Ghosts Of Payments Fraud Past: Enron CEO Skilling Freed From Custody

In an echo of payments scandals past, news came this week that Jeffrey Skilling, former CEO of Enron, has been released from federal custody after a 12-year term in prison.

As widely reported, Skilling helmed the energy giant before it collapsed into bankruptcy at the end of 2001. He served jail time in connection with fraud and conspiracy, centered on accounting tricks that were partly used to cover financial losses. The company posted a $600 million loss, The New York Times noted this week, and wrote down shareholder equity by $1.2 billion. Founder and Chairman Kenneth L. Lay was also convicted in the scheme, but died after his trial while awaiting sentencing.

The Enron fraud resulted in estimated losses in the tens of billions of dollars, and relied in part on mark-to-market accounting, which inflated asset values. Special-purpose entities helped hide debt from balance sheets, but the company eventually had to restate earnings going back years.

Separately, among more recent developments, and as reported in the Sun Sentinel, a whistle-blower has claimed that widespread fraud was tied to purchasing fraud in Port Everglades. The claims led to investigations by a number of authorities, including the FBI and auditors. The whistle-blower, Chris Rosinski, found payments fraud that stretched back years, and possibly decades.

Investigators found that, in one case, a worker rang up $18,000 in charges over the course of one year, buying equipment that ranged from faucets to pipes, which were not installed at the port. Other allegations found, for example, that procurement cards were used to buy equipment from a firm that had gone out of business last year, and where receipts were still being submitted.

Separately in Australia, Colleen Fay Dhuga in Calgary has pleaded guilty to a $1 million scam that lasted over six years, where she stole the funds from her employer, a group of companies under the name Anderson. According to the Calgary Herald, Dhuga said “I see you have discovered my gambling habit” when the scam was uncovered and she was confronted. The embezzlement lasted between 2008 and 2014 when she had been acting as controller, partially by manipulating foreign exchange transactions and through corporate credit cards.

In Canada, as reported earlier this week, Patrick Bieleny, the former CFO of an unnamed agri-business organization, was charged with a series of fraud counts. The Edmonton police said in a statement that “the organization reportedly discovered that millions of dollars of corporate funds had been allegedly misappropriated through transfers, non-business billings and other means.” The charges state that as much as $2.5 million had been defrauded between 2009 and 2015. The alleged fraud took place through transfers and non-expense billings, among other methods.

Separately, The Wall Street Journal (WSJ) reported that a number of verticals are finding artificial intelligence (AI) of use in finding suspect transactions within expense reports. The effort seeks to reduce manual efforts among firms, and AI offers speed and accuracy through third-party offerings.

Among them, AppZen has logged more than 1,000 customers using its auditing technology, which is used to examine expense reports. The company said its audits take only minutes to be completed, versus days for manual efforts — and that as much as 10 percent of expenses submitted are “worth questioning,” as the WSJ reported. The AI-powered offering also gathers data points from thousands of sources to check prices for goods and services that are cited in various expense reports.