Post-Madoff, forensic accountants seeing increase in business
Investigators say that the number of people trying to pull off low-level Ponzi schemes is increasing so quickly that they are now calling them "mini-Madoffs."
And forensic accountants believe their skills will be even more valuable in this climate, as jilted investors are asking tough questions about where their money went. Business owners and governments are also being cautious, watching their funds with more scrutiny than ever.
One certified fraud examiner firm in Westport, CN, Walter C. King Associates, is offering tax recovery and forensic accounting services to investors who fell victim to Bernard Madoff's Ponzi scheme. And forensic accountants have been hired by actress Zsa Zsa Gabor, who wants them to track as much as $10 million that her lawyer says she lost to Madoff, The Wall Street Journal reported.
Joseph Centofanti, the training director of the Connecticut Certified Fraud Examiners Association, told the Connecticut Post that he's got plenty of business, and plenty of work to delegate to interns. "We just started 11 accounting interns and every single one wants to work on fraud stuff," Centofanti said.
Awareness of Ponzi schemes has certainly grown since Madoff's alleged $50 billion scheme came to light. The New York Times reports that the Commodity Futures Trading Commission has seen a doubling of complaints leading to possible Ponzi schemes in the last year. The agency established a new Forex Enforcement Task Force to prosecute foreign currency Ponzi cases. In 2008, the agency prosecuted 15 Ponzi schemes and expects that number to increase this year.
Smaller schemes include the case of Nicholas Cosmo, of Long Island, NY, whose Agape World Inc. loan business allegedly cheated about 1,500 investors out of tens of millions of dollars — an amount that still pales in comparison with Madoff's.
U.S. Senators Charles Schumer (D-NY) and Richard Shelby (R-AL) both introduced legislation to provide $110 million to hire 500 new FBI agents, 50 new assistant U.S. attorneys, and 100 new SEC enforcement officials to crack down on financial scams. The FBI and CIA are also seeking accountants to track down where criminals got their money and where it went.
"Ponzi schemes are against the law," Schumer told the Times. "But we have not had enough law enforcement officials. Madoff should have been stopped. Our proposal would not just provide more resources, but it would work like a posse to go after this fraud."
Centofanti said he wouldn't worry about the demand for fraud investigators drying up any time soon. "It's amazing. Everything is so financially driven, and people are not always making the best decisions," he told the Post.