Association of Certified Fraud Examiners

Institutional Fraud

Overview

The Swiss Banks

Lance Armstrong

The Ratings Agencies

The Swiss Banks We are not talking about the actions of “War time Switzerland,

surrounded by the Nazis”.

In 1962, the Swiss government issued a decree that required banks to look through all dormant accounts and identify those that belonged to victims of religious, racist, or political persecution.

ICEP formed in 1996 for the purpose of conducting a full audit of all Swiss banks as well as a Claims Resolution Tribunal.

The Bergier Commission – formed by Swiss parliament in 1997 Banks systematically destroying documents as late as 1997 Banks made very little effort to locate the victims of Nazi

persecution who had deposited money in the banks, in fact they used “bank secrecy” as a justification.

Lance Armstrong USA Cycling

Trek Bicycles president

Carmichael Training Systems

Dr. Michele Ferrari (coach and physiologist)

US Postal Service Racing Team (not actually the US Postal

Service)

Motorola Racing Team (again not actually Motorola)

Former member of the US Olympic Committee

Former member of the International Olympic Committee

Investment Banker and Co-founder of Montgomery Securities

Numerous former teammates

Other Racing Teams

Ratings Agencies Standard & Poors, Fitch & Moodys

Responsible for “Rating” of Mortgage and other securities Financial Crisis Inquiry Commission - We conclude the failures

of credit rating agencies were essential cogs in the wheel of financial destruction.

”The Three credit rating agencies were key enablers of the financial meltdown. The mortgage-related securities at the heart of the crisis could not have been marketed and sold without their seal of approval. Investors relied on them, often blindly. In some cases, they were obligated to use them, or regulatory capital standards were hinged on them. . . . [T]he forces at work behind the breakdowns at Moody’s . . . includ[ed] the flawed computer models, the pressure from financial firms that paid for the ratings, the relentless drive for market share, the lack of resources to do the job despite record profits, and the absence of meaningful public oversight."

Commonalities Everyone else is doing it! Collusion among individuals and/or among companies and

seemingly unrelated organizations.

Regulatory framework and spirit willfully and systematically

ignored.

Foxes watching the hen house:

Swiss Banks and the Swiss Bankers Association

USA Cycling and Lance Armstrong The Rating Agencies were supposed to be representing the

interests of investors but were being paid and controlled by the Banks, their customers

The Fraud Triangle – Does it Fit?

The Rise of the OligarchyA Business or Industry that is Controlled by a Small Group

Financial Institutions Accounting Firms Ratings Agencies Phone Companies Etc.

The Fraud ExaminerDid the rise of institutional fraud occur because Fraud Examiners failed to do our jobs? Were we the unwitting victims as well?

Management and Corporate Boards are focused on: Earnings Competition Innovation Fair Financial Reporting Combatting Fraud within the organization

Government Regulators are under intense pressure to allow the free market to function without interference.

Unfortunately, if entities perceive that the competition is participating in nefarious activities, there is pressure to compete at a similar level.