A career in fraud

A prospective client investigation was ordered on a company and its president, but the preliminary information on the president was enough to reject the subject or any company under his direction from the possible business engagement. Initial court searches uncovered a 2001 criminal misdemeanor conviction for possession of a false identification to be used to defraud. The index did not provide much information and the file was destroyed by the court, so SI’s analyst turned to media sources to dig deeper. Sure enough, one article referenced guilty pleas entered in 2002 by the subject and his business partner for hiring imposters to take the Series 7 securities brokers’ examination for them. Each was sentenced to a year of probation and fined $5,000. Other articles from 2002 reported three civil cases for fraud in locations where the subject appeared to have no residential history, and further disclosed that the subject and his partner had been statutorily disqualified from working for a broker licensed by the National Association of Securities Dealers, ordered to disgorge profits and interest totaling $4,649,125 and each were fined $15,000 in civil penalties in 2006. Articles also linked the subject to a con artist who had admitted to defrauding Jewish organizations and individuals of $80 million during the 1990s. Most recently, the FDIC had executed a written agreement with the subject and (the same) business partner after they allegedly failed to seek FDIC approval before making an investment in an unregistered bank holding company. On the whole, this company president had been engaged in fraudulent behavior for nearly a decade and no amount of legal or regulatory action appeared to change his mode of operation.

March 26th, 2010|Fraud|

Members of the Financial Community

Members of the Financial Community
FM: Larry Scherzer, President, Scherzer International
RE: Background Investigations in the Current Economic Environment

Ladies and Gentlemen,

As a part of its Risk Management Program, one of our financial services clients asked us to conduct a Prospective Client Background Investigation. This is a well-accepted best practice for protecting the firm’s reputation and minimizing legal liabilities.

SI’s investigation in 2006 revealed that the subject company and its principal were involved in dubious business practices. As you may have guessed, based on this initial discovery, our client declined the engagement.

Recent headlines have now verified, years after our investigation, that the prospective client had, in fact, been running what can best be described as a long-standing Ponzi scheme.

This experience demonstrates the benefits of obtaining background investigations that provide comprehensively researched and analyzed information as a key element in your Risk Management Program.

Please visit or telephone 800-SC-FACTS to find out more about managing business risk for pennies on the dollar… because we never take integrity for granted


Larry S. Scherzer

April 17th, 2009|Risk Management|
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