Accounting Scandal Updates and Other
Fraud Between October 1 and December 31, 2019
Bob Jensen at
Trinity University
Bob Jensen's Enron Quiz (and answers) --- http://faculty.trinity.edu/rjensen/FraudEnronQuiz.htm
Bob Jensen's Enron Updates are at --- http://faculty.trinity.edu/rjensen/FraudEnron.htm#EnronUpdates
Top 10 Red Flag Warnings of Fraud --- http://www.accountingweb.com/aa/auditing/top-10-red-flag-warnings-of-fraud
Bob Jensen's Fraud Updates --- http://faculty.trinity.edu/rjensen/FraudUpdates.htm
Other Documents
Scandal Updates --- http://faculty.trinity.edu/rjensen/fraud.htm#ScandalUpdates
Bob Jensen's Enron Quiz --- http://faculty.trinity.edu/rjensen/FraudEnronQuiz.htm
What's Right and What's Wrong With SPEs, SPVs, and VIEs --- http://faculty.trinity.edu/rjensen//theory/00overview/speOverview.htm
Bob Jensen's Summary of Suggested Reforms --- http://faculty.trinity.edu/rjensen/FraudProposedReforms.htm
Revenue Accounting Controversies --- http://faculty.trinity.edu/rjensen/ecommerce/eitf01.htm
Electronic Business Controversies --- http://faculty.trinity.edu/rjensen/ecommerce/000start.htm
Bob Jensen's Bottom Line Commentary --- http://faculty.trinity.edu/rjensen/FraudConclusion.htm
The Virginia Tech Overview: What Can We Learn From Enron? --- http://faculty.trinity.edu/rjensen/fraudVirginia.htm
Fraud References --- http://faculty.trinity.edu/rjensen/fraud.htm#References
Fraudulent Dealer
Tricks: An Interactive DHTML Illustration ---
http://faculty.trinity.edu/rjensen/FraudDealerTricks.htm
This includes a summary of ten unethical tricks of the trade by automobile
dealers.
Selected Scandals in the Largest Remaining Public Accounting Firms --- http://faculty.trinity.edu/rjensen/fraud.htm#others
Accounting
Education Shares Some of the Blame ---
http://faculty.trinity.edu/rjensen/FraudProposedReforms.htm#AccountingEducation
FraudBytes (Mark Zimbelman) --- http://fraudbytes.blogspot.com/
My Latest Web Document
Over 400 Examples of Critical Thinking and Illustrations of How to Mislead With
Statistics ---
http://faculty.trinity.edu/rjensen/MisleadWithStatistics.htm
Richard Campbell notes a nice white collar crime blog edited by some law professors --- http://lawprofessors.typepad.com/whitecollarcrime_blog/
Books about the biggest business scams of our time — including Enron, Bernie
Madoff, and Theranos ---
https://www.businessinsider.com/business-books-about-fraud-scandal
Three CPAs from a New Jersey auditing firm fined and suspended
by the SEC ---
https://www.sec.gov/litigation/admin/2019/34-87159.pdf
Elizabeth Pierce dazzled investors with plans to run high-speed fiber optic cable under the Arctic, boosting web speeds for much of the planet. It turned out to be a $1 billion scam ---
University of Georgia Student ran $1 million Ponzi Scheme from Fraternity
House ---
https://www.newsweek.com/university-georgia-undergraduate-syed-arbab-1m-ponzi-scheme-frat-house-1464805
Bob Jensen's threads on famous Ponzi schemes --- http://faculty.trinity.edu/rjensen/FraudRottenPart2.htm#Ponzi
Report: Defense Contractors Hiding Behind Shell Companies are
“Ripping off the Pentagon"
---
https://nationalinterest.org/blog/buzz/report-defense-contractors-hiding-behind-shell-companies-are-%E2%80%9Cripping-pentagon-106531
Why Don’t We Know More About the Subway Construction Costs in
the USA?
https://marginalrevolution.com/marginalrevolution/2019/12/why-dont-we-know-more-about-subway-infrastructure-costs.html
Another Grant Thornton U.K. Audit Was a Total Disaster
---
https://goingconcern.com/another-grant-thornton-u-k-audit-total-disaster/
Bob Jensen's threads on other Grant Thornton disasters ---
http://faculty.trinity.edu/rjensen/fraud001.htm
WeWork: Auditor EY didn’t warn about the risks ---
https://thedig.substack.com/p/wework-auditor-ey-didnt-warn-about
Cryptocurrency --- https://en.wikipedia.org/wiki/Cryptocurrency
Three Men Arrested in $722 Million Cryptocurrency Fraud Scheme
---
https://www.justice.gov/usao-nj/pr/three-men-arrested-722-million-cryptocurrency-fraud-scheme
Journal of Accounting and Public Policy, Forthcoming
SSRN
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3490343
53 Pages Posted: 6 Dec 2019
Central University of Finance and Economics (CUFE)
BI Norwegian Business School
Central University of Finance and Economics
Southwest University - College of Economics and Management
Date Written: September 2019
This paper examines the impact of corruption culture on accounting quality (AQ) of listed firms at the municipal level in China. We consider municipalities with (without) corrupt top government officials as having high (low) corruption culture. To isolate the effect of corruption culture, we use the arrest of corrupt officials (the events) to capture the change in local corruption culture, and apply the difference-in-difference method to compare AQ of firms operating in the jurisdictions of corrupt officials pre and post the events, compared to control firms. We find that AQ of firms affiliated with corrupt officials is higher after the events, which is robust to the placebo test, time-trend analysis, and various robustness tests. We complement the literature by showing that the increase in AQ is greater for firms associated with more powerful officials and having stronger connections with corrupt officials. Moreover, the positive effect on accounting quality is stronger in the post-2012 period. Further, we document that firms improving AQ after the events issue more SEOs and have lower cost of capital. Finally, analyses on channels firms used to improve AQ show that firms switch to higher quality auditors, have better internal control, and issue more management forecasts. This study has implications for policymakers in countries that suffer from corruption.
Keywords: Corruption Culture; Accounting Quality; Local Government Officials
Comey: ‘I Was Wrong’ — FBI’s FISA Abuse ‘Was
Not Acceptable’ ---
https://www.breitbart.com/clips/2019/12/15/comey-i-was-wrong-fbis-fisa-abuse-was-not-acceptable/
Vatican Charity Scam: The WSJ reports that as little as 10% of the
approximate $55 million in annual donations actually goes toward charitable
works, and most of the funds are used to help fill in the Vatican’s budget
deficit. ---
https://www.wsj.com/articles/vatican-uses-donations-for-the-poor-to-plug-its-budget-deficit-11576075764?mod=trending_now_5
The mattress-stealing, luxury hotel culture that is German ---
https://marginalrevolution.com/marginalrevolution/2019/12/the-mattress-stealing-luxury-hotel-culture-that-is-german.html
Differences in items stolen between four-star versus five-star hotels
---
https://jborden.com/2019/12/10/i-always-knew-the-rich-were-different-than-the-rest-of-us/
Jensen Comment
The thieves are often not hotel guests such that it's misleading to conclude
that there's a significant difference based on guest wealth. Also its not
necessarily true that guest wealth determines who chooses four star versus five
star hotels. Other factors such as employer expense account policy can greatly
affect hotel choices. Some employers who pay less salary may provide more
generous expense accounts. Also hotel reward programs can greatly affect hotel
choices. A business traveler may choose a five star hotel that offers greater
rewards for later family vacations.
I do have a jeweler friend who says, based on anecdotal evidence, the the wealthier customers are more often slower about paying up their accounts when purchasing on store credit. My jeweler friend factors this into price negotiations.
The top retractions of 2019: A new record, some impressive numbers, and
some bizarre stories ---
https://retractionwatch.com/2019/12/19/the-top-retractions-of-2019-a-new-record-some-impressive-numbers-and-some-bizarre-stories/
What Accounting Review paper was retracted in 2019?
Scientist Has Identity Stolen for Fake Peer Reviews ---
https://twitter.com/KamounLab/status/1204659178364645376?s=20
Why Articles in Arts and Humanities Are Being Retracted?
https://link.springer.com/article/10.1007/s12109-019-09699-9
The sad news is that most retracted articles never go away and are often cited
long after being retracted.
Not all retractions are caused by cheating, but you can see Bob Jensen's
threads on professors who cheated at
http://faculty.trinity.edu/rjensen/Plagiarism.htm#ProfessorsWhoPlagiarize
Chronicle of Higher Education:
Faculty
members
are drastically underreporting
academic-integrity violations ---
https://chroniclevitae.com/news/2280-why-we-don-t-report-all-of-the-cheating-we-detect?cid=VTEVPMSED1
Francine: A wrap-up of writing about GE 2011-2018
http://retheauditors.com/2018/09/02/gee-no-ge/
Famous Leftist Reporter Who Fabricated Stories --
-Cryptocurrency --- https://en.wikipedia.org/wiki/Cryptocurrency
Bitcoin is Less Secure than Most People Think ---
https://marginalrevolution.com/marginalrevolution/2019/01/bitcoin-much-less-secure-people-think.html
Three Men Arrested in $722 Million Cryptocurrency Fraud Scheme
---
https://www.justice.gov/usao-nj/pr/three-men-arrested-722-million-cryptocurrency-fraud-scheme
Cryptocurrencies Could Eliminate Banking’s Easiest Moneymaker
---
https://www.gsb.stanford.edu/insights/cryptocurrencies-could-eliminate-bankings-easiest-moneymaker?utm_source=Stanford+Business&utm_medium=email&utm_campaign=Stanford-Business-Issue-176-12-1-2019&utm_content=alumni
The end of December 2019 week at Retraction Watch featured:
· The story of what happened when researchers tried to publish a Nature paper 600 times
· How a plagiarized image in NEJM was discovered;
· A new scam involving special issues of journals;
· Four retractions for an endocrinology researcher in South Korea.
Here’s what was happening elsewhere:
· “You don’t need a degree in statistics to catch most of these errors.” Kristin Sainani on “how to be a statistical detective.”
· The Van Andel Research Institute pays the U.S. government $5.5 million to settle allegations that it hid generous grants from China to two of its researchers.
· 15 studies that challenged medical dogma in 2019, according to Eric Topol.
· The “I was prompted to kill my student and lover because someone was accusing me of plagiarism” defense.
· A college bookstore suspended the sales of three sociology textbooks after allegations that the author, a faculty member, plagiarized.
· Among authors of dermatology textbooks, “The total compensation [from pharmaceutical companies] for 381 authors in 2016 was $5,892,221.”
· Guess which scientific sleuth is quoted by Merriam-Webster’s dictionary for use of the word “overadjusted?”
· A Trump official committed “localized instances of plagiarism” in her thesis, Columbia found.
· “Unfortunately, many journal editors don’t have the courage to keep science clean.”
· “The current methods used to prevent/contain misconduct are vague, ineffective, insufficient, or poorly implemented.”
· A look back at the infallibity of science in the decade that is about to come to an end.
· Should publishers be suing Sci-Hub?
· “Our view is that hiding self-citation data is indefensible and needlessly confuses any attempts to understand the bibliometric impact of one’s work.”
· “Participant carelessness and fraud: Consequences for clinical research and potential solutions.”
· “How did our advice about research ethics work out, four years later?” asks Andrew Gelman.
· Finnish institutions of higher education have “inconsistent responses to notifications of suspected plagiarism,” says a new study of cases.
· “There is substantial published evidence showing that countless people enroll each year in ethically deficient clinical trials.”
· “Unfortunately, a scholar’s tendency to emphasize the claims of science are ineffective.”
· In which biotech companies duke it out by press release.
Psychiatrist who stole grant
funds also engaged in research misconduct ---
https://retractionwatch.com/2019/12/30/psychiatrist-who-stole-grant-funds-also-engaged-in-research-misconduct-says-ori/