The fraud triangle (or other fraud theories)
- March 11, 2022
- Posted by: Phillip Author
- Category: Uncategorized
In our readings thus far, we have read about the role of auditors, both internal and external. We have also seen some discussion about the difference between a traditional financial audit and a fraud, or forensic audit. In addition, we have had discussions from Chapters 2 and 3 about various fraud theories and the motivations behind fraud. We have explored evidence and identifying signs of deception.
One of the more “colorful” fraud perpetrators in recent years is Barry Minkow, of ZZZZ Best infamy, among other things. Without going into detail, Mr. Minkow has had a very colorful history stretching from the 1980’s to today. To give you a good flavor of his history, I have gathered the following list of resources that tell some of his story. Please start with the video “Cooking the Books” that can be found in this week’s Module. (I realize the video is a bit dated, but the content and observations are still timely). After watching the video, review the other items below and any additional research that you care to do to understand his story. I especially recommend the 60 Minutes interview.
Once you have a good understanding of his story over the years, please post a ½ to one page summary exploring Barry and his colorful history, specifically focused on your observations of his story and what you, as a potential forensic accountant/fraud examiner, can most learn from his story.
Following your initial post (please post your initial post by Wednesday to allow your classmates time to respond), please interact, discuss, and debate and discuss freely with your classmates with at least three substantive responses to other posts. Significant time is being allowed for this discussion, as I am truly interested in getting your perspectives that explore the breadth of subject areas we have covered thus far. The content of our discussion is fairly wide open; however, consider any one or more of the following areas to discuss:
• What are your most poignant observations?
• What are lessons to learn from this story?
• What conclusions can you derive about motivating factors?
• How does this story impact your opinion of the role of auditors?
• How well does the fraud triangle (or other fraud theories) apply to fraudsters like Barry Minkow? How might the application of these theories be different in this case?
• What is your opinion of the punishment that Barry has experienced (sentences, jail time, fines, restitution)?
• Is jail time an effective deterrent? Why/why not? If not, what might constitute a more effective deterrent?
• How do we stop fraudsters like Barry? Why does this type of fraud story continue to repeat itself?
Do not limit yourself to these questions. This discussion is an opportunity to share your gut instincts and observations, using what you have learned thus far. Please do NOT recap his story – I am very familiar with it. I am most interested in your thoughts, observations, reactions, opinions, and conclusions that arise as you study Mr. Minkow’s history.
Barry Minkow Resources:
Minkow movie trailer
Minkow Movie Trailer (Links to an external site.)
Jan. 1988 – ZZZZ Best Founder Minkow Indicted on Racketeering and Fraud Charges
http://www.wsj.com/news/articles/SB122651435543121217 (Links to an external site.)
Feb. 1990 – Nothing But ZZZZ Best: Barry Minkow – The Kid Who Swindled Wall Street
http://www.nytimes.com/1990/02/25/books/nothing-but-zzzz-best.html (Links to an external site.)
Jan. 2012 – Barry Minkow : All-American Con Man
http://fortune.com/2012/01/05/barry-minkow-all-american-con-man/ (Links to an external site.)
2006 -Barry Minkow ZZZZ Best CEO Profiled on 60 Minutes
Barry Minkow ZZZZ Best CEO Profiled on CBS 60 Minutes (Links to an external site.)
American Greed – Barry Minkow: Once a Fraud, Always a Fraud (Audio)
https://www.youtube.com/watch?v=Z8dyd6pmpwA (Links to an external site.)
March 2011 – Plea Deal Puts Minkow Redemption Movie in Limbo
http://blogs.wsj.com/developments/2011/03/17/plea-deal-puts-minkow-redemption-movie-in-limbo/ (Links to an external site.) (Links to an external site.)
Sept. 2013 – Ponzi Schemer Barry Minkow Facing Third Strike
http://nypost.com/2013/09/25/ponzi-schemer-barry-minkow-facing-third-strike/ (Links to an external site.)
Dec. 2013 – Barry Minkow Scam Leads to $1 Billion Verdict
http://www.laweekly.com/news/barry-minkow-scam-leads-to-1-billion-verdict-4176480 (Links to an external site.)
Jan. 2014 – Former Pastor Barry Minkow Admits Embezzling, Defrauding Local Church Out of More than $3 Million
Ex-pastor Barry Minkow sentenced for defrauding local church out of $3M (Links to an external site.)
Barry Minkow – Con Man Nonpareil
http://fortune.com/2014/05/06/barry-m (Links to an external site.) (Links to an external site.)inkow-con-man-nonpareil-gets-five-more-years/ (Links to an external site.)
Missing from the Minkow Movie