Introduction
There are a number of fraud schemes committed by the mob. These may vary with location and it is crucial that an understanding follows the fraud involvement in company investments. Some of the common fraud schemes are such as pump and dump, ponzi schemes, chop stocks and the dump and dilute. Fraud crimes get their criminal profiling dependent on demographics such as the kinds of investors living in an area, the prevalence the area has from criminalized professionals and the types of rooted organized crime activities in an area. The evidence of this if by organized crime from Nigerians in Ontario deeply rooted in investor and telemarketing fraud. On the other hand, the mafias of Montreal focus their activity on the manipulation of stock markets and boiler-room schemes. They work under well-organized managerial hierarchies that it is almost impossible coming across them during their activities.
Fraud and Mob Activities
The most common layers of mob activities are the godfathers, underbosses and consigliore who hold the top positions of fraud activities without direct involvement in the actions but coordinate the game and collect proceeds from those working under their organizations. A lower layer from them is the captains whose work is reporting to the underbosses and then the soldiers come lower followed by the associates. The associates are the ones mostly in contact with direct business like lawyers, accountants and company executives among others, whose associations and connections with mobs stay concealed. They are in direct fraud operations and the proceeds from their activities benefit the entire connection to the top bosses. The seriousness of mob activity makes it very necessary for organizations to take preventive measures for the safeguard of their accounts (Kranacher et al, 2010).
However, this is impossible through the power of the organizational structure of the mobs. It is hard for the associates to swear a strong allegiance to the companies where they work because of the mobs of their connection. This is imperatively so because with the crime committed against the organization, they will possible get sucked or sued for stealing from the company. However, on the case with the fraud bosses, they have to stay carefully in guard of their lives. This keeps their loyalty to fraud bosses stronger than they can risk not continuing with the business to benefit the connection, leading to a continuity of fraud activities within organizations and very little capability of scrapping it out ones it infiltrates into the system. Mobsters set up false accounts, used for hiding money or transferring money from one account to another (Singleton et al, 2006).
Accounting Fraud
The implication of internal fraud is that the gangs link up with insiders in the accounting department of the organization who help with the fraud activity. In their external endeavor, the gangs have the organizations opening up in utmost unfailing faith, accounts intended for the fraud activity (Wells, 2011). The mobsters benefit from ill-gotten gains and interests in any commercial venture they engage in through the racketeering actions. Consequently, the mobsters could abscond with assets in case of any indictments. The activities by the mobsters lead to the destruction of private, commercial ventures, as well as, properties. Occasionally the activities of fraud make the process of proving the existence of some enterprises rather difficult particularly when seeking legal redress against the actions of the mobsters. However, connection could be attached to the pattern of proceeds invested in the activities of racketeering in the enterprise or the acquisition and maintenance of interest or control in an enterprise. Furthermore, the mobsters carry out or take part in the on goings of an enterprise or organization through the racketeering pattern activities and conspiracy to fraud the commercial venture. Therefore, mobsters rely on the enterprises or organization, which are their illegal devices of fraud activities
The Mobsters have highly centralized organizations managed by criminal masterminds of the underbosses. The objective of engaging in the unlawful activity of fraud is the monetary gains. Nevertheless, some Mobsters derive their motivation from the political process. The Mobs could force individuals to carry out business with them from businesspersons for the reasons of protection (Singleton et al, 2006). Apprehensive of the toll, which fraud has brought up to corporations in the US, there is a promotion by regulators on the awareness of fraud along with the installation in the business community the urge for a fresh mindset, which prevents fraud instead of undergoing expensive investigations for detection. Such institutions as the AICPA, issued recent description in the market, which came about as a rejoinder to the requirement of forensic accountants that are qualified. Various stakeholders such as the business community, regulators and scholars should come with similar objectives in order to accomplish the prevention and determent of fraud thereby minimizing the pervasive effects.
There is a negative impact on the assets of organizations by the accounting fraud as it contributes fundamentally to the depletion of resources. Assets are economic resources, which a business depends on for the purpose of generating revenues, creating wealth and gaining the share of the market. Accordingly, an activity of fraud strikes at the center of the corporate operations since they diminish the capability of the organization in competing in the long or short term. Asset bases include machineries of production and equipment. There must be mechanisms for monitoring of financial status in organizations to avoid effects of accounting fraud. The control measures include such mechanisms as segregation and separation of duties. Activities of fraud have an effect on the competitiveness of a commercial venture. This is because it deducts the resources of the business, which it acquired through loans.
Activities of fraud bear an encouraging influence on the equity capital of an organization. When the net worth of a commercial venture is equivalent to its assets without liabilities, a rise in the liabilities or a fall in the assets will result in the net worth figure scaling down. An organization experiencing losses as from activities of fraud possibly will see its economic power deteriorating in the environment of business. Consequently, a tarnished reputation may result in the senior management being underwater in the perception of the participants in the securities exchange. Investors are aware that no organization guarantees the perfect behavior of its employees at every time in every circumstance. Nevertheless, corporate financiers anticipate the top leadership to determine reasonable procedures that can restrict the magnitude and frequency of the losses stemming from fraud (Kranacher et al, 2010).
Conclusion
Fraud has become a serious problem, which all companies must be keen on dealing with on discovery, or stay effectively protected against fraud. Fraudsters look for every opportunity to swindle money from organization, coming with new and varied strategies each time. Out of the many fraud activities identified, a company never knows the strategy a mob intends to apply in a first or subsequent attack. Therefore, it is the responsibility of every organization to work towards keeping the company safe from all types of fraudulent activities. Early detection of fraud decreases the potential damage, while, fraud not detected strikes at the base of an organization. The overall strength of an organization is on its capability of remaining financially sound. However, if not detected and fraud takes place, the foundation of the organization grows unstably. Mob activity can also affect a company through its networks making it essential for companies to be extremely careful about those they have in their business circles.
Fraud along with its pervasive influence presents opportunities for the excelling of forensic accountants. Fraud has destabilized attempts and earnings from the corporations in the US. The effects are so pervasive, consequently giving the notion of victimization of all organizations, despite the amounts not being sufficiently material to warrant an investigation. Unfortunately, numerous organizations decidedly forego their rights of recovering their losses or restituting the lost finances. This is because the holders do not desire to expose their commercial ventures and suffer the embarrassment that subsequently rises from the realization of the weaknesses of the accounting controls within, and their naivety in having faith on such employees.
References
Kranacher, M.-J., Riley, R., & Wells, J. T. (2010). Forensic accounting and fraud examination. Hoboken, N.J: Wiley.
Singleton, T., Singleton, A., & Bologna, G. J. (2006). Fraud Auditing and Forensic Accounting. Hoboken: John Wiley & Sons.
Wells, J. T. (2011). Corporate fraud handbook: Prevention and detection. Hoboken, N.J: Wiley.
