May 9, 2008:   Fraud Costs Hedge Fund $77 million; Investment bank loses $350 million

In one of the boldest frauds in recent history an Asian arm of Och-Ziff Capital management Group, LLC, lent funds to a hospital rehabilitation project it believed to be affiliated with  Marubeni Corp., a Japanese trading company. Additionally, Lehman Brothers made a series of loans thinking they were guaranteed by the Japanese company. Initial investigations suggest that two Marubeni employees helped draw in the investment bank by using forged documents. The employees were low level employees working on a year-to-year basis.

This case illustrated the importance of performing due diligence investigations before loaning money or investing. Klink & Company is a global leader in investigating and preventing fraud. We specialize in due diligence investigations on behalf of hedge funds and investment banks around the world. Contact Klink & Company before loaning money to someone you think you know. It could save you millions of dollars.

Contact David Nolan in New York at 212-292-5116 or Howard Jones in London at +44 (0) 207 016 9734 to learn how we can help you with your due diligence project. 

March 18, 2008:   The importance of knowing your vendor

A Business man defrauded Sigma- Aldrich Chemical Co. out of $2.1million. Timothy A. Heffner who ran Bio Technology Co. of America, with the help of a contact at Sigma- Aldrich, bought rare chemical compounds at low prices from the company then resold them back to Sigma-Aldrich at higher prices. He earned profits of 85 to 95 percent and kicked back some of the money to the contact at Sigma-Aldrich.This fraud scheme occurred for almost 10 years from 1995 until 2004. In the meantime, Mr. Heffner lived lavishly, driving a Mercedes and a Ferrari, piloting a helicopter and operating a 54 foot yacht.

An important part of preventing fraud is knowing who your vendors are. Klink & Company along with KlinkCheck provide the services you need to discover and help prevent this type of fraud from occurring in your company.

February 19, 2008:  Failure to detect fraud costs auditor firm millions of dollars

It was reported last weekend that Ernst & Young will pay nearly $300 million in settlement to Cendant Corp. for alleged negligent failure to detect massive fraud during its audits of a unit of the company. In 2000, Ernst paid out $335 million to Cendant shareholders as a result of fraud believed to be the largest ever settlement by an auditor related to work for a single client. According to the lawsuit, senior managers of CUC International, Inc., a subsidiary of Cendant, inflated the unit's operating income. From 1995 to 1997, CUC inflated its income by $500 million. In 1998, Cendant's announcement that it had discovered accounting irregularities at CUC caused its stock to lose $14 billion in value in one day.

This case illustrates the need to hire an investigative firm that utilizes in depth manual processes and analysis when investigating potential fraud or accounting irregularities.

January 28, 2008: "What One Person Can Do (Cause $7 Billion in Losses,

$80 Billion in Trades, Have the Federal Reserve Make a Huge Cut In Rates....)"

Why you need to know who you work with

It  was widely reported last week, that a rogue middle level employee of Societe Generale, the large French bank, had committed a series of trades that caused

$7 billion in losses to the bank. Further, the bank was forced to engage in about

$80 billion of activity to cover the loss. Finally, the Federal Reserve of the United States, likely reacting to Societe Generale's movement of $80 billion, unleashed a drastic .75% rate cut on Friday.

The cause of this appears to be attributed to the actions of ONE person. That a middle level employee in an immense bank committed one of the largest frauds in history should come as no surprise. The bank's controls were obviously lacking. Supervision of the accused was lacking. And of course, the French do not permit background checks. It is an invasion of privacy...

Improve your work force today. Institute the best pre-employment controls to protect your money and reputation.

Disgruntled Employee Deletes 7-Years Worth of Architectural Drawings
Homeland Security Daily Wire (01/28/08)

An employee at a Florida architectural firm deleted seven years worth of files because she believed she was about to be fired. Marie Cooley discovered a job advertisement in a local paper that matched her job description at Steven E. Hutchins Architects. A police official said that she "decided to go and mess up everything for everybody" because she was sure that the advertisement meant she was going to lose her job. Cooley went into the office on the night of Jan. 27 and logged onto the company server using her own account. Within seconds, she deleted an estimated $2.5 million worth of drawings and blueprints. Cooley later confessed to the crime, and faces a maximum sentence of five years in prison if convicted of a second degree felony. The owner of the firm said that they had managed to recover every file that had been deleted. He also said that there had been no plans to fire Cooley. The classified ad was for a position at his wife's business.

Now Hiring: KlinkCheck is seeking part-time research staff for its Pittsburgh office. For information, please contact Jane Yanosick (412) 201-9123.

Maybe you should be using Klink & Co. to reduce your risks and maximize your opportunities.

Klink & Co. is a recognized Global Leader in Risk Management.  Call or email us for further information.  Contact us at (800) 836-8916 for further details on how we can help you.