Litigation

Even an MLM scammer says MLMs are scams?

Posted on February 10, 2010
Who do you trust? That’s an issue that often arises in my work with reformed felon Barry Minkow. Barry is most well-known for the fraud he committed through his carpet cleaning company ZZZZ Best. He is much less known for his work helping the FBI uncover fraud since he’s been out of prison...

Compliance Week article: Koss Fraud Spotlights Small Filers? Internal Control Issues

Posted on February 02, 2010
An article in today’s Compliance Week, Koss Fraud Spotlights Small Filers’ Internal Control Issues (subscription required), quotes me on internal controls and the auditors as it relates to the huge fraud committed by VP of Finance Sue Sachdeva at Koss Corp (NASDAQ:KOSS)...

Marketing Fraud: Why multi-level marketing pyramids and financial ponzis are ignored by law enforcement

Posted on January 31, 2010
Dear Colleagues, Consumers and Pyramid Scheme Alert Supporters, A new essay recently posted on the False Profits Blog addresses a question many of you  have raised. Why are multi-level marketing pyramids and financial ponzis able to ensnare so many people today? What is the power behind this Main Street epidemic? This question goes beyond the lack of law [...

Sachdeva and Koss Corp.: The indictment, the clothes, and the auditors

Posted on January 28, 2010
The case of the alleged theft of at least $31 million by Sue Sachdeva from Koss Corp. (NASDAQ:KOSS) carries on. Last week, Sachdeva was charged with 6 counts of wire fraud. Experts are saying this indictment came much faster than usual, as the Feds usually spend much more time thoroughly investigating cases...

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The move to IFRS: All about greed

Posted on January 22, 2010
Professor David Albrecht wrote a great piece today about the push to move from U.S. GAAP (Generally Accepted Accounting Principles) to IFRS (International Financial Reporting Standards). His conclusion? The push to switch is motivated purely by greed...

Usana Health Sciences knows it products are being sold illegally in China

Posted on January 21, 2010
Almost thre years ago, Barry Minkow and Fraud Discovery Institute released a report on Usana Health Sciences (NSDAQ:USNA), listing ten red flags of fraud he and his team (which included me) uncovered about the company. The report criticized the company’s business model, essentially calling it a pyramid scheme in which recruiting is the focus (rather [...

Koss Corp.: Commit the fraud and cover it up

Posted on January 20, 2010
I’ve been talking here, at DailyFinance.com, and to the media about the massive fraud at Koss Corp. and how I think it may have been committed and covered up. The time has come to get more specific about how I think it happened, and why I think the auditors did not find it...

Stories on Koss Corp. fraud

Posted on January 19, 2010
Here’s the list of news stories related to the fraud by Koss VP of Finance Sue Sachdeva which I’ve written or been quoted in: Accountants cite lessons learned in Koss scandal Koss Corp: Anatomy of an Alleged $31 Million Fraud Fraud Case Feeds Sarbox-Exemption Critics Koss Corp...

Koss Corp. Fraud: Defending Grant Thornton? No.

Posted on January 17, 2010
I have been criticized for ?defending? Grant Thornton, the auditors of Koss Corp, which has suffered a fraud loss of at least $31 million at the hands of the company’s Vice President of Finance, Sue Sachdeva. In fact, my comments relating to this case are not a defense of Grant Thornton, in the least...

Medifast continues to mislead shareholders

Posted on January 14, 2010
This week multi-level marketing expert Robert Fitzpatrick released his second report in the last year on Medifast (NYSE: MED) and their Take Shape For Life multi-level marketing division. The report highlights how little money the company’s “health coaches” actually earn from selling the products, and makes it clear that the real money (if there is [...

More on the endless chain recruitment scheme of Medifast and Take Shape For Life

Posted on January 13, 2010
Yesterday I referenced a new report on Medifast and Take Shape For Life by multi-level marketing expert Robert Fitzpatrick.. Here is more from his report. I want to highlight these things because they’re the facts that many pushers of MLMs will never tell you...

Medifast multi-level marketing scheme called into question by expert

Posted on January 12, 2010
Robert FitzPatrick, a multi-level marketing expert known around the world for his analysis of the business model, has released a report on Medifast Inc. (NYSE:MED) and its Take Shape For Life division. TSFL is the multi-level marketing arm of the weight loss company, and is the force behind the company’s overall increase in revenue...

Koss Fraud: Losses higher, Grant Thornton fired, Baker Tilly Virchow Krause hired

Posted on January 06, 2010
I’ve had plenty to say about the massive fraud Koss Corp has suffered at the hands of their Vice President of Finance, Sue Sachdeva. Here I am on Milwaukee’s ABC affiliate, WISN 12, talking about how a company with annual revenue in the $40 million range can fall victim to a fraud loss of $31 million [...

Overstock.com and Patrick Byrne caught in another lie

Posted on January 03, 2010
Overstock.com (NASDA:OSTK) is truly the gift that keeps on giving if you are a fraud investigator. The company and its wacky and incompetent CEO Patrick Byrne have been caught in yet another lie. The antics of Overstock, Byrne, and paid stalkers Judd Bagley and Mark Mitchell have been documented over and over...

More on fraud at Koss Corp.

Posted on December 29, 2009
Today’s Milwaukee Journal Sentinel provides additional insights into the alleged fraud committed by Koss Corp. VP of Finance Sue Sachdeva. Initially the fraud was estimated at $4.5 million, but that was quickly revised upward to more than $20 million...

Barry Minkow busts another fraudster

Posted on December 28, 2009
As if uncovering more than $1.8 billion in frauds hasn’t been enough, Barry Minkow (famous for his ZZZZ Best Carpet Cleaning fraud for which he did 8 years in prison) has just busted another fraudster who was running a Ponzi scheme. Dow Jones Newswire reports: Minkow has blown the lid on about two dozen Ponzis over the [...

Financial motive for arson?

Posted on December 27, 2009
One type of case I really enjoy working is suspected arson. On either a personal or business level, an insurance company may be looking for a motive when arson is supsected. A difficult financial situation is one obvious motive for arson. Today’s article about a fire at the house of a women accused of defrauding Wisconsin’s [...

How the VP of Finance at Koss steals millions

Posted on December 26, 2009
This week Koss Corp (NASDAQ:KOSS) announced that Sujata “Sue” Sachdeva was fired from her position as Vice President of Finance for stealing at least $4.5 million from the company. Two members of the accounting staff Sachdeva supervised were suspended without pay...

Any way you slice it, the UFF Money Merge Account loses

Posted on December 21, 2009
Anyone who has spent some time on this site knows I’m no fan of the United First Financial Money Merge Account (UFF MMA).  This “revolutionary” software is supposed to help you pay off your mortgage in record time, all for the low, low price of $3,500...

Why does the U.S. Postal Service exist?

Posted on December 20, 2009
Back in the day, a government-run delivery service was a good idea. It put some quality controls in place and made the service more reliable. People could actually count on their letters getting to their final destination. But in this day and age, the U...

Complaint filed with FTC about Facebook ?privacy? changes

Posted on December 18, 2009
I’ve been ranting publicly and privately for the last week about Facebook’s new “privacy” options that went into effect last week. I put privacy in quotes because the way things were set up, many Facebook users had information out in the public domain, and they didn’t even know it...

InterOil?s Senior Manager for Media Relations sends email threats to Fraud Discovery Institute co-founder

Posted on December 16, 2009
FDI demonstrates that InterOil (NYSE:IOC) selectively excludes certain issued press releases from regulatory filing Susuve Laumaea, Senior Manager for Media Relations at InterOil (NYSE:IOC) in Papua New Guinea has issued at least two press releases on behalf of InterOil Corporation dealing with material exploration operations in PNG, but neither of these official company press releases were [...

Fraud Discovery Institute challenges three month, 132% increase in InterOil Corp?s stock price by demonstrating sleight of hand in recent press releases

Posted on December 15, 2009
InterOil Corp?s investors duped into believing company has discovered and certified resources in Papua New Guinea In the last three months, the stock price of InterOil (NYSE:IOC) has gone from $30.40 to $70.55 per share. What is responsible for this incredible 132% increase in price? Certainly not the company’s financial performance...

The continuing Mary Kay Cosmetics con

Posted on December 15, 2009
My most popular post on this blog is Mary Kay Cosmetics: Destroying half a million women a year, and with good reason. Each day, thousands of women are searching for information on the Mary Kay “opportunity.” Until a few years ago, the only information they could find was produced by the Mary Kay Spin Machine...

Overstock.com stalks critics, hacks into Facebook accounts, and disproves own conspiracy theory

Posted on December 12, 2009
The story about the Oversock.com theory that anyone who is “friends” on Facebook is part of a naked short selling conspiracy keeps getting weirder. It was bad enough that former Overstock.com employee and paid stalker (paid by OSTK CEO Patrick Byrne, nonetheless) Judd Bagley has created a database of Facebook users and their friend lists...

Facebook privacy problem: Deactivate your account

Posted on December 12, 2009
This week I’ve been writing about the cyberstalking activities of Judd Bagley on behalf of the Deep Capture website funded by Patrick Byrne, CEO of Overstock.com. In a nutshell, Byrne and company published a list of their enemies, which essentially includes journalists, bloggers, and hedge fund managers who think Overstock...

Facebook ?friends? are co-conspirators in Overstock.com land

Posted on December 11, 2009
In the world of Patrick Byrne, CEO of flailing Overstock.com (NYSE:OSTK), his paid stalkers, and his nutty followers, anything and everything is evidence of a massive conspiracy on Wall Street. Involved in this massive conspiracy are “captured” journalists who “take orders” from hedge funds and help manipulate the stockmarket...

Immediate Edge: Scam or not?

Posted on December 07, 2009
I could literally spend all day blogging about scams on consumers. And the consumers don’t even have to be gullible. There are plenty of scams that look completely legitimate from the outside, and it’s not until you’re involved with them that you realize they’re scams...

Google Bomb: Internet lawyer John Dozier on defamation online

Posted on December 05, 2009
There’s a fine line between the First Amendment right to free speech and defamation, and this has become an increasingly larger problem online. What do you do if you’ve been careful with your reputation personally and professionally, but someone with a vendetta decides to attack you? Internet lawyer John Dozier is one of the country’s leading [...

Year-end tax planning

Posted on November 30, 2009
The end of the year is fast approaching, and its’ a good time to remind everyone of a few basic things they ought to do before December 31. I appeared last year on CNBC’s On the Money to talk about my five best tips for taxpayers. [...

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