What happens when the wrong person claims unclaimed property?
or
What happens when that $10 million anonymous donation is not legit?
Find out this week on the Friday Fraudster.
Your Friday Fraudster hosts are passionate about ethics, fraud and good business practices.
Kelly is known as the Pink Collar Crime guru. If there is fraud, she can find it.
Jo is the Ethics Expert. She can identify and correct those stick organizational ethical issues.
Robert is a process. He looks at the controls to determine if you are performing actions to get your desired results.
Join Kelly Paxton, Jo Erven and Robert Berry on this weeks episode of the Friday Fraudster.
Find Kelly at https://kellypaxton.com/
Find Jo at https://www.auditconsultingeducation.com
Find Robert at www.thatauditguy.com
Transcript
Alright guys, welcome to Episode 19 of the Friday fraudster.
Kelly Paxton:Wow, we're getting
Rob Berry:right she was no longer a baby. It's like I don't know a toddler now we'll know a little bit pairs that were preteen.
Jo Erven:I was gonna say we don't want to be in our like terrible threes. We just got through talking about that with Trent this morning. So hopefully we're like elementary or at least middle.
Rob Berry:Alright guys, so you know the drill as you come into the room, you at the Friday for us to Show Episode Number 19 dropped the emoji into the chat that signifies the mood that you're in right now. I only asked you to do that because we care about you and your welfare, doing the job that we do as auditors and fraud investigators and compliance folks. It's hard. So I just want to make sure that everyone is doing okay, and Heather says she's got some lunch now. Heather, I'm glad you got some lunch. I'm still hungry. But you know what, Heather, get your popcorn too because we're in for an exciting time with some interesting stories today. Now Joseph emoji is a cowboy hat and you guys will see why a little bit later. Oh boy. You will see why we have the cowboy hat on and Melissa is here again. And she says fun with the Friday fraudsters. Alright guys, it's Friday, we're talking about fraud. So before we dive right in, let me just say we are on your favorite podcasting platforms unless your favorite podcasting platform is Apple. You can also get CPE credit for watching this show. If you go to Friday froster comm or seven the number $7 cpe.com because our CPE E's are really cheap, but that doesn't mean that we're cheap. The show is very good. And we we like doing the show. And so we thought that we'd offer you some reasonably priced CPE ease. So Friday frosted calm or $7 cpe.com either way, we'll get you to it. Dan is here from Houston. He says Good afternoon from smoking. Houston, Texas. Joe is dropped that into the chat $7 cpe.com Leslie is here. Leslie is all smiles today. Bethany, good to have you here. I was here.
Jo Erven:I'm just glad Leslie and Melissa and Heather aren't tired of us, Rob. They've seen us this week.
Rob Berry:They probably are tired of me. So how says no apple? That's right. No Apple, no apple. And Mark says Hey there, Dan. Hello, everyone. Hope you are all well. Yes. Well, let me speak for myself. I'm well, Joe Kelly. How are you guys today?
Kelly Paxton:Awesome. I have so much fun planned for this afternoon. I want to coach you like I don't know seven years ago and I met a guy and his wife. I met her like four years ago and they're in Bend and so I'm going to make an amazing dinner for them with some peach and blackberry trifle and she and they're like the rock star couple. So I'm really excited for tonight.
Jo Erven:Now I'm even hungrier.
Rob Berry:Me too.
Jo Erven:I'm not doing anything nearly that exciting. But I am excited for Friday fraudster in the fact that this is my second to last meeting on a Friday. How about you guys? We've almost made it through the week. Oh,
Rob Berry:well, you know, we've had a busy week this week, we had the innovative auditor challenge, which was a five day program. One hour each day, one new topic, one new presenter each day for $25.05 hours of CPE. Ease. It was a lot of fun. And we have a lot of people on the Friday froster with us right now who attended the innovative auditor challenge. We're doing our next one. When are we doing our next one Joe?
Jo Erven:October, I just put the link in the chat. Or in the comments. It is October 25 through the 29th. So Mark your calendars now one hour at lunch, you guys can do it. It's so fun.
Rob Berry:And for those of you who have doubts about how fun it is, Leslie says then a great week Leslie was on the innovative auditor challenge and she's here with us on the Friday froster. So Leslie obviously is not tired of us. And Heather says last meeting for today and then the weekend. And Joe again dropped the chat the drop in the chat the link to the innovative auditor challenge. And again, Friday froster is a podcast on your favorite podcasting platforms unless your favorite podcasting platform is Apple. So let us dive right in to our first story. And that first story is titled, I'm here to unclaimed that property. You'll see what we mean by that in just one moment. So let's talk about our guy from today. And how he is a Florida man. A man faces 114 charges in allege $2 million unclaimed property fraud scheme. He's actually out on bond right now. $178,000 bond. But let's talk about what unclaimed property is before we actually dive in because not everyone is going to know what that is. So unclaimed property typically refers to and tangible intangible goods, you know, like cash. I'm sorry, uncashed checks, unused gift cards, abandoned bank accounts, stock, stocks, bonds, things like that. But it could also be things that are left in safe deposit boxes or unclaimed goods that people have. Well, the total amount of unclaimed property in the US here are high, which you'll see that the numbers are probably more than what I'm about to tell you a $43 billion in 2013. Now that was according to the National Association of unclaimed property administrators. Now, here's the thing, you guys, if there's an association for it, that probably means that there's a lot of money in it. So the National Association of unclaimed property administrators has said that they're $43 billion in unclaimed property in 23rd. team that is insane. So now, the concept of unclaimed property itself dates back to England, where an abandoned property would typically revert back to the crown. So the Queen got it all if you died, didn't leave your stuff to anybody to Queen got it. Now here in the US. We each state has unclaimed property laws. These these states and laws have gone at some criticism over the way they collect money. Now while there is no limit, time limit for when you can reclaim property, many states know that only a small fraction of the things that they have in unclaimed property will actually be claimed. And states have taken the liberty to do some creative things with that money. So for example, some states earmark that money for special programs, and some of them have gotten as bold as to transfer that money into their general fund. Which means the state to using that money for operating expenses. Ooh, so that's pretty interesting. In this specific video, another thing to mention about unclaimed property, if you have some property that you need to claim, you can claim it, you will not be charged for it and you will not be taxed for it either. Your money. So let's talk about this particular case. The investigation was by the Florida Department of Financial Services. And it began in April of 2017. After Well, after an initial referral. You see there was a financial institution that said that they received some documentation that seemed to be altered from someone claiming or wanting to claim some unclaimed property. So they refer it to the Department of Financial Services who began an investigation. And like I said earlier, what they found was will they they are right now accusing this gentleman of making $2,036,122.68 cent worth of fraudulent claims between 2009 and 2020. All right, Kelly, Joe, what do you guys think? What's going on here?
Kelly Paxton:I had a friend reach out to me, this was a couple years ago and she's like, Hey, I got this call stating that I might have some money. And but they want to charge me a fee. And I was like Oh dear, like and she was a she was good to be hesitant. And I said give me like she had a nickname. So I said give me your name, and your mom's name. Her mom had died. And she had kind of hidden some money from her ex husband. It was in a mutual fund. And the address was like in Missouri, my friend got over $30,000 and no fee. I mean, she did take me out to lunch. But so, but I could see how people would be skeptical. You get an email or something. And they're like, Oh my god, it's fishing or something like that. But I put in the chat, a link for you know, five money. I think it's good that people are skeptical, but it's also you know, we just need to Do it ourselves. Like don't have someone do it for us. I found money for my dad, like in a utility thing that was like 300 bucks. He was like, so excited. It's like, it's like the lottery.
Jo Erven:Yes. Kelly brought up a good point. Watch out for fraudsters, when it comes to things like, Are people just trying to take advantage of you? And taking those finders fees and things? Because it is something that if you're even slightly educated, you can do it yourself? I love Dan's comment. Can you put that one back up? Rob, I've always been stunned at how many major corporations either don't know, or haven't ever exceeded unclaimed property slash checks. So I was actually on the ground floor at my company that had life insurance, on becoming a fiduciary and actually starting to search the Social Security death master files, and do those sweeps to say, Hey, who has passed away, that hasn't claimed their life insurance. And so check that out, you guys, because that is that a few years ago was a big deal. And we did several audits in our audit shop to help our company get it right. And what is their fiduciary responsibility to be actually finding the people that have passed away, figuring out how to cut those checks, and you know, if we can't find those people to achieve that money to the state, and it was a huge, huge issue. And actually, the regulator's came in and dinged a lot of companies. And that was what like five, I mean, I'm guessing five, seven years ago, it was a big, big story. So
Rob Berry:well, and the thing is, a lot of these companies that call people, some of them are legitimate companies, you can get the money on behalf of someone else, and then charge them a small fee. But there really is no need to do that. Because like you said, Every state has a way for you to do it yourself. For example, in Florida, their site is FL treasure hunt.gov. You can go in and type in your name. And see if you have unclaimed property that the state can actually, you know, give you if you prove that you are who you say you are. And and by the way, Joe, just use the term sheet. That's what it's called. When you send the funds to the state, you're exceeding those funds to the state. Which brings up hell sheet system.
Jo Erven:And how are you on that Porter website right now trying to see if you have any money?
Rob Berry:Yeah, Kelly. Kelly brings up a really good point, too. Oops,
Kelly Paxton:but did we lose you? Whoo, we might have lost draw.
Rob Berry:Oh, I am back. There was a small blip there for a moment. I don't know what that was. But Kelly brings up a really good point tips find fraud.
Kelly Paxton:Yeah, yeah. And, you know, think of all the Nigerian sort of print scams and things like that. So people are hesitant if they get an email or something like that. So, you know, and then think of all the people who don't have access to a computer, or aren't good with a computer. Um, you know, and we tell everyone don't click on those links. Well, some of the links are very legitimate. So there's kind of, I think, a balance there between, like, I'm going to say being greedy. And you know, something sounds too good to be true. If If someone does reach out to you doe online, and find literally unclaimed money and the name of your state. The other thing is, like, I just looked up my son's name. He's got like, 50 bucks coming to him. I don't know why, like, I have no idea why. It's probably for like some class action suit for some video game thing or something like that.
Rob Berry:Yeah. He did something at some point in time that you know, gets him 50 bucks now says he's trying to collect this life insurance.
Kelly Paxton:So it also like go to places like I've lived in Wisconsin, I've lived in Washington. So the states and that's how my friend found it. She's like, you know, my mom did live in misery. I didn't mean to say Missouri, Missouri for a while and so that's how she found it was through Missouri. So do it for all your states you've lived in or
Rob Berry:Yeah, right. Absolutely. So let's talk about what this this guy did or allegedly now because I think he's one Oh, he's actually been indicted I think so anyway. What there's
Kelly Paxton:Oh, oh, no. Oh, no,
Rob Berry:we lost what I did was
Jo Erven:Oh, you froze your back.
Rob Berry:Oh, goodness. I don't know what's going on with my connection today, you guys. So So what he did They're alleging that he had fake passports and he created some non existent companies. And he tried to deceive these large financial firms by sending them a bunch of paperwork, phony paperwork with identification information. And at one point, he actually sent them fake power of attorney information to try and collect money from people. And then they're saying that he reportedly deposited checks received through the scheme into bank accounts, tied to his many fake companies. That's according to an affidavit. Now investigators were able to track him down by looking through hundreds of emails sent between him and the various financial institutions. And they were able to track him Guess how, again, his IP address, it was in Miami, and that's where they picked him up.
Jo Erven:Data Analytics, anybody? Couple things. We just talked about bank accounts, IP addresses, and the fact that you're communicating with the same person on email. You know, there's so many red flags on this with this guy. $2 million. And yes, he was different names in different bank accounts. But still, he had to have overlapped some, there hadn't been a correlation. Can I go back and answer Mark's question really quickly? Mark had a great question. So those companies should be proactively making sure their policyholders are still alive. So that was the controversy. That's what regulators came in and said to life insurance companies, they said, yes, you have a responsibility to be doing social security death sweeps, that's what they call them. Now, what the problem was, you guys, as you know, fraud, savvy, people are going to realize the immediate problem is now everybody can do a search for people who have died and start stealing identities, and social security numbers. So states started locking down these social security death sweeps, so it wasn't as easy to do them. So there's some paid services that companies life insurance companies can use to do them. So last, I was involved in this process, they are still supposed to do their due diligence, and do them for whatever states they can for Social Security death sweeps, and look to see if there's any life insurance payments that need to be made. So yes, the answer is on that one.
Rob Berry:Yeah. Well, and what a lot of people don't realize is there's a lot of work to be done, because each state has different laws. And some states say that you are required to reach out to that person at their last known address that you have on file, or that you can reasonably find. And if you can't find the last known address on that person, typically, you have to send the funds to the state where your company is incorporated, which is why Delaware is kind of the king of unclaimed property. So they have a lot of money in Delaware. That is unclaimed property, because a lot of companies are headquartered in Delaware.
Jo Erven:Yeah, and you're right all the years for the different types of money, right, like checks have to be a sheeted after a certain amount of time. And I mean, the list I mean, it's quite, my company had an unclaimed property department that focus on it, and it had to staff. So, you know, to Mark's point, I bet a lot of these life insurance companies aren't doing that. It's a great opportunity for auditors to come in and say not only should we be doing this legally, but we should be doing this the right way. This is one of those rare moments where we like to say, you know, even if it's legal, it may not be ethical type of scenario. There are some activities that these companies should be doing when it comes to unclaimed property that they're not, and maybe not legally, maybe they're not legally mandated. But what is their duty to do that to find the owner of this property? So it's kind of an interesting topic.
Rob Berry:Yeah. And Kelly just said, she didn't realize Delaware gotta go check Delaware? Yes. If there's a company that couldn't find you, and they were headquartered in Delaware, the checks are probably in Delaware. When I worked for Deloitte, I had a few projects with insurance companies. And these were some of the things that we were doing and we were trying to use automation to get some of this done. So you're right, Joe, here, the whole death sweeps and all that good stuff. It's, it's real, and it's very, it's very strenuous process.
Kelly Paxton:And it makes me think about like, so outsourcing it, you know, it's behavioral science is, it's kind of like, you know, a clothing company doesn't own the factory in China. And so they can kind of like, no, that's not us. And so if one of these insurance companies or whatever outsources it and they can't find the people, they're like, Well, hey, that's not us. We outsourced it so it relieves them.
Jo Erven:Well, I think this falls into one of my seven deadly ethical sins, which is deny and deflect, right, this is the devil any responsibility? The it's the it's deflected on to it's your fault. You didn't find your own money. And you know, I love Mark says, Can you say ethics? Joe? That's right. I mean, this isn't. This is more of an ethical responsibility, I think companies to do this. So, and yeah, Dan's comments. Awesome. Yeah, it is not to pay claims, right. So they're trying to keep their money. But this is one place where regulators came in and said, No, you can't, you can't keep this money. This isn't your money. So,
Rob Berry:and then it's absolutely correct. But now mark is bringing us a little bit more comic relief. He says, What did Delaware, a New Jersey.
Jo Erven:Oh, my gosh. It's Friday, where
Rob Berry:I like and pozo says she wonders of all these new FinTech companies have controls in place for unclaimed funds. Now puzzle, you bring up a very good point, because let's go back to this case, because now, here's where I get into my what, how, really. Okay, so now let's talk about this. Join Florida's treasure hunt, you can go to Florida and type in your information. And after you type in the information, Florida will try to verify your ID to make sure that you are who you say you are before they send you any money. Now they have a fact website or FAQ on their website. And you guys may not be able to read this. So I'll just tell you some of it says that each claim form will detail what documentation will be required in order to verify your ownership in the property, then it also says that providing your identification alone may not be sufficient. And then it said examples of unacceptable documentation include handwritten letters, letterhead and business cards, printouts from the internet and telephone directories. So then it asks, well, what types of documentation are acceptable? And it says a driver's license or some other form of government issued ID? So for me, that kind of begs the question. This guy created some fake companies use some fake ID. But they caught him because they were able to trace back his IP address from emails, he had sent the bank, but also, the funds had to be deposited in similar accounts as well, because I mean, he couldn't have created enough fake bank accounts to do $2 million worth of transactions. So state of Florida, are we not doing any kind of data analytics for the items that we send to people for unclaimed property? I mean, I did I miss something here?
Kelly Paxton:Well, and then the thing about the documentation, I have had this where I have dead relatives who have like, you know, 50 bucks or under 100. And it's like, it's not worth it. Like, it's just they make it so difficult for some things. It's like, I'm just not sending it in for you know, if it says under 50, it literally might be two cents, I'm not going to get, you know, death certificate and all that sort of stuff. They need to make it easier, but harder. Does that make sense?
Rob Berry:Yeah. Oh, yeah. Yeah. Cuz I'm still wondering, how was he able and he did it from 2009 until 2020. And as Kelly always says, most fraud is caused by based on tips. But how was he able to do it for this long without anyone seeing some data that made them think Wait a minute, this guy has gotten, you know, a couple $100,000 in unclaimed funds over the years? That just doesn't seem right.
Jo Erven:Well, did you see what it said in one of the articles it said it was an initial, an initial referral was sent to investigators inserting a property claim that seemed to use altered proof documents. Yeah. And so that means here's what the good news means to me. Somebody was doing their job and noticed that something looked fake. But on the kind of the other side, you know, that most of these people are just pressing the button. Like, if it looks like a driver's license, if it looks like a, you know, they're just doing their job as quickly as they can. Because they want it to be easy, right? Like Kelly, they want people to get their money. So they're probably good people doing a job quickly, trying to get people money, that aren't looking at the documents close enough or aren't being trained. It all goes back to training, educating on what is a fake document looked like I mean, how much that would be my question, how much is are these government's training their employees to look out for this stuff to protect? And I love the one article that said there's two victims here. One, of course, they think is the government because this guy stole money from the government. Well, it's not really their money. It's these individuals that aren't claiming it. So there's kind of two victims here is what they say against this guy. But you know, I think I put this back on controls like training and showing people how to do their jobs to look for fraud. They need to hire Kelly.
Rob Berry:I don't know. Like, Joe, the government couldn't use this money for their general fund. So yeah, the government was a victim too.
Jo Erven:It's Florida health as training. I mean, it's not just I'm sure it's not just, it's, it's everywhere, right. But
Rob Berry:you gotta be everywhere. Yeah.
Jo Erven:Good for that employee, or whoever it was that sent the referral to start looking at this stuff. Because what is it tips catch fraud. Right. Kelly, the hashtag. I just gave those acfe statistics this week in a presentation. Yeah. Anyway.
Rob Berry:Alright, so our first story, unclaimed property, lack of controls in place, the guy was committing the fraud for several years from 2009 until 2020. Over $2 million. A tip is what saved the day. So now before we go on to our next story, what are you guys working on? What do we need to talk about here?
Jo Erven:Well, I'd like to plug Kelly and eyes. Really fun in person event that we're going to do a year from now. Yes, you heard that right. I wasn't gonna post about it on LinkedIn until August 4, because it's next year, August 4, and fifth 2022. Go to broad retreat.com. And check it out. We are doing a live two day event at the Gaylord resort and Convention Center here in Denver, Colorado. And I know you guys want to plan a vacation. So early bird pricing is out there, Kelly and I would love to see you in person next summer. So we're going to start plugging that a lot on Friday fraudster because it's going to be awesome. Kelly, do you have any other things you want to say about that? Um,
Kelly Paxton:okay, we met in person at the Gaylord. The Gaylord is really nice. It's a great place for a you know, an event like this especially. And I am so excited. So I'm going to start plugging in, I can't believe it's only your way. Because like, last summer, when we had to cancel, it's like, oh my god, that's so far away. But now here we are. So, um, yeah. And you're gonna make connections that you wouldn't make this way. Like it. These are like deep, long term connections. So do it.
Rob Berry:Alright, and we just wrapped up the innovative auditor challenge. As I said earlier, I have some exciting news. I am going to be the opening keynote speaker at a conference coming up. I won't tell you what conference it is this week, because I'm waiting on them to make the official announcement just in case they want to fire me before they actually hire me. But it's an exciting conference. And it's an exciting time for me because the speech won't be on auditing. Right? It's a keynote speech. So that's fun coming up in the at the end of September. Also, at the end of September, we'll start another cohort for the ask better questions boot camp, which is nine weeks 18 hours of CPE. With me, it is a combination of some recorded training and some group coaching. And so far, people who are in it are saying good things about it. But we shall see what happens when they get to the end and they have to do some more exercises towards the end before they can get their certificates. But in all seriousness, exciting things coming up. I will be the keynote speaker opening keynote speaker at a conference coming up and the ask better questions. bootcamp is just rolling right along. If you want to know more about it, go to my website or just email me DM me, I'm always here. Alright guys, I think it is time to go to our next story, which is called the gift you got to give back. Let's see Kelly laughing All right, this one is we're laughing but this one is not funny. This one is really insane. And I know I say that about a lot of them, but this one is really insane. So what happened is a former Wyoming Catholic college CFO has been ordered by a federal judge to not make any financial transactions other than routine purchases. Now why you want to know? Well, he was accused in a federal lawsuit filed in June of acquiring more than $115,000 in loans under false pretenses. Well, here's what he did. The plaintiff in the case is a firm called r squared and they filed a lawsuit against them on June 22. What he said what they what they're saying is he pretended to be worth more than $750 million. In order to get that loan. What he did was he forged some bank statements, showing that he had a $750 million deposit. He sent that to the investment firm. And then because of that said, since I have $750 million, you guys should give me a $15 million loan. And you know what? This investment firm actually did it. Okay, we'll just stop there for a moment and take that in Joe Kelly, what, what do you got? What do you guys think? Before we even talk about what else he did?
Jo Erven:Great question, Kelly. I mean, that's what when I was reading through these articles, I'm like, wait, this guy's claiming to have 700 plus million dollars, but he wants a $15 million loan. I'm guessing it you know, this hedge fund obviously thought that they wanted his money in their asset portfolio to start trading. And that's why they gave him the money, right? Like, these are these relationships these big money people have that as little people I don't think understand maybe, I don't know. That's, that was one of my questions, too. But and by the way, this is how this is the Wyoming guys story, not a Florida man story. So we went, we went to the Wyoming guy. That's why I have my hat and my pink boots just for Kelly in the back. Because you guys don't see my feet. So anyway.
Kelly Paxton:I want those pink boots. I'm wearing this pink boots to the Gaylord next year.
Jo Erven:Hey, you borrow my pink boots.
Kelly Paxton:Yeah. You know what this reminds me of? I am listening on Audible. And I'm not an audible person to the cult of we're about Adam Newman, and we work. And you guys know, I hate victim shaming. Like, I don't like victim shaming at all. But you know what? People who don't do due diligence, especially corporations, like you know, the average mom and pop or something like that. I understand how it's hard to do due diligence. But when you have people like, you know, Goldman Sachs fidelity did our squared not do due diligence, I'm sorry, collective we they all deserve to lose their money. You guys can argue about that. But like I'm listening to the collectively. And it's Has anyone listened to it? I mean, it just came out. It's, I'm gonna make it an R rated podcast. It's batshit. Crazy.
Jo Erven:Well, it talks about it. Well, we're Kelly and I are going to talk about it in our fraud and pop culture event at the rocky mountain area conference, by the way plug for that event. That's gonna be awesome in September. If you bet your pozo brought it up, where were the underwriters? Well, they were there looking at fake bank statements. Again, it was about altered documentation. We're not looking at the right thing. We're not looking for fake documents, we could go back to training perhaps, or they just wanted to believe this guy had the money. And because they're greedy, is upset one of the seven deadly sins greed. Yes. Yes, it is.
Rob Berry:Absolutely. All right. So let's go back here now. So this started off with Kelly asking the best question in the world. Why did he need 50 million if he was worth 750 million, and we can always count on health a good comic relief, r squared, he did a regression analysis to get the 750 million. And as Joe just said, puzzle said, Where were the underwriters. So let's add a little bit more context to this. So yeah, he told them that he had $750 million coming and he told r squared, that he was going to invest that money with them. r square said, Great, we'll give you a $15 million loan. Now. This guy actually gave our square the name of someone at his bank to verify that the $750 million was in the account, and he impersonated this guy at the bank. So r squared, the puzzle you asked about the underwriters, I would have thought that the underwriters would have looked up the name of the bank and independently verify that he had the money but no, they use the name and phone number of the man that the fraudster gave them and he then impersonated this individual now, r square at first he asked r square for a $10 million loan. Then he came back and asked for 15 million r squared gave him the money and then when the 750 million was supposed to hit the R squared account, it never hit.
Jo Erven:Yeah. You're gonna tell everybody what he did with the 15 million or is that Oh,
Rob Berry:yeah, we're getting there. I just I just wanted to see if you guys have any more comments after that whole.
Kelly Paxton:So who's getting who's gonna be held responsible at r squared But
Jo Erven:I mean, well, yeah, great, great question they're talking about, well, we'll get to the college that he worked for before he was let go. They talk about the college, they talk about him, but nobody really talks about the bank's responsibility in in any thing that we read about it. So good point, Kelly.
Rob Berry:Well, and you know, to piggyback off of Kelly's point, with the money and what he did with it, should other people be required to actually pay it back?
Kelly Paxton:Where the lawyers, you know, what, you know, who's making money on this lawyers?
Jo Erven:Oh, absolutely. Maybe we should just shoot it to the state. Like Well said, I mean, how can that 750 feet and why not the 15 million?
Kelly Paxton:Let's go give it to the government.
Rob Berry:Oh, man. Oh, wow. Okay, okay. Okay, so, so this, what are we going to talk about next? Oh, yeah. Oh, yeah. Yeah, what did he do with the 15? towel? Okay. So with the $15 million, he gave about 5 million of it to friends and family members and things like that, with 10 million of it, this guy was the CFO at a university at a college, right? He gave them an anonymous $10 million gift. So the university took the $10 million gift, and they had already made plans for the money in their heads, right? This is what we're gonna do with this money. And his friends and family had already used the money to pay off loans that they had, and all kinds of other stuff like that. And they're saying r squared is saying that they can account for all but 1 million of the 15 million, so they know where it all went, except for 1 million, which he may have spent that on himself. But yeah, about four or so million went on friends and family, and 10 million went as an anonymous donation to a university. So now you start to ask, Well, why didn't the university do some due diligence on someone that gave them a lot of money? Because what happens is, and so you guys know, I spent 15 years in higher ed, right? What happens at the university, you can have anonymous donors. And oftentimes, they, a lot of times, they really aren't anonymous. They're anonymous to everyone except the administrators at the university, right. But this money just showed up in a university account, and they said, Oh, great, we're gonna make plans on what to do with this money. Now, I would have been leery of money that just showed up in my account at a university. But okay, so the university is saying that it's not going to hurt them at all, because they were trying to they were going to use the money for future plans not to run current operations. But again, should they be required to give it back? It's the big question.
Jo Erven:Well, I don't know about that. But I loved all the comments about due diligence, like you said that the universities needed to start doing because in my mind, there's some skepticism that they didn't know that he is where this money came from. You know, from everything I read, he was very well connected, connected, you get I mean, Wyoming is not a big state, Sweetwater County, not a ton of people. I've lived there. I lived in Rock Springs, Wyoming for two years. I mean, these are all people very interconnected. at the college. I think there was even one of the three articles. Kelly put another one in the chat. I put one of them that kind of alluded to, they weren't sure who else at the college was connected to all of this. You know, I think it's interesting. They said, even typically, the CFO, which was his role would be the one responsible for doing due diligence. Yep. So you know, really interesting, like, do we need some controls some backups in place? I don't know. This was kind of an interesting one. To me. Oh, yeah. His LinkedIn profile Kelly, just put on there. You gotta click on it. Oh, you got to click on his link for LinkedIn profile. And notice he started another company sweet water spirits. During all of this, during the pandemic, he made of course, hand sanitizer. Now how many of you think he was going to be price gouging us all on hand sanitizer? He just seems like that kind of guy.
Rob Berry:Yep. Now puzzle says was he funding his own salary? Mark says he wanted his name on something. Oh, boy. And and Dan says if the check clears. proposal says Robin Hood style fun raising.
Jo Erven:Yeah. And how put up hat. Yeah. I mean, again, back to the Wyoming point. This was Wyoming Catholic college. So this is a small School in Wyoming. This isn't one of the big schools a $10 million anonymous donation.
Rob Berry:And the school actually said it's the largest donation they'd ever gotten.
Jo Erven:Yeah. So there's questions behind this plus they were already so planning for these future improvements. And they needed the money to do them. I mean, how many of you probably bet the CFO, over exaggerated oversight over committed to do these big things that the university then realized he didn't have the money to do it? So this is him getting himself out of a situation. So just like any fraudster, that's rationalizing their behavior. He's saying, I'm doing the right thing by, you know, who said, Yeah, Robin Hood? It's we're, you know, kind of a robin hood mentality. He's doing good with the money. What is that called? Kelly, when you steal to give to a charity? Isn't that the name? Oh, it's the Robin Hood? Yeah. Right. One of
Kelly Paxton:the things that I just looked up and we're going to I'll put a link to it is pro publica does the form 990s. And I can't wait to see what their form 990 looks at. I wish I would have thought of this beforehand.
Rob Berry:Oh, yeah.
Kelly Paxton:And even if they probably don't have something that just going forward, to see what shows in the form 990.
Rob Berry:Now, Mark says was the gift anonymous, yes, Mark to give was, it definitely was anonymous. But again, they really aren't anonymous, you know, as a university who it is. And like hell said, they just don't want the public to know. So they give a gift anonymously, and they won't, they don't want the public to know, typically. Now, I will say, you will find a lot of people trying to use universities to commit money laundering. And I'll tell you, I'll give you just one example of what some people will do. So you get students who come in international students who come in from out of the country, and they'll say, Well, my parents are going to wire money to us, the bill is $10,000, the parents will wire in 50. And then they'll expect the university to give the student you know, put deposit the difference into the student's account. You have to watch out for that because a lot of times that's money laundering, student, what student needs 20 $30,000 to survive on for one semester, or even, you know, a whole year if everything else is taken care of. So there's a lot of money laundering attempts that happened at our universities. So now Oh, wow, what else did we miss besides his LinkedIn account? I because we're gonna go there next. Do we miss anything else in this?
Kelly Paxton:Well, so I've just posted something and it's in the National Catholic register. And so it's just about I didn't know this word, you guys we're learning a new word. barataria is a meta evil term, no longer news, which signifies fraud committed to obtain elicit gain to the detriment of one community. And then arbory explained in a recent column, the Tara fraud, so I'm gonna have to find the Tara fraud and see what it says the punitive form Oh, my God, this is just like, you know, it's okay. It's Is it funny? I was raised Catholic. It's a little funny. Tar a fraud. I got it. I maybe that should be another new class to tar fraud. He asked Rob, the concrete of fraud, like, oh my god. This is too funny. I'm sorry. But the image of tar works another way as well. He added fraud is sticky stuff, even even being in proximity to it can tar someone with suspicion, we will do all we can to keep that from happening in our community. Oh my god, you guys, we have totally missed using tar. Three of our sauces, like fraud tar calm. Who's gonna get that domain name? Quick fraud, tar calm.
Unknown:I've got too many points.
Kelly Paxton:Sorry, I just I couldn't help it.
Rob Berry:Wait a minute. Hopefully somebody else does go like
Jo Erven:I thought I just put that third article. I think it might have been in the one I just posted. I can't remember now. There's three. And they're all in this chain at one point or the other. So read these articles. Because the one Kelly was just reading from was pretty good. is too good.
Rob Berry:Well, and you guys know how I feel about the the spinmeisters the marketing folks and PR folks at these places. So at one point they said in one of the articles they said, The falsity and the great links Mr. McCook took to exact his plan became known only days after funding the loan regarding adorably the vast majority of the funds have now been disseminated to various entities and individuals affiliated with Mr. MacAllan including his family members and his employer.
Kelly Paxton:Have you guys heard of the scam channel? dotnet?
Rob Berry:No.
Kelly Paxton:Okay, look at I just found scam chat of scam channel calm. Yeah, I did not know there was scam channel calm.
Rob Berry:Now what marks is fraud toward? I like the
Jo Erven:man. Talk about one other thing from the article. That's put it in the comments. This is a quote I want to talk about. Because Robert, you'll take this one and run with it. You're ready. Oh, hold on. Hold on one second. There we go. Okay. Okay, father, Anthony. staple, or however you say his name, who teaches a class on church management at St. Patrick's seminary, emphasize the need for checks and balances to maintain complete transparency and flag potential issues. Oh, that sounds like an auditor control thing to talk about. And they're talking about in the way of anonymous donations here. By the way, I went back to that topic, but I thought that was a good. Good quote.
Kelly Paxton:You know what I think is funny. There's this guy that you guys have heard me talk about before Scott Galloway, NYU professor, he's on pivot. He has this thing that if you give a donation, and you have a press release, you shouldn't get the tax deduction. And I kind of think it's genius. Oh, yes. Because it makes no sense. Yeah, all these tax deduction or all these donations with a press release? is, you know, I mean, he says it in this would be R rated, so I won't do it. But like, really? Do you have to you give a press release for your big fat donation?
Rob Berry:advertising?
Kelly Paxton:Yeah, it's advertising. Yeah.
Jo Erven:So but in this gentleman's case, obviously, we think that he had the greed factor going on. But I still am convinced because it was anonymous. He didn't want the press release about it. Right. He was trying to cover up something he did at the college. So like, my immediate gut reaction was, how did he steal from the college in some other way? That he feel guilt, and he is making this $10 million donation back to them. So what if we continue following this case that it comes out that he's been stealing all along?
Kelly Paxton:He knows exactly what I was thinking is he needed it to replace what he's done?
Jo Erven:Yeah. Or, you know, the, like I said, these big plans that he was making for the expansion of the college, you know, he knew that the university couldn't do that. So maybe it was a little ego driven. But anyway, it just doesn't blow your mind how people rationalize that they're gonna get away with this.
Kelly Paxton:Family and colleges right now during COVID.
Unknown:waiting.
Kelly Paxton:Just right now during COVID, like this, but a small college like this, like
Jo Erven:red flag. Yeah.
Rob Berry:So let's dig a little deeper, though. Because Joe brings up a very good point about Wow, it just left me. Sorry, guys. Stealing. Yeah, about how he could be stealing something, how he stole something and was trying to cover up, okay. Typically, when you get a donation that's this big, it is typically restricted. So in colleges, you have unrestricted donations, and restricted donations, right. Usually, when someone donates money of this significance, they want it to go towards a specific cause. And from what I can tell, this was unrestricted. So if it was unrestricted, it now here's here's the theory. He had stolen money from somewhere else. And he was going to use this money to try and cover up something else that he's stolen. Because typically, what someone would say is I'm giving you $10 million. I want it to be anonymous, but I want it to be to help, you know, one legged one eyed students in Alaska. Right. And so they have a specific cause. But from what I can tell, this was an unrestricted donation that they could use to do however, they saw fit. That doesn't make sense. And that's an anomaly that someone should have thought about in that environment as soon as they got the money.
Jo Erven:Yeah, good point. Good point. Yeah, I like how set this was a short lived Ponzi scheme. Yeah, that's, I mean, exactly. I think he was gonna get away with this. Like, I just it blows my mind.
Kelly Paxton:Okay, so guess how many students are at the school?
Rob Berry:I'm going to go with 6000
Jo Erven:I'm gonna go less than that. 22,000 Max
Kelly Paxton:170 I think
Rob Berry:Oh, my goodness. We were
Kelly Paxton:Where did I just see 170? I was like, literally it's Yeah, I think it's as a fall 2019 there were over 170 students enrolled. Let me see where it's like. Wyoming was small. Yeah, yeah. Yeah. That's a lot of money for 170 students.
Rob Berry:Wow.
Kelly Paxton:Oh my gosh. And the academic staff. There's only 19 Oh, okay. 185 students.
Jo Erven:Look at these guesses in the chat. You guys were lower than us. And we're still way high. Wow.
Rob Berry:So, here's a man here. He's on LinkedIn. He went to Pepperdine University. He is the CFO and founder of hopland Labs. And, and and wait, it's better. Sweet water spirits. So when you look up sweet water spirits, that was a beer. I mean, you know, spirits. So we're in alcohol. And the lab was the hand sanitizing company. So, and there is Chief Financial Officer at Wyoming Catholic college, from 2018. And then Before that, he was the CFO at a data speed, which was in Rochester Hills, Michigan, and he was also on the city council when he was in Michigan.
Kelly Paxton:Oh my god, you guys want to know how much he makes? How much? And this is 2019 $87,000. And he gets an extra 10,000 in some other type of compensation. He literally Yeah. Oh, my God. That's
Jo Erven:not a big not. I mean, just the the dollar amount associated with this guy is crazy. Given? Yeah, you've got a CFO that's only making 80,000 to begin with. I mean, did what is it r squared? Is that the company r squared? Yeah, I might be on board with the they were so stupid to not do their due diligence. Sorry, that was really mean. Do Yeah, maybe the college should get to keep this $10 million bonus. I don't know if that's crazy. Crazy.
Rob Berry:I mean, you know, seriously, because, okay, if I'm r squared, and I'm an underwriter, I would probably look up this guy's LinkedIn. I would also probably ask him for some tax returns for 185 million. I wouldn't just trust it. He won the lottery. And I don't know if that was his excuse. I would have been trying to figure out where it came from. Okay, look, you guys are hilarious. Heather says her high school graduating class had that many folks. And how do they have division one football team. And Mark says, they only have intercollegiate ping pong.
Kelly Paxton:Oh my god. So also on the form that you form 990s are awesome. Austin's employees and board members are covered by the conflict of interest policy. If a potential conflict arises, it is reviewed by the cabinet and ultimately a decision is made by the President. I got you guys. I mean, if you're interested, you got to go the form 990 it's just but this was not very much stuff.
Rob Berry:This wasn't a conflict. He was actively fundraising. Sorry.
Kelly Paxton:Yeah. It's crazy. It's Yes.
Jo Erven:All right, you guys, this is it.
Rob Berry:This is a fun one. So Mark says not r squared r tar. Like tar tar. He got the money from Florida unclaimed property. But how Mark also said they had three on three football. You know, I'll do you one further. They didn't have that kind of football mark. Remember the game where you would fold up the paper and kind of dump the paper when you were a kid? That football game on the table? Yes. What they had
Jo Erven:paper football.
Rob Berry:Paper football. Yeah. You know, I? And I know Joe, we don't blame the victims here.
Jo Erven:Are to Kelly where she There she is. In Kelly. Yeah,
Rob Berry:we don't blame the victims here. But r squared I mean $185 million. Now. I'm really wondering what story he gave them because if he said the lotto, they could have easily gone to that state to see if there were any winners in that state's lotto because I'm sure it wasn't Wyoming lotto if that's the story he used, if it was a relative, I mean, there would be some way to actually prove it, but $185 million, and he faked the bank statements.
Jo Erven:Yeah, yeah, we kind of came full full circle back here to the to the R squared. Yep.
Rob Berry:Yeah. arscott Well, and and honestly If this university, this college only had 185 students, they're kind of a victim here too, because let's face it, no matter what their press release said that this didn't affect their future. There's no way 185 students are propping up an entire university. So they were let down when they figured out that this month. Well, you know, everything I've seen, hasn't said that they've given the money back yet.
Jo Erven:Yeah, this is really recent. Yeah, this is like a July 2021. Guys, this one there'll be we could follow this story a bit.
Rob Berry:Yeah. And Lolo Yeah, this guy has got me speechless. I mean, this is this is like, don't want to one right is you don't, not everyone thinks like auditors and fraud investigators. I get that. But oh, Joe.
Jo Erven:Sorry. popped into my head that he gave money to $5 million. About that extra five, right? He gave it to his friends and family. Now, I don't know about you guys. It kind of reminds me of the monopoly trailer, where the guy says, if someone handed you a million dollars, of course, you're going to take it unless you have to kill someone. And it's like that that comment made me thinking, you know, somebody is giving me lots of money. I'm going to ask lots of questions. Where is where is everybody's ethical fit? Like, you know, people, it's gone out the window. And this is where I'm like, I'm on my soapbox. We got to get back to our ethics and our values. If somebody handed you money, you better be questioning it. I'm sorry. But there was so many other little people involved in this.
Rob Berry:Yeah, yeah. Well, and so Mark brings up a good point, you tell me that the members of the administration didn't know boo. Here's one thing I will say, though, Mark, they may not have because in one article, I read that the money just showed up in one of the university's accounts. Now, that could happen because this guy was the CFO. So he knew the routing and account numbers. So it could have just been one day you just come and it shows up in your account. So that is possible. But you know, I'm with you. I think that's bull,
Jo Erven:but he didn't have some gut that something was going on. There you
Rob Berry:go. That's where I was going with it. Yeah, you had to have some kind of good, even if you didn't outright know that this was fraudulent you had to have, because I would imagine most donations to that university. Well, I would imagine their endowment right now that that amount of money that they got, is probably more than what their total endowment was. They probably doubled or quadruple their endowment.
Jo Erven:Yeah, absolutely. Well, and by the way, they probably could have done a parking lot audit Kelly and found that all of his friends and family just got new cars. We get all this money at the same time that his whole family and friends just looked like they won the lottery. Oh, my
Kelly Paxton:tell he upgraded he got a better tailor. The other picture of the story is like it's fitted where when he was in Michigan, I'm sorry. He looked like a gangster. He looked like Tony Soprano. I mean, his suit was so ill fitting and now he's got this really nice sort of French cut shirt and Oh, he and we're in Wyoming. Idaho, okay, it's our Wyoming people here are they're really nice Taylor's in Wyoming. He's probably flying to New York for his shirt. Look at that. That's, that's Tony Soprano.
Jo Erven:Somebody just look up the population of lander, Wyoming where you live? And that will answer your question, Kelly, and it's two o'clock and we probably should end on that note, but anyway.