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Sun-Sentinel
(Fort Lauderdale, FL)
October
10, 1999
ACCOUNTING
SLEUTHS TRACK DOWN FRAUD
Michael
Kessler was hired by Monsanto to track down a sweetener counterfeiting
ring. Fake packages of Equal, the St. Louis-based Monsanto's sugar
substitute, were showing up in stores from Minnesota to South
Carolina. Kessler, 49, a forensic accountant, uncovered a clue
to the source not in the ledger books but in the trash. Staking
out Haskel Trading Co. in Brooklyn, he found bogus boxes of Equal
buried amid crates and cardboard in a bin outside.
Such
sleuthing is a booming business for Kessler and other forensic
accountants, who charge about $300 an hour for investigative work,
a third more than for audits. They're riding a wave of corporate
crime from cooked books and hacked computers to infringed copyrights
and old-fashioned theft.
"This
is without doubt one of the fastest-growing areas of our practice,"
said Frank Piantidosi, head of the investigative group at Deloitte
& Touche.
Fraud
cost U.S. companies more than $ 400 billion last year, reports
the Association of Certified
Fraud Examiners. Investors sued 235 corporations for securities
fraud in 1998 -- a record number – according to the Stanford Securities
Class Action Clearing House at Stanford Law School.
Bank
of New York says it has hired investigators from the accounting
firm KPMG LLP to determine whether a Russian crime syndicate laundered
as much as $ 10 billion through the bank, as U.S. law enforcement
officials allege.
And
for months, scores of accountants have combed documents at six
insurance companies for clues to hundreds of millions of dollars
that vanished with Martin Frankel, according to state regulators.
German police captured the money manager in Hamburg in September
after a global manhunt, but investigators still don't know how
much money is missing.
Big
Five accounting firms like Arthur Andersen LLC, Deloitte &
Touche and KPMG are expanding their forensic businesses, units
that are often part of what executives call "litigation support
services" or "dispute resolution."
Deloitte
has added 75 people to its investigative unit, including more
than two dozen former agents of the FBI, CIA, federal prosecutors
and Royal Canadian Mounted Police. At KPMG, the New York forensic
practice has grown from four to 90 people in the past five years.
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