDENT DIRECTORS
Continuing education for independent directors would be highly desirable. Premier management institutions and professional institutes should be encouraged to run development programmes of short duration for independent directors. The corporate governance report should give details of such management development programmes attended by the independent directors of the company.

It would not be a bad idea to set up a self-regulatory body called ‘The Institute of Directors’. It could be a top-of-the-line institution to nurture, promote and regulate the profession of independent directors.

Nurturing the profession of independent directors requires a great amount of restraint and imagination on the part of the regulators and the law-enforcers so that eminent and good people are not discouraged from being on company boards.

AUDIT
One of the ways to reinforce the audit function is to constitute a high-powered ‘Audit and Accounts Oversight Board’ consisting of eminent people of high public standing with requisite qualifications. This ‘Audit and Accounts Oversight Board’ should have the liberty to pick up the annual accounts of a few companies out of the leading 100 listed companies of India, for a detailed and transparent scrutiny every year. After such a scrutiny, a short synopsis of its findings in a highly-readable form should be posted on the regulators website as well as on the website of stock exchanges and that of the company.

The corporate governance report should cover in some detail the areas covered by the internal audit of the company with the comments of both the audit committee as well as that of the internal auditor of the company. It should be prescribed that, in the case of listed companies of a certain size, the internal audit should be carried out only by an independent internal auditor to be selected by the audit committee of the company on a transparent basis.

A HOLISTIC APPROACH
With the increasing distance between ownership and management of companies, the only way to ensure survival and prosperity to companies in a global era is through corporate governance.

A holistic approach to corporate governance would be to adopt a stakeholder-centric corporate governance model, as opposed to a shareholder-centric corporate governance model. Who are the typical stakeholders in a stakeholder-centric corporate governance model? They are (a) the employees, (b) the customers, (c ) the lenders, (d) the community and (e) the shareholders. In a stakeholder-centric corporate governance model, the best interests of all the stakeholders are taken into account.

In this context, it would be tempting to say that market forces should determine the kind of corporate governance practices that a company should adopt. However, it should be said that the threshold for such corporate governance practices should be laid down by principle-driven regulation. Companies which exceed such a regulatory threshold would obviously be rewarded by market forces.

After all, a great institution can be continually built to last only when those who build it share wealth and power as a result. Now is the time to reinvent corporate governance as a self-enriching way of life. The Tatas are a good example of this. India that has shown five millennia of greatness can surely be the cradle for many more Tatas!

Source: The Business Standard, By L.V.V. Iyer, 21.03.09

US watchdogs on the prowl for skeletons in corporate closets

REGULATORS UNLEASH SPREE OF INVESTIGATIONS FOLLOWING CRISIS

US REGULATORS and law enforcement officials said on Friday they are aggressively cracking down on fraud related to the financial crisis and are seeking more powers to prevent predatory lending in the future. 
    

The FBI said it has 43 corporate fraud cases under way directly related to the financial crisis, and said they include allegations of financial statement manipulation, accounting fraud and insider trading. 
    

The US Securities and Exchange Commission told lawmakers at a House Financial Services Committee hearing that it has several investigations into subprime lenders that raise issues regarding possible insider trading, particularly before the announcement of negative news regarding the lender. 
    

It also said the SEC is probing the timing and amount of investment banks’ massive writedowns of asset values. 

“We are also in the process at the commission of considering what additional legislative changes may be needed to help our enforcement and examinations personnel combat fraud and wrongdoing in the market place,” SEC Commissioner Elisse Walter said. 
    

Democratic Representative Barney Frank, chairman of the Financial Services Committee, said Congress needs to know what resources are necessary to go after those who helped fuel the economic crisis. 
    

“There is in America today a justifiable level of anger at the fact that the great majority of Americans are suffering economically because of the mistakes of a relatively small number of people and of a system that was inadequate to the task,” Frank said. 
    

“We cannot prosecute people for breaking rules that did not exist and one thing we need to think about is the rules we need going forward.” 
    

Federal Reserve Governor Elizabeth Duke said the Fed is working on registration requirements for residential mortgage loan originators employed by federally supervised institutions. Many of the bad mortgage loans that are the root cause of the credit crisis were created by lenders that had little or no oversight, and regulators are seeking to assert more control over the mortgage origination process. 
    

“While the expansion of the subprime mortgage market over the past decade increased consumers’ access to credit, too many homeowners and communities are suffering today because of lax underwriting standards and other unfair or deceptive practices that resulted in unsustainable loans,” Duke said. 
    

The US Department of Justice urged lawmakers to support pending legislation that would expand the definition of “financial institution” to include mortgage lenders for fraud prosecution. 
    

Rita Glavin, acting assistant attorney general for the criminal division of the DOJ, said the department is working with the inspector general of the Treasury Department’s $700 billion TARP. — Reuters 

THE HEAT IS ON 
FBI is investigating 43 corporate fraud cases 
SEC is probing insider trades at subprime lenders 
House panel seeks to find those responsible for crisis 
Fed works on requirements for mortgage originators 
Several states have started probing bonuses at AIG

Source: The Economic Times, By Karey Wutkowski & Rachelle Younglai, 21/03/09

Credit card details of Britons sold at $10 each

A BBC sting operation has exposed a criminal gang in India that sells credit card details of UK customers, reportedly stolen from call centres in India.

In a sting operation, two BBC reporters posing as fraudsters from London bought names, addresses and valid credit card details of UK customers from New Delhi-based Saurabh Sachar, who acted as a broker to arrange the sale.

The BBC team was in India after being put in touch with a man offering to sell stolen credit and debit card details. The reporters met the broker in a Delhi coffee shop for an encounter that was filmed secretly.

He said he could supply them with hundreds of credit and debit card details each week at $10 a card. After the reporters agreed to initially buy the details of 50 cards, the man handed over a list of 14.

Sachar, who said the remainder would be emailed later, claimed some of the numbers had been obtained from call centres handling mobile phone sales or phone bill payments.

The investigation was broadcast on BBC's prime time news on Thursday.

After the BBC team returned to UK, Sachar continued to supply card details by email.

The BBC said nearly all of the names, addresses and post codes sold were valid but most of the numbers attached to them were invalid -- often out by a single digit. However, about one in seven of the numbers purchased were active cards still in use by UK customers and their owners could have been subjected to fraud if the cards had fallen into the hands of criminals.

The BBC team contacted the owners of these cards and warned them that their details were being bought and sold in India. Three of the customers had, within hours of each other, bought a computer software package by giving their credit card details to a call centre over the phone. Within hours of the purchase, their details were fraudulently sent on to the reporters. Sachar denied any wrongdoing or illegal activity.

The software was made by Norton, part of Symantec corporation. Symantec, which launched an investigation after being informed, said the leak had come from a single source, now removed.

"We are investigating how this happened and will take appropriate steps to address any opportunities for improvement. We have engaged with law enforcement officials in India... We are in the process of reviewing all possible options to manage this third party call centre, including moving away from it," Symantec said.

Data protection lawyer Pavan Duggal told the BBC: "India is only paying lip service to data protection. We don't yet have a dedicated legislation on data protection. Until India comes across with strong stringent provisions on data security we will have instances like this."

Source: www.dnaindia.com, By PTI, http://www.dnaindia.com/report.asp?newsid=1241063

PriceWaterhouse Revamps Indian Unit

NEW DELHI —The auditor PricewaterhouseCoopers is overhauling its operations in India two months after starting an investigation into fraud at one of its Indian clients.

The auditor, which has nine offices and thousands of clients in India, said Thursday that it would make sweeping changes to “re-emphasize quality.” They include adding a five-member advisory board in India, appointing a new head of risk management from outside India to oversee work in the country and a new auditing team in India, and changing the management in its office in Hyderabad.

Price Waterhouse, as PricewaterhouseCoopers is known in India, audited Satyam Computer Services, a software and outsourcing firm whose chairman said in January that he had falsely claimed assets of $1 billion in cash and overstated operating margins. Two of Price Waterhouse’s partners are being held without bail in a Hyderabad jail on charges of criminal conspiracy and cheating.

Price Waterhouse has said that there was no evidence that the two auditors were complicit in the suspected fraud. Still, the changes announced Thursday may raise questions about whether quality problems are more widespread in India.

“While we are confident in the overall quality of our services and our people, the problems at Satyam have created a difficult environment, and therefore we are taking all the necessary steps to demonstrate to our clients and other stakeholders our commitment to the highest standards,” Ramesh Rajan, the chairman of Price Waterhouse India, said in a statement.

Price Waterhouse’s new advisory board will comprise four executives from outside the company and one PricewaterhouseCoopers executive from outside India. A new head of quality assurance and risk management, who will review the company’s work in India, will also come from PricewaterhouseCoopers operations outside India.

A partner from India, Sharmila Karve, was named the new head of auditing for the firm and has appointed a new team of seven to oversee audits in India.

The global firm fully supports the new steps taken in India, Samuel A. DiPiazza Jr., chief executive of PricewaterhouseCoopers International, said in a statement. “It is essential that the quality, expertise and behavior of partners in PwC member firms all around the world are, and are clearly seen to be, of the highest standards,” he said.

About a dozen PricewaterhouseCoopers examiners from outside the country have been inspecting audits and practices at the firm in recent weeks. Price Waterhouse is the only foreign auditing firm allowed to sign off on the balance sheets of Indian companies because its presence in the country predates a law forbidding the practice.

Source: http://www.nytimes.com/2009/03/06/business/worldbusiness/06audit.html?_r=1

SEC charges Silicon Valley hedge fund manager with multi-million-dollar fraud

The US Securities and Exchange Commission has brought charges against Albert K. Hu, a hedge fund manager with ties to Silicon Valley, for falsely claiming that his funds were overseen by experienced attorneys, auditors and other professionals, and for misappropriating investor funds.

As part of its suit, the SEC is seeking an emergency court order to freeze Hu's assets. Hu, a long-time Bay Area resident, was arrested in Hong Kong on related criminal charges filed by the US Attorney's office in San Jose.

Since 2001, the complaint alleges, Hu claimed to manage hedge funds known as Asenqua and Fireside. The SEC says that Hu, and entities he controls, lied to investors from the beginning of his scheme.

Hu and the Asenqua hedge funds falsely claimed that several prominent international law firms served as legal counsel for the Asenqua hedge funds. In addition, the defendants identified an individual as 'chief financial officer' of the Asenqua hedge funds, when in fact the person had no association with the funds.

Hu forged the signature of the purported chief financial officer in communications with investors, according to the complaint. Further, the defendants provided investors with supposedly independently audited financial statements for two of the funds. In reality, Hu paid for a virtual office with an address in the San Francisco financial district for the 'independent' audit firm.

'By touting the supposed involvement of independent professionals in the oversight of his hedge funds, Hu deceived investors into believing that there were safeguards in place that simply did not exist,' says Marc J. Fagel, director of the SEC's San Francisco regional office. 'The SEC filed an emergency action to preserve whatever investor funds may remain in accounts in the US and abroad.'

According to the SEC's complaint, Hu raised more than USD5m from investors with connections to Silicon Valley and transferred hundreds of thousands of dollars of investor funds into foreign bank accounts without informing investors. The SEC further alleges that recently Hu has refused investors' requests for the return of their funds.

The Commission's complaint, filed in federal district court for the Northern District of California, charges Hu and the entities he controls, Asenqua, Asenqua Capital Management, AQC Asset Management and Fireside Capital Management, with violations of the antifraud provisions of the federal securities laws.

In addition to emergency and interim relief, the SEC seeks a final judgment permanently enjoining the defendants from future violations of the antifraud provisions of the federal securities laws and ordering them to pay financial penalties and disgorgement of ill-gotten gains.

Source: http://www.hedgeweek.com/articles/detail.jsp?content_id=318889

Obama vows end to corporate greed culture

Washington: US President Barack Obama, under fire over the payment of huge bonuses to traders at the floundering insurance giant AIG, Wednesday vowed to end the culture of corporate greed in America.

He made his remarks on the White House lawn as he headed to California for two days away from the capital, where the crescendo of public ire over the payments is rising. 

Obama insisted he and his administration were not responsible for creating the "mess" at American International Group (AIG), whose insurance of questionable financial instruments has contributed to the global meltdown. 

But he added: "Ultimately, I'm responsible. The buck stops with me. And my goal is to make sure that we never put ourselves in this kind of position again." 

He said that the "culture" of "excess greed, excess compensation, excess risk" has to change and pledged regulatory reform to put more controls on the finance industry. 

He said the government was working to set up a "resolution authority" similar to the Federal Deposit Insurance Corporation, which regulates banks and insures bank deposits. 

Answering a reporter's question, Obama said it was not his intention to "quell anger" of the public. 
"I think people are right to be angry. I'm angry," he said. "What I want us to do, though, is channel our anger in a constructive way."

Source: Indo-Asian News Service, updated on http://news.in.msn.com

Workers At Home Target For Fraud

f you work from home, freelance or telecommute you’re a likely target for a variety of fraud attempts so listen up.

Since you are a company of one–Exec, Admin, HR, Marketing, IT, Central Supply, and even the grounds keeper you have to make decisions about computers, telecommunications, banking and all the other facets of running a business that big companies spread over dozen, hundreds, and even sometimes thousands of people. So you’re a good target for people who want to take your money.

In fact, the FTC received over 800,000 complaints during calendar year 2007. Consumers reported fraud losses of over $1.2 billion (at an median amount of roughly $350 per person).

Shop-at-Home/Catalog Sales was the leading complaint category, so if you buy online (and you do) be sure you know who you’re dealing with. Internet Service rip-offs were the second largest category followed by Foreign Money Offers (those idiots just don’t give up do they), bogus Prizes/Sweepstakes and Lotteries, Computer Equipment and Software, and Internet Auctions (can you spell eBay?). Health Care, Travel, Vacations and Timeshare, Advance-Fee Loans and Credit Protection/Repair, Investments, and Magazines and Buyers Clubs fill out the list.

Wire transfer problems continue to increase. It used to be you could assume a cashiers check was good, but not any more. So wire transfers becomes the option of choice. But 28% of the consumers reported wire transfer as the payment method involved when they were scammed.

But here’s the (almost) bottom line: Half the fraud complaints where electronic mail related. We’ve said it before but we’ll say it again: if it’s spam it’s a scam.

Let’s be careful out there!

Source: http://undress4success.com/work-home-people-target-fraud/