discussion response

You must reply to at least four colleagues in a manner that extends the discussion. A simple “I agree/disagree” will not be accepted. respond in a manner that further extends the discussion.

post 1.

After doing a little bit of research, I think the most interesting financial fraud in history would be with Enron. Enron was poised to be one of the biggest companies in the world, in 1999. Their projected revenue was to exceed $200 billion and their stocks got up to around $90 per share. By November of 2001, their stock had fallen to less than $1 per share. This all happened because they committed complex fraud. The reason why Enron had such a high revenue was because it only existed on paper. The company used deceptive techniques in accounting, to help misinterpret the companys value to investors. The punishment was that the SEC brought criminal charges to the top executives of the company. Also, the shareholders filed a $40 billion lawsuit against the company. Ive always heard about the fall of Enron and I really didnt know the full story. Im glad I got to research it and really understand what actually happened.

https://www.sonnlaw.com/news/round-notable-financial-fraud-cases-2017/

post 2.

Another form of fraud that I found was in the energy industry. It was somewhat recent, it happened in 2009 and it involved the Pennsylvania-based Mantria Corporation. The company claimed to be developing carbon negative residential communities and producing blochar, which is a form of charcoal made from organic wastes. The SEC filed a complaint against them in 2009, they claimed that they were committing fraud, by cheating approximately 300 investors out of $30 million, through fraudulent and unregistered securities offerings. 

As a result of this fraud, regulators and investors are taking a more in depth look at the claims of promoters of green energy investments. The Mantria case and other fraud schemes in the green energy sectors gave the Financial Institutions Regulatory Authority (FINRA) a reason to issue an investor alert in the U.S. advising the public on the signals of green fraud schemes.

https://www.fraud-magazine.com/article.aspx?id=4294968654

post 3.

There are many types of fraud in the financial field. One of the most common types is financial statement manipulation. There are several reasons for this type of fraud. One of the main reasons is that by increasing revenue, it will make the company more appealing to investors, and there is a large financial incentive. On September 17th, 2020, Adam Rogas, CEO of the firm NS8, was arrested and charged with securities fraud. The co-founder of NS8, an intelligence-driven platform created to detect fraud, had been involved in top level fraudulent behavior for quite some time.

Rogas fabricated financial data and statements to show that the company was making substantial revenue from their customers. Rogas was able to do this because the former CEO had access to a bank account used for deposits. He was able to mess with the bank statements before they were sent to the financial department. In addition to messing with the bank statements, Rogas also engaged in spreadsheet manipulation as a way to make it appear as though there was much more revenue than there actually was. Most recently, Rogas was able to convince investors to invest more than $120 million during securities offerings, and from these offerings he personally pocketed more than $17.5 million. Unfortunately, I could not find any information on if there was something in the financial statements that tipped the SEC off about the fraud. However, Rogas went as far as to falsify bank records that were provided to auditors, who were conducting an audit on  behalf of potential investors. This is unfortunately a good example of how a company can use financial statement manipulation to its advantage. This type of fraud is extremely common, even with all of the regulations that are in place.

https://www.zdnet.com/article/ceo-of-cyber-fraud-company-arrested-for-financial-fraud/

post 4.

Because the renewable energy is still relatively new, so there is a need for more regulations to be created. The boom from this clean energy revolution is creating billions of dollars in revenue, but there are also those looking to dupe people out of their money. There are currently many  “green schemes” going around. These schemes involve a variety of practices. In one case, a man approached a city that was in economic distress, and convinced them that by investing in his manufacturing facility, it would provide an economic boost. In another case, not only were person investors hurt, but the government as well.  In 2019, federal prosecutors in Northern California revealed a $1 billion solar energy fraud scheme. This scheme ripped off the average person, but the treasury department was hurt as well because the accused couple utilized federal tax credits as well. Unfortunately, these schemes have become quite common. It is important that any person interested in investing in renewable energy sources does plenty of research.

https://www.nbcnews.com/news/us-news/hype-hope-promise-how-green-energy-scams-trick-investors-rake-n1157701

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