Fraud and Insolvency Cases

Departing staff stealing intellectual property

Wed, 10 Nov 2010 21:35:00 GMT

Protect your business from staff when they are leaving

The Australian Financial Review, on 15 October 2010, published a very helpful and insightful article called “Bosses’ Byte Back to Protect Secrets”. The article noted that the increased availability of USB memory sticks and mobile electronic storage devices (including IPODS, smart phones and portable hard drives) made it easier for employees to “steal” intellectual property, data and information and this is particularly more prevalent at or about the time that the worker resigns their employment.

One of the leading authorities quoted in the course of this article was Mr Warren Mallard, Managing Director of Lyonswood Investigations and Forensics. His firm provides Fraud investigation services that through the clever use of IT “data mining,” can forensically acquire the data from a computer hard disk and conclusively prove whether or not an employee has downloaded data from a computer or server.

The article also noted the use of Anton Piller and Mareva Orders now known as “Search” and “Freezing” orders where helpful in the process of finding and freezing the proceeds of these thefts.

ASIC releases Insolvent Trading report

Fri, 15 Oct 2010 05:56:00 GMT

Insolvent Trading is a serious issue. As a director of a business you have a responsibility to not let your organisation engage in insolvent trading. This occurs when debts are incurred but at the time it is know they will not be able to be paid as and when they are due.

ASIC has released a booklet to help directors better understand their responsibilities with Insolvent Trading. The Insolvent Trading report is a result of ASIC's visits to over 1,530 Australian companies displaying solvency concerns during the period from 2005–06 to 2009–10. Interestingly 15% of these companies reviewed by ASIC were subsequently placed into external administration. This was mostly by the directors.

They found a director is less likely to breach their duties if they:
1: Maintain appropriate books and records
2: Identify insolvency concerns and assess available options
3: Seek professional advice
4: Act in a timely manner

For the full 24 page report go to > ASIC National Insolvent Trading Program Report

Comment from Mark Streeter Sydney Lawyer

What is interesting in this report on Insolvent Trading is that 85% of these companies displaying insolvency concerns therefore were not placed into external administration. The majority of business worked their way through it. Asking for legal advice about insolvent trading is not saying it is all over. Acting in a timely manner rather than leaving it too late is a very good reminder for all business directors. As the report says "Directors seeking advice at an early stage may achieve a better outcome for external stakeholders, including employees and creditors."

If you are facing insolvency or trying to recover debts from an insolvent company give us a call to arrange an appointment to discuss your options.

Workplace Fraud Prevention Checkup

Thu, 23 Sep 2010 02:45:00 GMT

The USA based Association of Certified Fraud Examiners (ACFE) provide some valuable resources. Workplace Fraud is a serious issue in Australia. Tools like their Fraud Prevention Checkup may assist you to consider what practical steps you can take to reduce workplace fraud.

The ACFE is the world's largest anti-fraud organisation. Streeterlaw Sydney Law Firm also have available a free White Paper for businesses.

Workplace Fraud Investigation, How to legally uncover it, stop it, prevent it.

Desperate people do desperate things

Thu, 23 Sep 2010 02:00:00 GMT

The Association of Certified Fraud Examiners (ACFE) have a free report Occupational Fraud: A Study of the Impact of an Economic Recession available from their website.

ACFE President James D. Ratley, CFE says "Desperate people do desperate things. Loyal employees have bills to pay and families to feed. In a good economy, they would never think of committing fraud against their employers. But especially now, organizations must be vigilant during these turbulent times by ensuring proper fraud prevention procedures are in place."

The survey behind the report also found that:
* Employees pose the greatest fraud threat in the current economy. When asked which, if any, of several categories of fraud increased during the previous 12 months, the largest number of survey respondents (48 percent) indicated that embezzlement was on the rise.
* Layoffs are affecting organisations' internal control systems. Nearly 60 percent of CFEs who work as in-house fraud examiners reported that their companies had experienced layoffs during the past year. Among those who had experienced layoffs, almost 35 percent said their company had eliminated some controls, while 44.2 percent said the layoffs had no effect on controls and only 3.2 percent said their company had increased controls.

The survey was conducted in USA in February and March 2009. The findings are still of interest now in Australia.

For a copy of the report click here >> Occupational Fraud: A Study of the Impact of an Economic Recession

Insider trading suspected in major USA mergers

Mon, 20 Sep 2010 04:30:00 GMT

Insider trading is difficult to prove without a paper trail but sometimes the signs are obvious. Studying the stock prices of major corporations over a one year period helped highlight that insider trading was taking place. In this Insider Trading video below it states 40% of stock prices leading up to mergers over $1b USA experience spikes BEFORE the announcement was made.

The continued policing and prosecuting of insider trading is seen as improving the credibility of the market and creating a more level the playing field for investors.

Other Insider Trading blogposts

Insider trading stock tips at family reunion
What is insider trading?
Decriminalising insider trading proposal
Legal and illegal insider trading

Credit Card Fraud by Former Employee

Mon, 20 Sep 2010 01:35:00 GMT

Some corporate fraud by employees is not premeditated. it is opportunistic. Sometimes temptation overrides common sense. It is important that businesses have in place mechanisms to prevent fraud.

In this video it explains a simple scenario. A laid off employee didn’t have his corporate credit card canceled. So he took advantage of it and went shopping and paid for a family holiday. Clearly it is illegal but the recovery of the money can be a distraction and expense your business could do without.

This video has some simple tips for companies to help reduce employee fraud. Streeterlaw's Mark Streeter has extensive experience in fraud cases.

Corporate Fraud does happen in Australia? Ask for Streeterlaw's free White Paper: Workplace Fraud Investigation. How to uncover it, prevent it, stop it

Insider Trading Stock Tips at Family Reunion

Mon, 20 Sep 2010 05:16:00 GMT

Insider trading laws in Australia have become far more relevant to the majority of the population. Traditionally insider trading was considered a white collar crime of a select few wealthy individuals with "inside" knowledge of businesses.

Australia now has one of the highest ownership of investment shares in the world. Therefore many Australians take an active interest in stock prices and follow the Australian share market closely. Good trading tips always seem welcome but be warned.

Insider trading is illegal in Australia. It is considered a white collar crime but it is also quite easy to overstep the mark as this cartoon video demonstrates. Click on the YouTube graphic below to watch a scenario of a not-too-ridiculous event. Seemingly innocent stock tips can land yourself and others in trouble. The 'best shares to buy' tips are not worth it if you end up with a criminal conviction.

YouTube Insider Trading Video

Other Insider Trading blogposts

Insider trading suspected in major USA mergers
What is insider trading?
Decriminalising insider trading proposal
Legal and illegal insider trading

Most Common Business Fraud Schemes

Thu, 16 Sep 2010 06:32:00 GMT

Business fraud is an increasing problem not only in Australia. In this American video forensic accountant and anti-fraud director, Lance Randolph of CBIZ MHM, discusses the two most common fraud schemes facing corporate America today. The situation in Australia is similar with corporate fraud done by a company's own staff a serious issue. Protecting your business from fraud can be a matter of having simple procedures in place.

It is amazing that simply "writing a cheque" is the easiest way for businesses to be de-frauded by their own employee(s). The second one is the use of counterfeit cheques.

Do you suspect Corporate Fraud? Ask for a free White Paper: Workplace Fraud Investigation. How to uncover it, prevent it, stop it

Preventing Corporate Fraud is Good Business

Thu, 16 Sep 2010 06:00:00 GMT

When USA based WorldCom Inc fell victim to an $11 billion accounting scandal it resulted in the company filing bankruptcy. In 2002 it was the largest bankruptcy in U.S. history. Corporate Fraud occurs in Australian businesses. Most business fraud is opportunistic so could be prevented.

Some of the lessons learned in the WorldCom collapse are explained in a video called Fraud and the Tone at the Top . This is a training video designed to help business owners prevent corporate fraud.

The video includes interviews with one of those charged and sentenced to a gaol term for their role in commercial fraud.

He explains how he was able, and even encouraged to manipulate accounting records. The culture of the leaders encouraged questionable ethics and even them having a written “Code of Ethics” was seen as helping staff avoid moral analysis of their actions.

Some of the commercial fraud started seemingly innocently enough with delaying write offs of accounts receivables. As staff were remumnerated on profit and results there was incentive to make revenues look better than they actually were. Actions were justified with a belief that they could be fixed in the future when things improved.

The setting of unreasonable goals combined with poor communication is seen as partly to blame for the fraud. Where loyalty is not displayed staff can become loyal only to themselves

The video is a reminder that preventing corporate fraud is good business.

To watch the 20 minute video click here: Fraud and the Tone at the Top

Do you suspect Corporate Fraud? Ask for a free White Paper: Workplace Fraud Investigation. How to uncover it, prevent it, stop it

What is Insider Trading

Mon, 20 Sep 2010 04:33:00 GMT

Insider trading is illegal in Australia… but what is an insider trading definition?

The simplest definition of Insider Trading is taking advantage of information that is not public.

This 'inside' information is most often seen as being used to give someone an unfair advantage in the buying or selling of shares or stocks.

Australians are now more likely to personally own shares in companies in which we work or where a member of our family or close friends work. When you include superannuation even more Australians own stocks and shares. Everyone would appreciate knowing ahead of time if a stock is likely to rise, or if it is about to fall.

It is considered natural to ask friends or family who work for companies on the Australian stock exchange for insider information on trading tips of shares. Your innocent question over a BBQ of "what's happening at work?" could however land you, and your friend, in court facing insider trading penalties? It depends on whether the information being shared is already 'public' knowledge. If your friend’s answer convinced you something significant was about to happen and that you should be selling, or buying, shares then a court may consider it insider trading?

Likewise how would the law courts consider if you saw a confidential report on the photocopier at work about a major loss or new investment and bought or sold shares? What if based on the information you had seen you told some friends or family to expect shares prices to change? Insider trading can appear quite innocent, but the reason Australian Courts treat it as a crime is that it gives 'insiders' an unfair advantage over the general public.

This video includes a brief definition of insider trading.

Other Insider Trading blogposts

Insider trading suspected in major USA mergers
Insider trading stock tips at family reunion
Decriminalising insider trading proposal
Legal and illegal insider trading

Corporate Fraud Stealing from Work

Thu, 16 Sep 2010 06:00:00 GMT

Business fraud costs everyone in a company. Policies and procedures for businesses help prevent and identify fraud. This American news report gives some insight into the problem.

The video includes a case of a former trusted book keeper of a restaurant who defrauded their employer of thousands of dollars.

Do you suspect Corporate Fraud? Ask for a free White Paper: Workplace Fraud Investigation. How to uncover it, prevent it, stop it

Initiating workplace fraud investigations

Thu, 16 Sep 2010 05:59:00 GMT

Preventing or dealing with workplace fraud or theft takes work. Preparation is a big part of this. Even just saying you will be doing background checks during an interview process may help weed out some people from ever being hired.

Business owners should consider the level of risk their business is exposed to. Always presume innocence of staff. However ensure you have policies in place. Breach of these policies may allow you to dismiss staff much easier than simply suspecting them of theft or fraud. The American video below includes some practical tips if you want to initiate an investigation. Be very careful before making accusations of staff who may have been involved in workplace fraud.

Comment from Mark Streeter Fraud Lawyer

While this video suggests a do it yourself approach to fraud investigation it is pretty easy to see how it could get complicated. Streeterlaw are experienced in investigating workplace fraud. Acting quickly is important before evidence can be tampered with. Unfortunately taking the untrained approach, or relying on HR staff as promoted in the video can give the suspect too much time and power in the situation to cover tracks.

If you suspect workplace fraud or theft give Streeterlaw a call.

Do you suspect Corporate Fraud? Ask for a free White Paper: Workplace Fraud Investigation. How to uncover it, prevent it, stop it

Legal and Illegal insider Trading

Mon, 20 Sep 2010 05:07:00 GMT

The reason insider trading is illegal is that one person, or group of people have an unfair advantage over others. In the perfect world no one would know more than anyone else. Obviously the world is not perfect.

Naturally some people must know information before it is made public. Businesses are continually evaluating opportunities and discussing strategies behind closed doors. This is not illegal. The reason insider trading laws have been created is to help ensure that those who are part of these discussions cannot unfairly profit from that prior or 'inside' knowledge.

The dramatic increase in online trading and buying shares has meant insider trading is no longer restricted to an elite group of business owners and their close friends. While a criminal insider trading case may be difficult to prove the financial services industry in Australia has gone through many changes over recent years. The restrictions on giving financial advice are complex. The need for clear documentation and explanations around advice given has increased dramatically. Simply asking your friends "what's the best shares to buy" is no longer so simple.

In this video below it gives advice on what to do if you suspect insider trading. It also suggests you walk away rather than be tempted to make use of inside information you may have received.

Other Insider Trading blogposts

Insider trading suspected in major USA mergers
Insider trading stock tips at family reunion
What is insider trading?
Decriminalising insider trading proposal

Decriminalising Insider Trading proposal

Mon, 20 Sep 2010 04:35:00 GMT

Insider trading only became illegal in 1960's when it was felt some individuals had an unfair advantage over others with the buying and selling of stocks. In 2009 an article was published supporting a fairly radical idea for insider trading to be decriminalised again. It is a very controversial idea.

Since the 1960's insider trading regulations have continued to be expanded. The video includes a discussion that fraud and insider trading are often linked. The article's author believes is that allowing markets to drive stock prices to realistic values is fairer. The counter argument is that it still gives an unfair advantage to some.

For the author insider trading is not fraud but rather is more likely to expose corporate fraud. The video also highlights the relative lack of resources being used on examining and trying to prevent Insider Trading.

Other Insider Trading blogposts

Insider trading suspected in major USA mergers
Insider trading stock tips at family reunion
What is insider trading?
Legal and illegal insider trading

Financial Fraud in non profit organisations

Thu, 16 Sep 2010 06:14:00 GMT

Fraud can happen in any business. However non-profit organisations sometimes have looser controls so may be more susceptible to fraud. This video dramatisation below may be a little corny but the message about corporate fraud is good. The statistics about fraud are also interesting. More men commit corporate fraud than women.

The fraud video helps show how easy it can be for employees to take advantage of lack of business controls. Simple things like no double signing of cheques, not checking bank statements - or simply having too much control by only a few staff members.

Comment from Mark Streeter - Sydney Fraud Lawyer

Fraud is not always premeditated. Rather fraud can be opportunistic. Yet if fraud is not caught early employers can continue to abuse the situation and cause more damage to the business. If you suspect fraud give us a call.

Do you suspect Corporate Fraud? Ask for a free White Paper: Workplace Fraud Investigation. How to uncover it, prevent it, stop it