Two Discussions W2

Discussion No.II

First Question: You have just been hired by an accounting firm that focuses on fraud investigation.  You first task is to gather evidence about suspected embezzlement by the accounting manager.  What evidence would you gather to prove embezzlement and how would you gather that evidence?  Keep in mind this case will probable go to trial.   Be sure to provide examples to back up your opinion and use authoritative sources (including peer reviewed articles from the library, Fraud Examiners Manual, etc).

My answer : When conducting an investigation on an accounting embezzlement, it is important to capture the right and accurate information. This ensures that should it end up in court, it can be proven beyond reasonable doubt.  In such a situation it is essential for the investigator to adequately prepare and plan on how they will conduct a sober investigation, gather strong evidence, and conclude the whole process without any conflicts arising. It is essential that at the end, the evidence and reports presented to court are credible to ensure the company can actually prove that the accounting manager is indeed guilty. Overall, one must be keen on the type of information to gather as evidence and how to actually collect this evidence.

          One of the information is evaluating profits and expenses in financial statements to be able to establish how revenues are generated and expenses incurred. It is possible that the manager could have cooked the books. This is prohibited by SEC because artificial inflation of sales can mislead investors ( Baugher, 2016). Second, is bank and credit card statements which indicate banking and payments made to vendors. Credit card fraud has been increasing leading to loss of billions of dollars from credit card companies, merchants and consumers (Barker et al., 2008). Third, inventory records can reveal a wealth of information in case there are any pilferages which do not reconcile with company’s revenues.

           As an investigator, there are a number of ways to gather the evidence. One of them is conducting a background check. This helps to reveal if the suspect has any hidden assets and financial sources. One can rely on jurisdiction real property records including deeds, liens and other documents without need for a subpoena (RSMUS LLP, 2018). Secondly, one can assess the critical documents such as bank statement, financial statements, tax returns, invoices, general ledgers and journals. Thirdly, one needs to interview witnesses including employees, vendors and even customers. They might have evidence of any fraudulent activities by the manager. Fourthly, one can evaluate other records such as phone records, travel records and even mileage reports.

Second Question: (this is the one that I need u to answer)

You mention looking at phone and travel records in this case. What exactly would you be looking for to prove embezzlement in this case?

Discussion No.I

First Question: Research, using authoritative sources (including peer reviewed articles and cases from the library, Fraud Examiners Manual, etc)  two similar fraud cases.  One case that was tried in a civil court and one that was tried in a criminal court (Westlaw is the best database to use).  Compare and contrast the outcomes of both cases.  Give a brief overview of the cases as you compare them.  Finally, discuss any current techniques and/or legislation that is being developed to combat the fraud you used in your example.

Someone else answer:

I was able to find two similar cases that relate to Medicare fraud. They are John N. Crawford V Sullivan No. 92 C3926, (1993) a civil case and between U.S vs Philip Esformes (2019) a criminal case.

 With regards to the civil case, the outcome was as follows. The plaintiff (Crawford) was indicted on 32 counts of Medicare fraud in violation of  18 U.S.C. § 10 01  and  17  counts of mail fraud in violation of  18 U.S.C. § 1341 . The violations involved the plaintiff knowingly submitting false Medicare reimbursement claims, and knowingly causing the delivery of reimbursement checks through the mails as part of his scheme. The plaintiff was convicted on twenty of the Medicare fraud counts and five of the mail frauds. John N. Crawford V Sullivan No. 92 C3926, (1993)

 He was sentenced to five years' probation, prohibited from practicing medicine involving Medicare or Medicaid payments during that period, and ordered to serve six months in a work-release program and perform 500 hours of nonmedical community service. John N. Crawford V Sullivan No. 92 C3926, (1993),

 In addition, the judge ordered the plaintiff to make restitution to the Medicare program in the amount of $50,461.56. This amount was later reduced to $6,427, to reflect losses to the program in connection with only those counts on which plaintiff was convicted. John N. Crawford V Sullivan No. 92 C3926, (1993) 

The second case of US vs Philip Esformes is a criminal embezzlement case in which the defendant was found guilty in the largest health care fraud scheme. The case involves a decades-long scheme of kickbacks and money laundering in connection with fraudulent claims to Medicare and Medicaid for services deemed medically unnecessary. Press Release (2019).

Esformes was found guilty of one count of conspiracy to defraud the United States, two counts of receipt of kickbacks in connection with a federal health care program, four counts of payment of kickbacks in connection with a federal health care program, one count of conspiracy to commit money laundering, nine counts of money laundering, two counts of conspiracy to commit federal program bribery and one count of obstruction of justice.  He was sentenced to 20 years in prison whilst his co-conspirators (Arnald Carmouze and Odette Barcha) were sentence to 80 and 15 months in prison respectively with a restitution payment of $12,590’761 and $704,516.00. Press Release (2019)

 However, to curb this menace The Health Insurance Portability and Accountability Act of 1996 was established and funds program to combat fraud and abuse committed against all health plans, both public and private. The Health Care Fraud and Abuse Control Program is to geared towards:

· Coordinating Federal, State, and local law enforcement programs to control fraud and abuse with respect to health plans;

· Conduct investigations, audits, evaluations, and inspections relating to the delivery of and payment for health care in the United States;

· Facilitate the enforcement of the civil, criminal and administrative statutes applicable to health care;

· Provide industry guidance, including advisory opinions, safe harbors, and special fraud alerts relating to fraudulent health care practices; and

· Establish a national data bank to receive and report final adverse actions against health care provider. (“ The Health Insurance Portability And Accountability Act of 1996”. 1996)

 

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