Fraud Investigation

1. Based on your research, identify and assess the fraud that occurred in the organization and it has had on the corporation’s investors and creditors. Provide support your rationale.

Nowadays, more and more corporations are taking advantages of enormous potential of both domestic and international markets. They budget for company expansions, spending whatever it takes to build the infrastructure to support future profit operations. However, more and more corporate fraud scandals are discovered, as faster and faster the corporations developing. Those illegal and intentional fraud behaviors will always cause huge profit deficits and reputation hurts to corporations. As we know that corporate fraud is the activities undertaken by individuals or company that are done in dishonest or illegal manners, and are designed to give advantages to the perpetrating individuals or companies (Investorpedia, 2013). Some examples of corporate fraud may include, but are not limited to, fraud or illegal practice in issuance or sale of securities, false reports or entries on corporate documents with intent to deceive, or purchase or sale of securities by a person having access to material information not available to public through a special relationship with the insider trading, etc. The schemes are always go beyond the scope of individuals’ stated positions, and are marked by their personal complexity and economic impact on business.

For instance, on December 16, 2011, in Alexandria, Va., Thomas J. Ernst, formerly a resident of McLean, Va. and Arlington, Va., was sentenced to 48 months in prison, three years of supervised release and ordered to pay $4,490,966 in restitution to the IRS. According to court documents, between 2000 and 2006, Ernst served as the president and chief executive officer of a health insurance benefits administrative company. According to the plea agreement and statement of facts, Ernst admitted that between 2001 and...