Archive for FRAUD AND FORENSICS

admin | November 17, 2010
2 comments

FRAUD QUIZ — ANSWERS!

A few weeks ago I posted a “fraud quiz” , based on one fraudulent invoice*, as shown below:  I told you there were at least TEN red flags. Several of you hit several of the marks  (the auditors caught none). Here are some of the most prominent RED FLAGS:

  1. A $7,000,000 invoice — and it is from a numbered invoice pad (#18886) you would buy at Staples?
  2. A $7,000,000 invoice — all in one page! Not much detail….
  3. Checks payable to “ZZZZ…or Barry”.  Wow -- pretty informal.  And um– Barry has a partner.
  4. Even the IRS does not use pennies!
  5. Ahem — where is the LABOR! on this invoice? Self-installing carpets?
  6. No address of the property — only says  “Re: Sacramento, CA”
  7. Sales  Tax: Should be zero!   At least back then there was no sales tax on construction in CA
  8. “379,000 square feet of carpeting”?  (to left of sales tax, scribbled)  Do the math — that’s about 80 stories, the building was 18, and  they said 11 were damaged.
  9. Why are they billing an appraisal company and not an insurance company?
  10. California at least requires a license # on this type of invoice.  Of course ZZZZ had none.

Conclusion:  Well, as an accountant and auditor and fraud examiner myself, I’ll let you draw your own…

( For a LARGER version  of the invoice click:  ZZZ BIGGER or   ZZZ  BILL )

Here is a close-up of the top:

* This is a “true” fraudulent invoice!  From the court case that put ZZZZ Best partner Mark Morze in prison for 5 years. More about this case in my original quiz post.

Category: FRAUD AND FORENSICS, IRRELEVANT, IRREVERENT |
admin | November 2, 2010
13 comments

Fraud Quiz! How Good Are You? How Bad Can You Become?

What is Wrong with Me?

What is wrong with the displayed Invoice? There are at least ten(!) clues to its falsity — and none of them have to do with Accounting or addition. ( For a LARGER version  of the invoice click:  ZZZ BIGGER or   ZZZ  BILL ) This invoice was part of a court case that put  Mark Morze*  of  ZZZ Best Carpet Cleaning in the pen for 5 years. -but his fake empire only came crashing down because a reporter — not the accountants, lawyers or bankers **– started pokin’ around.

Click on the title of the post to reply -- even getting One would beat the accountants!! ( Hints and Answers will be posted)

*”Morze created over 20,000 fraudulent documents.  These in turn created the belief that Z Best was doing over $400-million in insurance restoration construction work –  work that  existed ONLY ON PAPER.”

** Example of how NOT to audit:  “We were asked, “What would be good days for surprise inventorying of the 4 warehouses full of carpet?”

Mark circles the country speaking to professionals, public officials and others about how and why they miss the boat.

Here is a close-up of the top, where there are a couple of red flags: 

Another hint.  Looking at these items close-up what type of charge is oddly missing?

Again, to see the entire invoice detail close-up: click:  ZZZ BIGGER or   ZZZ  BILL


Category: FRAUD AND FORENSICS, IRRELEVANT, IRREVERENT | Tags: , , , ,