Company fraud directly related to the financial crisis

In an ABC News article they report that 500 cases of corporate fraud directly relate to the current financial crisis. Of these 500 cases, 38 are major firms.

"The FBI has more than 530 open corporate fraud investigations, including 38 corporate fraud and financial institution matters directly related to the current financial crisis," FBI Deputy Director John Pistole stated.

For more on the story, read ABC News.

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Reuters: Fraud detected more often at bankrupt companies

From Reuters:

Bankrupt companies are three times more likely to have been cited for fraud by U.S. regulators, according to a study released on Monday.
The study from Deloitte Financial Advisory Services LLP also showed that fraud incidents were much more likely to land a company in bankruptcy court.
"Many of the companies that commit financial statement fraud are dealing with adverse performance issues and committing fraud to cover those up," said Toby Bishop, director of the Deloitte Forensic Center. "A significant proportion of them -- 20 percent -- will end up filing for Chapter 11 (bankruptcy protection)."
Fraud-linked bankruptcies like Enron, WorldCom and Adelphia have kept U.S. courts busy for years, and the study revealed that companies that are cited for financial-statement fraud were twice as likely to file for bankruptcy as those that were not cited.

Does this surprise you?

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Trial begins for Lance Paulson

The trial for the former founder and chief executive of National Century Financial Enterprises, Lance Paulson, begins today in Columbus, Ohio. He is charged with committing $1.9 billion of corporate fraud. Forbes has more here.

He is accused of: fabricated data, moved money between accounts to hide shortfalls and misled the investors who funded his business model.

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