San Diego State University ?Fraud Psychology Discussion

Business Finance

Fraud Psychology Discussion Assignment

Barry Minkow – All-American Con Man? Can the Perpetual Fraudster be Stopped?

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 under the Course Documents tab (Course Documents/ACFE/ACFE Videos). (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.

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.

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:

Barry Minkow Biography

http://www.biography.com/people/barry-minkow-234623

(Links to an external site.)

Con Artist Hall of Infamy – Barry Minkow

http://archive.pixelettestudios.com/hallofinfamy/inductees.php?action=detail&artist=barry_minkow

(Links to an external site.)

Minkow movie trailer

https://www.youtube.com/watch?v=SLi0Fp8tB6w

(Links to an external site.)

Jan. 1988 – ZZZZ Best Founder Minkow Indicted on Racketeering and Fraud Charges

http://www.wsj.com/news/articles/SB122651435543121217