Joe Forte coached youth football, donated substantial time and money to not-for-profit organizations, and appeared to...
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Joe Forte coached youth football, donated substantial time and money to not-for-profit organizations, and "appeared" to be an all-around "good guy". Joe Forte currently serves a 15 year sentence in prison, has an additional five years of supervised release, and is ordered to pay restitution of $34.9 million. He pleaded guilty in criminal court to money laundering, wire fraud, mail fraud, and bank fraud. He lied to investors about the return on their investment and the value of partnership assets. The reality is that Forte consistently lost money on his trades. He was successful at attracting new investors, so he used new investment dollars to pay back any older investors who wanted to withdraw from the fund. Forte operated the typical Ponzi scam from 1995 to 2008, victimizing over 100 individuals, primarily friends and acquaintances. Because he was unable to continue the scheme, he turned himself in to authorities in December of 2008. When news of the Bernie Madoff Ponzi scam erupted, it made current investors wary, and alerted potential investors to be cautious. Current investors began withdrawing funds and the previously constant stream of new investors dried up. Required 1. Why were so many investors fooled by Forte? 2. What factors may have motivated Forte to commit fraud? (Hint: Consider all three sides of the Fraud Triangle.) 3. Assess the ethical behavior and integrity of John Irwin, who is the CPA in this case. (Hint: Consider the CPA's Code of Ethics) 4. Consider that John Irwin is the chairman of the board at Hilltop School. The school had an endowment invested with Forte. What is the CPA's obligation to this organization? 5. In your opinion, how should the court enable victims of the Ponzi scam to recover some or all of their investment? Should investors be required to give back gains and/or principle? Should charities who received donations from Forte be required to return the donation? Joe Forte coached youth football, donated substantial time and money to not-for-profit organizations, and "appeared" to be an all-around "good guy". Joe Forte currently serves a 15 year sentence in prison, has an additional five years of supervised release, and is ordered to pay restitution of $34.9 million. He pleaded guilty in criminal court to money laundering, wire fraud, mail fraud, and bank fraud. He lied to investors about the return on their investment and the value of partnership assets. The reality is that Forte consistently lost money on his trades. He was successful at attracting new investors, so he used new investment dollars to pay back any older investors who wanted to withdraw from the fund. Forte operated the typical Ponzi scam from 1995 to 2008, victimizing over 100 individuals, primarily friends and acquaintances. Because he was unable to continue the scheme, he turned himself in to authorities in December of 2008. When news of the Bernie Madoff Ponzi scam erupted, it made current investors wary, and alerted potential investors to be cautious. Current investors began withdrawing funds and the previously constant stream of new investors dried up. Required 1. Why were so many investors fooled by Forte? 2. What factors may have motivated Forte to commit fraud? (Hint: Consider all three sides of the Fraud Triangle.) 3. Assess the ethical behavior and integrity of John Irwin, who is the CPA in this case. (Hint: Consider the CPA's Code of Ethics) 4. Consider that John Irwin is the chairman of the board at Hilltop School. The school had an endowment invested with Forte. What is the CPA's obligation to this organization? 5. In your opinion, how should the court enable victims of the Ponzi scam to recover some or all of their investment? Should investors be required to give back gains and/or principle? Should charities who received donations from Forte be required to return the donation?
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Related Book For
Law Business And Society
ISBN: 9781260247794
13th Edition
Authors: Tony McAdams, Kiren Dosanjh Zucker, Kristofer Neslund, Kari Smoker
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