In recent years, it seems as if there is a new financial fraud being reported any given day. One could even say that fraud has become almost a much a surety as taxes. Given the opportunities and pressures, many will businesses will fall victim to human natures and suffer losses through fraudulent activities. This case study will follow one such fraud, following the crimes of Terry Scott Welch in his pursuit for happiness by indulging his passion of landscaping. So just how did Scott Welch fit the profile of the average perpetrator? Based off the information reported by the Association of Certified Fraud Examiners’ (ACFE) 2010 Report to the Nation, Welch fit directly into the median for a perpetrator – he was male, between the ages of 46 – 50, had a tenure of at least 6 – 10 years, an executive position as a Vice President. According to the ACFE’s report a perpetrator’s position within the company, age, tenure, gender and education level all have a have consideration in a fraud. In the 2010 report, it is noted that 66.7% of all frauds are perpetrated by men, more than likely due to the fact that more men hold a position of authority. Of the cases studied, 74% of all managers and 88% of all owners/executives were men (Association of Certified Fraud Examiners (ACFE), 2010). The combination of Welch’s tenure and authoritative position may have exacerbated the losses suffered by Wachovia and may also have helped him hide the fraud from detection for an extended period of time of eight years (“Former Wachovia,” 2011). This period is well above and beyond the 24 months reported by the ACFE as the median time frame in which frauds perpetrated by executives/owners were detected (ACFE, 2010). Taking into consideration all the kn... ... middle of paper ... ...: Wall Street Insider - Financial News, Headlines, Commentary and Analysis - Hedge Funds, Private Equity, Banks. Retrieved January 15, 2012, from http://dealbreaker.com/2010/06/wachovia-vp-had-good-reason-to-steal-money-from-bank-that-youll-probably-never-understand/ Pressler, J. (2010, June 14). Wachovia Executive Embezzled Millions for Love of Tropical Flora -- Daily Intel. New York Magazine -- NYC Guide to Restaurants, Fashion, Nightlife, Shopping, Politics, Movies. Retrieved January 14, 2012, from http://nymag.com/daily/intel/2010/06/wachovia_executive_who_embezzl.html Rexrode, C. (2010, June 16). Former Wachovia exec pleads guilty in embezzling scheme | WCNC.com Charlotte. Charlotte News, Weather, Traffic, Sports WCNC.com. Retrieved January 13, 2012, from http://www.wcnc.com/news/business/Former-Wachovia-exec-pleads-guilty-in-embezzling-scheme-96497129.html
They violated the trust of its customers and deceived and abused them. The bank and its affected personnel are paying and will continue to pay, the legal price for such flagrant wrongdoing, including perhaps, imprisonment of certain personnel (Cavico Mujtaba 17). According to Frank J. Cavico and Bahaudin G. Mujtaba, the authors of “Wells Fargo’s Fake Accounts Scandal and its Legal and Ethical Implications for Management,” the lesson to be learned from this scandal is “that if an organization sets unrealistic sales goals and then ties the employees’ compensation and their jobs to meeting these goals, then unethical and illegal behavior is likely to occur, harming the organization and its stakeholders” (Cavico Mujtaba
Martha Stewart became involved with an insider trading scandal back in December of 2001. Suspicion came abo...
The L.A. Times reported the unethical business practices in 2013, and aided in exposing the fraud. This report directed to a 2015 lawsuit against Wells Fargo by the city of Los Angeles. They were fined $185 million and Wells Fargo terminated 5,300 employees, nearly 1% of the U.S. workforce. Therefore, the federal regulators got involved and this resulted in WF announcing they were going to pay the $185 million fine. The purpose of the announcement was the bank’s executives wished to have the matter behind them. However, due to the firing of the employees and creating the fake accounts, it caused a public uproar and caught the government officials attention (the U.S. Senator Elizabeth Warren and U.S. Treasure Secretary Jack Law). They scolded Wells Fargo for the misconduct and asked John Stumpf to resign. Though, Stump wanted to continue and lead the team to success. In addition, a former consumer banking chief, Carrie Tolstedt, who had resigned during the summer and reportedly collected $125 million. She ran the unit that was responsible for the millions of fake accounts may be have million dollars in penalties. However, since she decided to retire in July, there are no indication that she will face any
First of all, they will not be able to buy tangible properties such as house, car and etc. because of that their credit ratings got a huge hit. Moreover, only 5,300 of the employees that were fired from the Bank, 10% were Managers. What could have motivated them to engage in this sham? This is not an attempt to imply all were of malicious but certainly most them led the way. The aggressive sales goals pushed employees to break the rules. “On average one percent 1 percent of employees have not done the right thing, and we terminated them. I don’t want them here if they don’t represent the culture of the company,” says John Stumpf, the company’s longtime chief executive, in an interview with The Washington Post. It is obvious that simple employees and managers could not break the law if someone from the top did not allow them to do so. But the executive board of Wells Fargo claimed that they only fired 1 percent of below employees and some managers for fraudulent accounts, however they also might be involved in that business crime although to build a case against a company executive, prosecutors would have to show “they knew there was a plan to create false accounts to drive up sales,” said Brandon L. Garret, a professor at the University of Virginia School of Law. Even if it appears that the executive purposefully attempted to avoid knowing about the fraud, prosecutors may be able to build a case. Because they don’t have to participate if there is willful
Jordan Belfort is the notorious 1990’s stockbroker who saw himself earning fifty million dollars a year operating a penny stock boiler room from his Stratton Oakmont, Inc. brokerage firm. Corrupted by drugs, money, and sex he went from being an innocent twenty – two year old on the fringe of a new life to manipulating the system in his infamous “pump and dump” scheme. As a stock swindler, he would motivate his young brokers through insane presentations to rile them up as they defrauded investors with duplicitous stock sales. Toward the end of this debauchery tale he was convicted for securities fraud and money laundering for which he was sentenced to twenty – two months in prison as well as recompensing two – hundred million in restitution to any swindled stock buyers of his brokerage firm (A&E Networks Television). Though his lavish spending and berserk party lifestyle was consumed by excessive greed, he displayed both positive and negative aspects of business communications.
Hanson, J. R. (n.d.). Fraud or confusion? RDH Magazine, 19(4). Retrieved 3 15, 2014, from http://www.rdhmag.com/articles/print/volume-19/issue-4/feature/fraud-or-confusion.html
Enron and their accounting firm Anderson Accounting brought what we know as “white collar crime” to the forefront. White-collar criminals are not known to be dirty criminals, because they use their heads to get what they want from society. White collar criminals do not use their muscle; instead they use their brain for mischievous way to manipulate people. These criminals are just as dangerous as the bank robbers and murderers in my opinion. In these times, even the most trusted people are being convicted of white-collar crimes, your neighbor, the banker you have trusted for ten plus years, the closest of family friends, no one can be ruled out. White-collar crimes can differ in the sort and magnitude of the crime. There are always new scams coming out every day that society falls victim
The Wells Fargo scandal is one of the well-known scandals that happened recently. Wells Fargo currently has over 70 million customers; however, that number used to be much larger before the scandal occurred (“Wells Fargo Today,” 2017). The Wells Fargo scandal was approached through many preceding events within Wells Fargo. The scandal seemed to have started by the CEO of Wells Fargo, John Stumpf, through his repetition of getting eight Wells Fargo products into the hands of each customer. Since meeting these goals was difficult and the employees wanted to meet their quotas, this caused some of the Wells Fargo employees to do whatever they had to do in order to meet their goals and quotas. Because of this, employees created new deposit accounts,
In this paper I will identify and analyze the Wells Fargo scandal as it pertains to the breakdown of leadership and ethics. I will first identify and analyze the event and discuss the challenges and conflicts the scandal presented. Then I will evaluate the issue by explaining why the issue has interest and concern to stakeholders followed by discussing the challenges presented to individuals and/or organizations around this case. Lastly, I will recommend action steps that should be taken to those involved as well as discuss what I have learned from exploring this topic.
Fraud is a major problem that has affected and hurt the American banking system for decades; however thanks to new technology and fraud prevention programs, fraud has been harder to get away with it. Thanks to Frank Abagnale Jr.’s first hand experience with fraud has helped him with his 40 plus years with the FBI, but the books he wrote, and the fraud protection agency he set up, has greatly helped shape the way check fraud prevention and catching the people who do it happen today. Fraud is defined as “the intentional deception of a person, business, or government agency for the purpose of stealing property, money, or causing financial injury in other ways,” (White-Collar Crime). It is because of Abagnale that so many people are protected
While Wells Fargo is doing very well and growing financially, it is important to keep in mind how the public sees them. It is necessary for them to keep obtaining new customers, and to continue to create an ethical culture among the employees. It is important for them to not slip back into their old routine, and not become too obsessed with opening new accounts. It is very appropriate that they are shifting their goals toward customer satisfaction in order to please existing and new customers. Overall, Wells Fargo has been fortunate, and has handled the scandal with
Weld, L. G., Bergevin, P. M., & Magrath, L. (2004). Anatomy of a financial fraud. The CPA
Zero in on a 45 year-old mother of 13. A man comes to her with a proposal. Invest in his company, and he can guarantee 100%, 200%, possibly even 300% returns on what she gives in mere months. For her this means taking out a second mortgage on her house; the same house she hopes to pay off entirely with the promised large return on her investment. Two years later, the windows of the house are boarded up and the woman recounts to reporters the chilling details behind the reason her family has no place to spend Thanksgiving this year. Her money is gone, along with her hopes of ever retiring from the two jobs she works. Stories like this are heard all too often from victims of white-collar crime. “Lying, cheating, and stealing. That’s white-collar crime in a nutshell. The term- reportedly coined in 1939- is now synonymous with the full range of frauds committed by business and government professionals” (FBI, n.d.). White-collar criminals are not holding a gun to anyone’s back demanding wallets and valuables. Instead, they gain the trust of those they prey on. Worse, they use their status in society to build comfort in their victims’ minds. A few of the best-known schemes in U.S. history are Enron, WorldCom, and the massive Bernie Madoff Ponzi scheme. These three cases alone amount to losses upwards of 70 billion dollars. The victims in each case are the same, American citizens. White-collar crime in America is insufficiently controlled due to weak laws, a broad pool of victims, and the enormous power scale of those involved.
Many white-collar offenders may start off as trustworthy, respected businessmen/women in their workplace. Motivated by greed and power, these highly skilled people will use cunning and deceit to earn what they want from innocent people. Some people are very well known through their illegal white collar activities that are brought to light. After a competitor’s representative met with The Securities and Exchange Commission (SEC) with suspicion about Bernard Madoff, founder of Bernard L. Madoff Investment...
Jordan Belfort is the notorious 1990’s stockbroker who saw himself earning fifty million dollars a year operating a penny stock boiler room from his Stratton Oakmont, Inc. brokerage firm. Corrupted by drugs, money, and sex, he went from being an innocent twenty – two year old on the fringe of a new life to manipulating the system in his infamous “pump and dump” scheme. As a stock swindler, he would motivate his young brokers through insane presentations to rile them up as they defrauded investors with duplicitous stock sales. Toward the end of this debauchery tale he was convicted for securities fraud and money laundering for which he was sentenced to twenty – two months in prison as well as recompensing two – hundred million in restitution to any swindled stock buyers of his brokerage firm. Though his lavish spending and berserk party lifestyle was consumed by excessive greed, he displayed both positive and negative aspects of business communications.