ABSTRACT
We analyze and dissect the management fraud in a series of financial statement schemes employed to shore up a financially deficient company while enriching the executives themselves. The multi-layer scheme of management fraud involved secretly issuing convertible notes, inflating revenues, and misappropriating funds. The management committed financial frauds not only through conspiracy to commit securities fraud and wire fraud, but also by improperly influencing the conduct of audits and engaging in aggravated identity theft. We assess financial risk to provide signals of fraud by applying fraud detection models and conducting various financial analyses to identify red flags in financial statements. Additionally, we examine the ethical environment and address the ethical concerns of the parties involved.
Keywords
Financial Risk, Fraud Detection Model, Fraud Symptom, Management Fraud Scheme,