More on corporate (and country scale) fraud

 Following on from an earlier review of two corporate fraud books this holiday season fraud reviews were taken to a higher level..... 

 

Listing gives : 

"A BOOK OF THE YEAR FOR THE FINANCIAL TIMES AND FORTUNE MAGAZINE.

The epic story of how a young social climber from Malaysia pulled off one of the biggest financial heists in history.

In 2015, rumours began circulating that billions of dollars had been stolen from a Malaysian investment fund. The mastermind of the heist was twenty-seven-year-old Jho Low, a serial fabulist from an upper-middle-class Malaysian family, who had carefully built his reputation as a member of the jet-setting elite by arranging and financing elaborate parties for Wall Street bankers, celebrities, and even royalty.

With the aid of Goldman Sachs and others, Low stole billions of dollars, right under the nose of global financial industry watchdogs. He used the money to finance elections, purchase luxury real estate, throw champagne-drenched parties, and bankroll Hollywood films like The Wolf of Wall Street. 

Billion Dollar Whale reveals how this silver-tongued con man, a ‘modern Gatsby’, emerged from obscurity to pull off one of the most audacious financial heists the world has ever seen, and how the financial industry let him. It is a classic harrowing parable of hubris and greed in the financial world."

As of 2021 Jho Low is still on the run but the net tightens after his rather nice ship was impounded.

The Equanimity, a luxury yacht belonging to fugitive Malaysian financier Low Taek Jho, was seized and brought to Malaysia in August 2018. It was later auctioned off [Lai Seng Sin/Reuters]

Bad Blood (Theranos) and The Smartest Guys in the Room (Enron) describe toxic workplaces that allow frauds and cons to flourish.

Bad Blood about Theranos

Smartest Guys in the room

Having recently read Bad Blood (Theranos) and The Smartest Guys in the room (Enron)  I was stuck by the similarity of the toxic workplaces that allowed these huge frauds to continue.

Enron used "creative" accounting and corrupt financial business practices to hide loses in the energy sector. Each quarter's results snowball on previous failures leading to a huge implosion in 2001

Theranos developed blood testing machine intended to replace the need for off-site blood tests using just a few drops of blood. The devices never worked reliably or accurately compared to established testing machines. As a silicon valley "Unicorn" this company burnt millions in start up finance.

Similarities

• Both companies were driven by charismatic characters with little grasp of the actual underlying science of the business.
• Both had "Bulldog" partners that bullied and coerced employees into compliance.
• Facts were hidden, one company used creative accounting methods to hide the real business financial facts, the other hid the miserable product performance from regulators and investors.
• Both companies prevented cross company employee engagement to prevent effective collaboration.
• Both companies had ineffective but high profile governance boards that were in thrall to the CEOs.
• Both company had highly paid employees who job description was vague and performance marginal.
• Original innovators leave in disgust or under a pretence cloud.
• Both companies had the internal culture of a cult. "All in or get out".
• Both companies valued long hours, apparent dedication over actual effective results.
• Both companies employed outside "consultants" to aid and abet the toxic business processes; Accountants in one case, Lawyers in the other.
• Whistleblowers were either ignored or legally threatened sued and silenced.
• Investors wanted to believe the "Too good to be true" story above the realities of market sense.  

Loses
Enron -In excess of $70 Billion. A publicly listed company who's loses were spread across the regular stock market.

** Update Legal outcome and convictions

Theranos - In excess of $600 Million as well as 1000s of inaccurate blood test results leading to real medical harm. A private company who's loses hit a smaller group of private investors.

**Update March 2018 Ms Holmes and Balwani charged with fraud
**Update Oct 2020 Ms Holmes and Balwani to face jury trial.

**Update Dec 2022 Both Homes and Balwani to face serious prison time

** Update Dec 2022 Homes to serve 11 years serious prison time

** Update Dec 2022 Balwani to serve 13 years serious prison time.

See also
Bernie Madoff and This list  of other large corporate failures.

Invoice scam - Do not pay for services not ordered or needed - techesseosseo.org was oseoservice.org SPAM FRAUD SCAM

December 2016 update
Same scam - new domain = techesseosseo.org

Seriously unless you have a business relationship with

]Registrant Email: wangbing616@engineer.com

Admin ID: 1611081654kifh

Admin Name: wang bing

Admin Organization: wang bing

Admin Street: Dong Shan Quxiangzhouqucuixiangjiedao1406hao

Admin City: guangzhou

Admin State/Province: guangdong

Admin Postal Code: 519000

Admin Country: CN

Admin Phone: +86.075620871127

Don't send him/her any money or CC card details.

---------
As the owner of few domains on the internet I get my share of frauds and scam emails. The fake SEO service invoice that looks and sounds proper is a common culprit. Intended to arrive on the desk of an admin person, who may be does not look to closely or is fooled by the language, and just clicks to pay.  This is fraud as regardless of if the service exists, and it probably doesn't, because the service was not ordered.  Sending invoice in bulk hoping that a few pay up is a common scam made easier by  email and web technology.

Don't fall for this one.  The letter says :

We do not register or renew domain names. We sell traffic generator software.

and yet uses the domain registration information to spam. The fact that the scammers have used domain information to scrape admin email addresses in breach of the terms of service of the registrars is just a minor point.

A special place in hell for .... James McCormick

** 2016 Update An £8 Million confiscation order was enforced on this fraudster **

I am not a particularly religious person with mild beliefs in that area but if I believe in anything it's the principle of "do as you would be done by." The reinforcers for that principal are not always obvious but what I really hope, and pray for, is that there is a special place in the hell fires of damnation reserved for those that betray the deepest trust of others.  Abusers that recognise the trust and belief of others and deviously manipulate and betray that trust are truly evil.  That hotspot in Hell is going to be a crowded place but there is plenty of room for the groping priests and dictators that take people over and past the edge of ruin. Mugube and Kim Yun-un you have your places booked in the fine company of Hitler, Pol Pot and Bernie Madoff.

Those bad boys are going to have to move over and make room for the new boy who most certainly will, in gods own time, be joining that pantheon of shame.  Introducing James McCormick a criminal fraudster whose actions beggars belief. He used bribery and corruption to sell fake bomb detectors for use by police and soldiers in Iraq.  Put yourself for just one minute in the place of the guard at the checkpoint with a duty of protection who's only tool can at best be described as a 100% placebo.  Trust is burnt, obligation of care and duty to society is literally blown away for the enrichment of some shithead thousands of miles away.  Yes, there will be other facilitators along the way that share the blame and shame for this despicable crime. Passing off a novelty golf ball detector, which did not even work for that minor function, as a serious public protection instrument is a staggering act of betrayal and corruption.

A whistleblower told the BBC Newsnight program that he had confronted McCormick, saying he did not want to be any part of the business if the devices did not work. McCormick is said to have responded: "It does exactly what it's designed to. It makes money." During his fraud trial, the court was told the detectors, which cost up to $40,000 (£27,000) each, were completely ineffectual and lacked any grounding in science.

Fake bomb detector

Bulletproof medallions, value for money payday loans, effective diet pills and a fair price for your gold/car/house today. All available on the internet near you.

The defence, recognise the principles behind how things work, be just a little bit skeptical and really research and understand what is going on.

Follow-up:  The wheels of justice roll slowly and we see that Mr. McCormick is sentenced to 10 Years in jail for fraud. To be fair that should be 10 years in jail in each of the countries the device was sold in.

Fraud - It's a menace and that's official

This is the the new(ish) location for reporting and information about internet and other frauds.  The site is based in the UK and closely tied to the fraud bits of the city of London police.

The site has lots of information about types and operations of internet and other frauds.  419, Phishing, dummy invoicing, ponzi etc.

Useful for victims and consumer organisations that need access to fraud awareness advice, give its read.

Lets be careful out there and keep an ear out for friends losing money.

Gannett