Alleged White Collar Criminals Walk Due to Dropped Insider Trading Charges


Over the past six years, the government has been cracking down on insider trading on Wall Street. But U.S. Attorney Preet Bharara will not win this one, not after the government has declined to hear an appeal for an overturned court decision that has freed multiple individuals from their previous convictions. Michael Steinberg, a former hedge fund manager for SAC Capital along with six others who had previously pled guilty to insider trading charges, will walk free.

Steinberg’s Scheme

Steinberg managed SAC Capital’s Sigma Capital Management Unit, specifically managing stocks in the technology, media and communications sector. He was convicted in 2013 of insider trading and sentenced to 3 ½ years in prison.

Steinberg, along with Anthony Chiasson and Todd Newman, two other technology hedge fund investors, were accused of passing along tips about technology companies to their bosses in order to maximize the returns on stock investing. Altogether, the funds Steinberg managed accrued over $1.8 million in profits.

New Ruling in the 2nd U.S. Circuit Court of Appeals

Chiasson and Newman were tried and convicted in 2012, but the ruling in an appellate court overturned these original convictions. The 2nd U.S. Circuit Court of Appeals decided that insider trading can only be found if the defendant knew that they received their information from someone who was required to keep the data private, but would personally gain by leaking the information. Passing along simple tips isn’t enough to gain a conviction – prosecutors must provide facts about the inside source and prove what the defendant knew at what time.

Newman, Chiasson, Steinberg and six others who had originally pleaded guilty as government witnesses will all walk free, with all charges vacated. Attorney Bharara states that further pursuing charges against them “would no longer be in the interests of justice.” While it is extremely rare for courts to let those who have pled guilty walk free, it does happen on occasion when the initial subject is cleared of their charges.

How Will This Precedent Affect Wall Street?

Bharara has led the charge against corruption on Wall Street, targeting consultants, insiders and fund managers. Of the 87 convictions gained during the past six years, 14 have been vacated either due to an appeal or dismissal.

It remains to be seen whether the new ruling by the appellate court will affect any other pending cases, but it will definitely make it more difficult to charge individuals for insider trading and hold up the charge with enough data and witnesses over the course of a trial.

Will this decision affect how Wall Street workers act? While many believe this ruling is a severe blow to the side of the prosecution in their efforts to limit insider trading, hopefully insider trading is still considered a risky, dangerous and illegal move and many are deterred by the government and Bharara’s persistence to keep pressing on despite changing guidelines presented by the appellate courts.

Is Japan’s Monetary Easing Policy Working?

Over the last half-century, Japan has definitely proved itself as an economic power to reckon with. Its vehicles, machines, and electronic equipment are among the finest in the world, and we consume them happily here in the US. Americans are in constant awe of Japanese innovations (just think of the traffic-directing robots).

Unfortunately, it isn’t sunshine and rainbows all the time. Even Japan has to make tough calls regarding fiscal policy.

That was the case in 2013. In order to make Japanese products more competitive overseas and to stimulate domestic consumption, Japanese Prime Minister Shinzo Abe pressured the Bank of Japan (BoJ) to begin a policy of monetary easing—printing more money to create inflation and devalue the national currency.

The strategy behind the Abe administration’s agenda is simple: by devaluing the yen, the price of Japanese exports in foreign countries should go down. Thus, consumers in those countries are more likely to buy. Also, a diminished yen should produce lower interest rates, leading to increased bank lending and consumer spending.

Response to Abe’s initiative was mixed, but the BoJ followed the directive after the Prime Minister threatened to change the laws under which the nation’s central bank operates.

So how did that work out for Japan?

According to plan, apparently.

From the beginning, the result of the monetary easing was a significant devaluation of the yen to the dollar, accompanied by a rise of the stock market (NIKKEI).

Mere days after Abe announced his plan, the NIKKEI jumped 234 points. Meanwhile the yen fell to a 33-month low.

The initial fear surrounding the issue was that Japan’s move would spark an international “currency war.” When any given nation lowers its currency, it has the potential to threaten the exports of other countries unless they do the same. The problem is that when everyone starts doing it, international trade takes a beating, which is what happened in the 1930s.

Fortunately, the nations of the G-20 decided from the outset to not take any such action. The G-20 nations have a collective understanding to not participate in competitive devaluations, and they weren’t going to break it for Japan’s relatively small-time action.

Those trends have continued over the course of the last two years. The NIKKEI has seen a steady rise to 25,000 points. Just compare that to the 11,000 it was at when the BoJ began the monetary easing in early 2013.

Meanwhile, currency depreciation has continued. While this has the potential to continue stimulating the Japanese economy as originally planned, it can have negative effects if not controlled. About 9% of Japanese imports come from the US—a value of $73 billion dollars. This includes billions of dollars worth of oil, meat, pharmaceuticals, and aircraft equipment. As the value of the yen goes down relative to the dollar, these goods will become more expensive for Japanese citizens and businesses.

Although Japan is currently enjoying the benefits of monetary easing, it’s yet to be seen whether the current policy will prove a help or hindrance to the country.


Did Donald Trump Run a Scam University?

Wealthy CEO turned-celebrity-turned-presidential candidate, Donald Trump, has been accused of many things; from racism and sexism to bribery. But the most recent allegations and lawsuits circling the celebrity businessman are about Trump’s “scam” university.

New Lawsuits Against Donald Trump Allege He Scammed His Students

A new class-action lawsuit in California and an ongoing civil suit in New York against the now-defunct “Trump University,” later known as “The Trump Entrepreneur Institute,” claims that Donald Trump defrauded as many as 5,000 of his students. Many angry students have accused the entire operation of being a scam from the beginning.

The victims paid up to $35,000 each to learn the secrets of Trump’s real estate investment techniques and strategies, and learn how to become successful entrepreneurs and business leaders; as Trump had promised that anyone could do. But these students never received the education they said they paid for.

According to the National Review, one couple, Shelly and Richard Hewson, paid $21,490 for what they thought would be classes that would teach them how to buy and “flip” houses for profit. But a Trump University instructor took them out to look at a couple run-down homes in a bad part of Philadelphia, made a few general statements, and never actually explained how to find properties to buy or sell.

Trump University Relied on Donald Trump’s Image, But Failed to Deliver Results

The Hewsons are irate that they paid so much money to an institution that didn’t deliver what was promised. They claim that they and the other 5,000 students are victims of Trump’s scam. What prompted them to spend so much money on these scam classes? “Because we had faith in Donald Trump,” Richard explains in his 2015 affidavit against the Trump Entrepreneur Institute.

Hewson goes on to say, “We realized that Trump was not teaching us how to find these needles in a haystack. We concluded that we had paid over $20,000 for nothing, based on our belief in Donald Trump…”

The Trump Institute promised that everyday Americans could achieve wealth and success if they followed his tips for real estate investment and business strategies. But more students of Trump’s university are coming out against the billionaire as victims of his scam organization.

Trump’s University Ruled to Be “Operating Illegally”

Between 2005 and 2011, Trump’s organization earned $40 million in revenue from students who bought into Donald Trump’s personal image and brand. In October of 2015, a New York trial court ruled that both the organization that is Trump University as well as Donald Trump himself were liable for restitution for every students who had taken the course since May 2010, “because it was operating illegally without a state license.”

While this ruling was easy to make based on the evidence, it may prove difficult for the victims to win a case against Trump on only the claims that they never received the education that was promised when they paid their many fees. But there are accounts of the aggressive tactics used on the victims at these Trump University seminars.

‘Aggressive’ Tactics Allegedly Coerced Students Into Paying Thousands

According to New York State’s complaint, “Trump University speakers repeatedly insinuated that Donald Trump would appear at the three-day seminar, claiming that he ‘is going to be in town’ or ‘often drops by’ and ‘might show up’ or had just left.” There would be a fleet of salespeople milling around, convincing students to pay an additional $1,495 to attend a special three-day conference. Many students were eager to sign up, including the Hewsons.

For an additional $34,995 students could sign up to join Trump’s “Gold Elite Program.” But the cases against Trump allege that the victims who paid the money never received the insinuated or promised results. The New York State case alleges that some students emptied all their savings or went heavily into debt to cover the cost of Trump’s classes. But instead of receiving Trump’s advice, students were allowed to take a picture with a cardboard cutout of Trump and were then persuaded to charge more money onto their credit cards.

The Trump Institute Is One of Several Recently Highlighted Falsehoods

Trump University was one of many of Donald Trump’s failed enterprises that quickly went bankrupt and left a wake of unsatisfied customers, including his many casinos in Atlantic City. With the increased press surrounding the businessman’s intent to run for President, other aspects of Trump’s business dealings have been more closely inspected, including the possible hiring of illegal immigrants on his construction projects.

In a recent press release, Trump said his net worth was $10 billion, but Forbes magazine has pegged it at just $4 billion. Earlier this summer, a California federal judge ruled that Donald Trump has to testify about both his fraudulent claims about his net worth and his earnings from the real-estate classes, alleging that the blatant lies about the numbers persuaded the student victims to invest in his classes, only to be scammed.

The lawsuits are a combined result of several students’ claims of the Trump University being a scam and the state finding the university to be operating without a license and with fraudulent and exaggerated claims. But as Hewson says in his affidavit this January, “We never tried to get our money back because at that point we thought the whole thing was a scam and that we would not be able to fight Donald Trump.”

Chinese Money Laundering in A Neighborhood Near You

Last December, a Chinese buyer dropped $51 million on a Vancouver estate, making it the most expensive property sold. And in just the first half of the year, the Chinese have spent more than $3.8 billion on Manhattan real estate, more than triple what they spent in all of 2014, according to data from Real Capital Analytics.

The foreign investor boom in high-end property in cities like San Francisco, New York City, London and Vancouver in the last few years is a boon to real estate brokers and developers. Overpriced properties are no longer a problem—marketing them to a wealthy Chinese buyer is the solution for a quick, all-cash sale.

These type of sales are creating a housing boom. While the perceived boom offers signs of an improving economy, the reality is the opposite. Foreign property investment is affecting property values in top US and Canadian cities and it’s pricing out local residents who can’t afford to pay top dollar to compete. Many of the purchased properties sit vacantly. Analysts wonder how long the market can sustain inflated prices before the bubble bursts. The more relevant and concerning question is how are Chinese investors funding the bubble?

A Bloomberg report found that “China’s foreign-exchange rules cap the maximum amount of yuan that individuals are allowed to convert at $50,000 each year and ban them from transferring the currency abroad directly.”

Despite these caps, China tops the list of developing countries sending illicit money abroad, according to a study by Global Financial Integrity. Illicit money out of China topped $2.7 trillion for the decade ending in 2010. That doesn’t bode well for Chinese policymakers trying to boost China’s rapidly slowing growth. Clearly things are serious enough—China devalued its currency in August by 1.9 percent against the dollar in the biggest single-day markdown since 1994. The attempt appears designed to curb capital outflows from China, but is a 2% devaluation enough to stop the funneling of billions dollars? Unlikely, when you consider a Barclay’s poll that found that nearly half of Chinese millionaires plan to emigrate in the next five years.

So how are Chinese millionaires and billionaires doing it? In several ways. The largest institutions responsible for capital funneling are the Chinese banks themselves. Some allow money to leave China while looking the other way, although the Chinese government is making this less likely with a public crack down on corruption. More “reputable” banks have loopholes that allow a Chinese national to physically open an account in Hong Kong, where unlimited money can be wired. There is often an intermediary money exchange service that exchanges the currency into US dollars to deposit into the Hong Kong account.

Hong Kong money services are feeling the Chinese government crackdown pressure and making the Hong Kong solution inconvenient. The newest laundering option is the controversial Bitcoin, which has seen a sharp rise in Chinese momentum in the last couple of years. Bitcoin is a digital currency that operates independently of a bank.

Traditional investors that find Bitcoin too esoteric get money out of China by not bringing it in, in the first place. Many businesses avoid the money exchange inconvenience by accepting payment in foreign currency like US dollars or Euros exclusively to their worldwide banks of choice.

For now, it’s a battle between government regulation and money preservation. It looks like the Chinese millionaires and billionaires are winning by creatively finding ways to pull their money out of China and investing it in offshore havens like your neighborhood. Get ready for a bumpy ride.



How Carly Fiorina Destroyed Bell Labs

Prior to Republican Carly Fiorina’s 2016 Presidential campaign and failed US Senate campaign, she was the CEO of the computer behemoth HP. Ultimately, after overseeing mass layoffs, burning as many bridges as possible, and pushing through questionable billion dollar acquisitions, Fiorina was forced out of the company. At the time, some wondered how someone with such limited executive ability rose to the level of CEO at one of the world’s largest companies. The reason goes back to Lucent.

Prior to her long string of failure, Fiorina was known as a star executive at Lucent Technology. Lucent was a spin off from AT&T and the home of the famous Bells Labs. Bell, founded in the 19th century by none other than Alexander Graham Bell, was one of the greatest drivers of technological innovation in world history. It is credited with inventing the transistor, the laser, and C++ programming. It is safe to say that the smartphone would not exist if not for Bell Labs. AT&T spun off Lucent and in turn Bell Labs so that it could sell gear to companies that may previously not have done business with a division of a direct competitor like AT&T.

At the time, the telecom industry was in on infrastructure buying binge. Companies were laying fiber optic cables across the world. Startups with limited cash flow were spending billions of dollars on cable and in the process, boosting Lucent’s sales numbers to record levels. Fiorina became a star. She was named one of the most powerful women in the country.

It turns out, however, that Fiorina’s meteoric rise was a product of accounting tricks and bad business practices. Lucent juiced its books by lending money to its cash starved customers. Money paid back from these loans would appear on Lucent’s income statement as revenue, while the debt would remain on its balance sheet as an asset since Lucent technically still claimed title to the equipment.

Fiorina personally oversaw a deal with the now defunct PathNet Communications. Founded in 1995, the company went public three years later, only to fold in the three years to follow. Lucent funded 100% of PathNet’s equipment acquisition at no money down. Lucent even threw in some spending cash on top of the equipment to sweeten the pot and extended a credit line worth up to $2.1 billion to a company that at the time had less than $2 million in annual revenue. The deal made absolutely no long term sense for Lucent. PathNet had barely any equity and was loaded down with junk bonds paying 12.25% interest. Lucent’s debt obligations leveraged the company to a point where they would realistically never be able to pay back the money.

For Lucent, deals like this one lead to a short term boost to its income statement, but a long term financial disaster. Fiorina was a direct beneficiary of the short term boost. She left for HP in 1999 at the peak of her stardom. Just after she bailed, Lucent filed an SEC disclosure revealing that the company had $7 billion in outstanding loan commitments from customers like Fiorina’s customer PathNet.

Ultimately, the successor to Bell Labs and the custodian of its legacy collapsed due to the self-interested and unscrupulous actions of its executives. More than any other person, Fiorina deserves the blame for Lucent’s demise and the blame for destroying Bell Labs: one of the greatest technological innovators in human history.

6 Ways to Protect Yourself from Hackers


Computer and cybercrime is the fastest growing white collar crime in the world. Protect yourself from a computer attack by following these 6 relatively simple steps:

1. Don’t be stupid and use common sense. Don’t respond to tempting emails offering you free stuff. If some king from let’s say Nigeria offers to deposit money into your bank account, don’t do it. Ask yourself “is this too good to be true?” If so, it’s probably a scam. If you’re not sure, type part of the content of the email, IM, or website that you are reading into a search engine and see what comes up. Chances are you are not the only person that noticed and the scam has already been exposed by others.

2. Choose strong passwords. Make sure they cannot be easily guessed and use a combination of numbers, letters, and special characters (#, $, %, ^, &, etc.). Most importantly, each website should have a unique password so that if one database is compromised, your entire internet identity is not at risk. If it is too much trouble to remember each unique password for every bank account, email address, or online store where you have an account, consider using a password system like this one that makes it easier to remember each unique one.

3. Check your bank and credit card websites regularly. Online banking makes verifying purchases really easy. Setting alerts for large transaction is not enough as hackers will sometimes make multiple smaller transactions to throw you and your bank off. Consider using websites like Mint that aggregate all of your bank accounts and keep track of your transactions. These websites raise their own set of issues, but on balance, they are worth it. Even if hackers broke into an aggregating website, they can’t steal your money because the websites won’t allow them to make transfers or withdrawals.

4. Download anti-virus and anti-spyware software. Yes most modern day commercial software in this category is so bloated and resource intensive that it feels like a virus in itself. However, many bundled and useless features can be turned off and you can limit the software’s scope to just the essentials. Consider downloading several trial versions to see which one is the least intrusive. Ultimately, anti-virus and anti-spyware software is your last line of defense in the event you violate step #1.

5. Keep your firewall turned on. A firewall protects your computer from hackers who might access your system without authorization. If you are using just one computer, a software-based firewall should be sufficient. For networked computers, consider investing in a physical or hardware based firewall that restricts access to the entire network.

6. Don’t panic if you are hacked. Most cybercrimes against individuals are relatively minor and can be fixed in just a few short hours. Some will require reformatting your hard drive. Others will demand several phone calls to your banks and credit card companies. Ultimately, they are not the end of the world and you will live to tell about it.

He stole millions from unsuspecting investors and got three years in prison. Is it enough?

The funny thing about criminals is that they always think they can get away with it. Take, for example, the story of Michael Hicks, a Cincinnati man convicted of mail fraud as part of a Kentucky oil investment scheme that bilked over 200 victims out of the not so small amount of $3 million.

Hicks, who was sentenced to three years in federal prison, admitted that he willingly went along with the deception, which convinced hapless investors to give up their hard earned cash and invest it in oil production—not a bad investment on honest terms, but when presented with inflated numbers and fraudulent guarantees, (let alone unethical motivations), it spelled disaster for those with the cash to spend.

There’s no doubt that members of the scheme knew they were into some heavy wrong-doing—otherwise why would they, according to investigators, fail to disclose facts and risks about the investments, as well as attempting to avoid detection by using fake names, changing their company name, and changing addresses through a dizzying array of cities such as Los Angeles, Bowling Green, Covington, Louisville, and Nashville.

Hicks, for his part, plead guilty and admitted opening bank accounts in several different names, managing several different addresses in different names, cashed or deposited the investor checks, and then withdrew the funds and sent them to his co-defendant and half-brother, John Westine, in California. Westine, as well as a handful of other co-conspirators, have all been found guilty of charges ranging from money laundering to securities fraud.

Not only must Hicks serve at least 85 percent of his three year prison sentence as a stipulation of his punishment, he will also be subject to probation for three years upon release. His victims, having lost all or almost all of their ill-fated investments, will receive court-ordered restitution from Hicks as well.

Is three years enough? Did Hicks truly believe they would never be caught, or did he think a few years of living big would be worth the pain and hassle of living in a federal prison?

The way our justice system doles out punishment is a bit of a mystery to me, no doubt punctuated by the fact I have never studied law or had a personal run in with the law myself. Recently I heard the story of a man who was sentenced to three years in prison for a different kind of crime. This man retired after decades as a well-respected firefighter, had a wife, kids, and grandkids, and no previous criminal record other than DUI related charges.

What he did have was an alcohol problem.

How Scammers Are Using Technology To Get Ahead

Age old scams don’t look the same way they once did – fake checks, mass mailers, and the wandering snake oil salesman are relics of the past as scammers turn to technology to stay hidden while getting ahead.

But while you might have noticed a mass of e-mails selling you things you never knew existed, let alone asked for, that barely begins to scratch the surface of how scammers are using technology to get your information.

To stay ahead of the curve and keep yourself protected, here’s what’s worth looking out for when it comes to scammers and technology.

They Skim Your Card

Card skimmers aren’t anything new unto themselves, but they’ve become almost unrecognizable. Skimmers these days can be placed over the card slot so securely that a simple jiggle won’t shake them loose, and with such a convincing cover that you would be hard pressed to catch the scam.

They can also go directly into the card slot, often so small that the most you’ll see of them once they’re in there are a few hair-sized fibers hanging down, and that’s if you know what you’re looking for.

Meanwhile, PIN capture overlay devices can look exactly like your ATM’s keypad, and be fastened out so tight that you’d never notice it wasn’t supposed to be there. Some skimmers are so advanced that they can send an SMS message to the scammer each time it’s collected new card information.

Scammers are getting increasingly clever with the placement of these devices, too. While they’ll probably always be seen as ATM skimmers, they’re going over card readers at gas stations, swipe entries in front of banks, and on any pad attached to self-service technology.

These pose a big risk to your financial security – giving scammers access to drain your account and even to potentially throw it into overdraft. If the information was taken from an independently owned, non-bank affiliated ATM, you could have a hard time getting your cash back. With no bank security programming backing them, these ATMs don’t necessarily have any responsibility toward customer reimbursement.

While skimmers are getting increasingly harder to find, the advice has remained largely the same:

  • Use bank ATMs whenever possible
  • Trust areas with security cameras first
  • Look for any signs of tampering like heave wear around the reader
  • If it looks even a little suspicious, don’t use it

They Take Over Social Media

You’ve seen them before – a story pops up in your Facebook feed talking about government grants or instant lottery winnings. These are classic twists on more well-known e-mail scams, with scammers knowing two things: first, you trust social media connections more than an e-mail from a stranger. Second, if they work in small enough increments, targets are more likely to bite.

You’ll see something that says you can win $1,000 instantly – just click to play. You follow the link and surprise! You’re the lucky winner. To claim your money, all you have to do is pay $50 or $100 processing fee.

Here’s the deal – you should never have to pay to claim a cash prize. Likewise, you can’t win a contest you didn’t enter. Scammers are using more widely checked and trusted methods like social media to get the scam out there, and they trust a common-sense threshold to get your attention. A thousand dollars seems far more likely than thirty-two million in terms of realistic winnings, so they’re adapting those lower numbers to draw victims in. It’s still a scam, though, and it could still have you at a loss if you fall for it.

Another common version has you paying for followers or likes. The numbers will add up, but they won’t be from real people or accounts. You’ won’t get any more traction or attention than you had previously, and you’ll be out what you paid plus the integrity of your account.

They Make You the Scammer

You won’t benefit from the information or money that they’re pulling in, but scammers can hijack your name and phone number to useas caller ID information for phone scams. This puts one more layer in between intended targets and the scammers, and it leaves you with the unfortunate fallout of angry callers wanting to know how you got their information, and possibly threatening to turn you into the police.

These are the often unheard victims in telemarketing scams – their information is used to disguise the true number and location of the scammer, and where targets have the option of simply letting the auto dialer roll over to the next number, you’re stuck with angry victims calling you back day and night.

There aren’t too many preventative measures you can take on an individual level, thought eh FTC is pushing for tighter regulation to make spoofing more difficult, but if you ever find yourself on the other end, you have the option of temporarily disconnecting your number, or getting a third party VoIP carrier that only lets certain number through to your phone.

They Make You Believe You’re Getting What You Want

This is at the heart of most scams, but technology has made it easier than ever for scammers to convince you that they’re the product, service, or person that you’re really looking for. Many scammers impersonate legitimate online service companies such as Netflix, copying their site and stealing your ID through their login or sign up screen.

The same is common with online job applications – the scammer clones a legitimate site and pulls personal or financial information when you apply, or otherwise gets you caught up as an unsuspecting player in a larger scheme, often unknowingly forwarding laundered money or illicit packages.

Not even your heart is safe – scammers are taking to online dating apps and wooing unsuspecting victims before asking for pay to come see their newfound love. Once you forward the money for the ticket, both your cash and your date are never to be seen again.

The technology may be new, but the heart of the scams are always the same. Don’t let a more high-tech front fool you. Stay on the watch for suspicious activity and you’ll be able to keep your money and your information safe both online and in real life.

The Types of Fraudulent Activities That Plague U.S. Business

According to the Association of Certified Fraud Examiners, a typical organization loses 5% of its annual revenue to various types of fraudulent activity. Fraud occurs at all levels of organizations. From underlings to owners, there are many ways an employee can misuse and abuse the system. Whether you’re a manager or a new hire, it’s always good to know the signs of occupational fraud in your workplace. Here are three of the main types of fraud to keep an eye out for.

Fraudulent Activity: Asset Misappropriation

A common type of fraudulent activity, asset misappropriation pertains largely to different types of theft within an organization, including:

  • Check forgery – Essentially, an employee takes checks and signs them in a name that is now their own in order to cash them and make off with the funds before the victim of the fraud knows what happened.
  • Theft of money – From stealing from the company’s petty cash box to raiding the register after closing up shop, this is a common form of asset misappropriation.
  • Inventory theft – This can include stealing supplies, equipment or merchandise from an organization.
  • Payroll fraud – This can take on a number of forms, including one co-worker punching another co-worker in/out even if he or she is absent, an accounting department creating a “ghost employee” and depositing the fake employee’s cash into their own accounts, or even an employee padding a time sheet to clock in more hours than he or she actually worked.
  • Theft of services – Some of the most common everyday examples of this type of theft can be illustrated by the classic “dine-and-dash” or “turnstyle-jumping” scenarios. Essentially, someone takes advantage of a service without paying for it.

Asset misappropriate is far and away the most common type of organizational fraud, accounting for more than 91% of fraud schemes, however it is also the least expenses type of organizational fraud when considered on a per-fraud basis.

Fraudulent Activity: Bribery and Corruption

There are dozens, if not hundreds of famous examples of this type of fraud, and it can be much more costly than asset misappropriation, with the average bribery/corruption case clocking costing organizations about $538,000. This type of fraud is often associated with big businesses, politics, and the blurry line that separates the two. Bribery involves paying large sums of money to certain parties in order to influence decision-making, and corruption can involve everything from kickbacks to shell company schemes to you name it.

Fraudulent Activity: Financial Statement Fraud

Often carried out at the upper-management/executive levels, financial statement fraud is a deliberate misrepresentation of data in order to give a false impression of the company’s financial strength to investors, shareholders, and any number of other audiences that might be put off or scared away by the less-than-ideal financial health of an organization. To get an idea of what an example of this type of fraud might look like, we have but one word for you: ENRON.

There are no industries that are immune, but financial industries are particularly prone to fraud. Financial industries, for example, because employees are dealing with cash, have higher levels of embezzlement. Title loan companies, such as Title Loans Columbus, have to take extra security measures to guard against employee theft.

If you suspect fraud in your organization, you can file a complaint or report a fraud to a trusted manager (if you’re an employee), your local FBI office, or your attorney general. Just make sure you gather as much information as you can about those you suspect of committing fraud. Remember, it’s a serious accusation you’re making, so you should be absolutely sure about what it is you’re reporting before taking the steps necessary to actually report it.

Are Popular Airlines Conspiring to Keep Fares High?

Every time you book a flight, you wince a little at the price. Could it all be unreasonable? Airlines always claim that their flights are overbooked, that weather is playing a part, or that seats on your flight are in high demand. But what if they’re causing that high demand themselves in an effort to keep your plane ticket airfare high?

Civil Antitrust Investigation Eyes Major Airlines’ Possible Collusion

On July 1st, the U.S. government launched a probe into several of the country’s most popular airlines on suspicion of collusion. The claims are that these major airlines are purposefully keeping customer’s airfare high by limiting the number of seats available on their flights, creating an increase in demand.

As if that weren’t skeezy enough, the Justice Department’s civil antitrust investigation claims that the major airlines were illegally signalling to each other about how quickly they were adding new flights and seats. This is a much worse crime than simply forcing demand to remain high. They violated the competition policies that the government set forth in order to keep competitive pricing healthy in our state of capitalism.

The major airlines in question received letters demanding that they turn over all records of communication between each other, Wall Street analysts, and shareholders. The government has also requested their information about passenger-carrying capacity from 2010 to the present.

They suspect that these airliners have avoided upgrading their planes or adding new flights when they could’ve in an effort to limit available seats, keep demand unreasonably high, and increase fare for passengers. The investigation claims that these airlines could have added more seats many times, but conspired with other major airlines to intentionally limit their passenger-carrying capacities together.

Although the Justice Department spokesperson, Emily Pierce declined to confirm which airlines were under investigation, she did confirm that they were looking into “unlawful coordination” between some of the U.S.’ most popular airlines.

Major airlines such as Southwest, Delta, American, and United Airlines have all said that they received the government-issued letters and are complying by providing the requested information.

Massive Profit Growth for Post-Merger Airlines Sparked Suspicion

Suspicions grew when from January 2010 to January 2014 the economy 2.2% per year, but the passenger-carrying capacity remained static. Compare that to the airline’s growth of a whopping 5.5% in just one year; from January 2014 to January 2015. It simply doesn’t follow unless there was a little extra help between the competing airlines.

Through a series of very well executed business moves, United, Delta, Southwest, and American Airlines now control over 80% of seats on commercial flights. Since 2008, there have been a series of careful mergers, eliminations of less-profitable flights, and controlled airfares. Their strategy worked: the average domestic airfare has risen 13% from 2009 to 2014.

That percentage is adjusted for inflation, and doesn’t even cover the fees collected from passengers. In the last year alone, these airlines raked in $13 billion in reservation changing fees, and $3.6 billion in baggage fees. The profits were record-breaking at a combined $19.7 billion earned for the U.S. airlines in just the past two years.

Decrease in Jet Fuel Prices Could Spoil the Airline Industry for Investors

Investigation aside, will we see a decrease in prices this year? Unlikely. In fact, the airlines will probably see more profit since the 34% drop in jet fuel prices (their highest expense).

In the defense of airliners, expanding too rapidly has been the kiss of death for many flights in the past. When fuel is cheap, airlines often reduce their prices too much in an effort to outprice the competition, but instead offer too-low fare and add too many new flights… all too fast, effectively emptying their pockets.

It’s a capitalistic highwire act, to be sure. But as this current investigation shows; stacking the odds too heavily in your own favor can just as easily hurt you. Analysts are nervous that the control over the market will soon be lost, and the health of the airline industry will decline as new, cheaper airlines like Jet Blue and Spirit continue to grow more popular. Investors want to know that airlines will cap their growth and keep their passenger-carrying capacity limited for the health of the industry, or else they’ll retreat.

Effects of the Conspiracy Investigation Felt in the Stock Market

When the news of the investigation went out, stocks plummeted 3-5% within minutes on a day where the overall stock market was previously up. Investors would be most affected if the investigation were to reveal that the airlines in question were indeed colluding. Many are already pulling out in an effort to protect their finances.

Spokespeople from many of the airlines under investigation have reiterated that they’ve done nothing but benefit their passengers, and that the airline industry is competitive and healthier than ever.

Even if the collusion allegations are proven to be false, this investigation could change the financial course for the airline industry over the next few months; for investors, the stock market, airlines, and even passengers.