Investigation in Maharashtra Insurance Fraud Scheme

Agriculture Insurance Fraud

The state agriculture department is investigating all agriculture insurance fraud claims made by farmers for the Khareep and Rabbi seasons after it came to light that in Beed district alone, Rs 58 crore insurance money was claimed illegally and banks had to reverse that amount to the state exchequer.

According to a report on the incident, over 15,000 farmers from the district had fraudulently claimed insurance for a larger area of cultivation, or for premium paid for crops they hadn’t even sowed. The episode was investigated when it emerged that the cultivated land shown as insured was much higher than the area available for cultivation in the district.

Procedure for Insurance

According to the norms, a farmer has to get a crop certificate from the talathi mentioning the area under cultivation and the crop he will sow before he can get insured for that crop. The premium has to be paid in any of the banks that are authorized by the national agriculture insurance company.

In some cases, the farmer would get a crop-sowing certificate from the land revenue officer. A few days later, he would go back to the officer saying he had changed his mind and would be sowing another crop and hence would need another certificate. The farmer would take these two certificates (the earlier one wasn’t cancelled) to two different banks and pay the insurance premium for both the crops, but sow only one crop. In these cases, insurance claims were admitted for both the crops.

Agriculture Insurance Fraud

There were cases where farmers didn’t even cultivate anything and had yet paid up premium for cotton and had received insurance money. Some had registered inflated land areas so that more compensation could be claimed.

Insurance premium that the farmer has to pay is very meager and the amount depends on the crop and the area under cultivation. Currently, once an agricultural cycle is completed, crop production estimates are made by visiting random fields in one insurance circle, and then extending them to the entire circle. The indemnity levels for availing crop insurance in 2015 were kept at 60.

Certified Forensic Accounting program offered by the Indiaforensic Center of Studies and customised for the Insurance sector discuss the various Insurance fraud schemes. For detailed information on the Insurance sector certification please call us on +91-9766594401 or write us on education@indiaforensic.com

 

KPMG ex-partner in Insider Trading

kpmgEx-Partner of KPMG was charged with insider trading by Securities Exchange Comission. The comission alleged that Scott London, Ex-Partner of KPMG tipped Bryan Shaw with confidential details about five KPMG audit clients and enabled Shaw to make more than $1.2 million in illicit profits trading ahead of earnings or merger announcements.

KPMG Ex-partner helps friend in Insider Trading

The two men had met at a country club several years earlier and became close friends and golfing partners. London has said that he provided the inside information about his clients to help Shaw overcome financial struggles after his family-run jewelry business began faltering in the economic downturn. In exchange for the illegal trading tips, Shaw paid London at least $50,000 in cash that was usually delivered in bags outside of his Encino,  jewelry store. Shaw also gave London an expensive Rolex watch as well as other jewelry, meals, and tickets to entertainment events.

London, who worked at KPMG for nearly 30 years, recently informed the firm that he was under investigation by the SEC and criminal authorities for insider trading in the securities of several KPMG clients. The firm immediately terminated him.

According to the SEC’s complaint filed in federal court in Los Angeles, London began providing Shaw with nonpublic information in October 2010 and the misconduct continued for the next 18 months. Shaw and London communicated almost exclusively using their cell phones, although on at least one occasion London disclosed nonpublic information in the presence of others during a golf outing.

According to the SEC’s complaint, London was the lead partner on several KPMG audits including Herbalife and Skechers USA, and he was the firm’s account executive for Deckers Outdoor Corp. Therefore, London was able to obtain material, nonpublic information about these companies prior to their earnings announcements or release of financial results.

The SEC alleges that London also gained access to inside information about impending mergers involving two former KPMG clients – RSC Holdings and Pacific Capital. London tipped Shaw with the confidential details. Shaw made nearly $192,000 by purchasing RSC Holdings stock the day before its Dec. 15, 2011, merger announcement. He made more than $365,000 in illicit profits from his well-timed purchase of Pacific Capital securities prior to a merger announcement on March 9, 2012.

Read the SEC Complaint here

 

Lloyds considering action against KPMG

KPMG LooydsLloyds banking group is considering legal action against KPMG in HBOS Bank Audit. Accountancy giant KPMG in the UK is under scanner over the audit work that gave HBOS, banking and insurance company, ‘a clean chit’ in the run-up to its collapse.

Lloyds Banking Group Considering action against KPMG

The Financial Reporting Council (FRC) confirmed it would consider launching an investigation of KPMG’s role following last week’s damning Parliamentary Commission report on HBOS.

The move will come once the Financial Conduct Authority (FCA) presents its findings on the bank’s failure in the autumn, the Daily Star reports.

It comes as a further blow to KPMG after it was forced to quit as auditor of two US firms, nutritional products group Herbalife and footwear maker Skechers amid an FBI investigation into alleged insider trading involving a former employee.

KPMG, which audited HBOS’ accounts throughout the years leading up to the financial crisis, said they stood by the quality of their audit work at HBOS.

Lloyds Banking Group, which rescued HBOS at the height of the banking meltdown, is also reportedly considering legal action against KPMG for failing to spot the black hole in its accounts.

The Parliamentary Commission on Banking Standards said last week that a combined total of 28 billion pounds had been invested into HBOS by the taxpayer and Lloyds.

HBOS was brought to its knees by reckless lending and billions of pounds of bad debts, but KMPG signed off its accounts in 2008, the report added.

Source: Yahoo Finance

Accounting fraud in TheStreet

The Securities and Exchange Commission today charged TheStreet, Inc. and three executives in connection with a 2008 accounting fraud at a former subsidiary of TheStreet, Inc. The fraud allowed TheStreet to report artificially inflated revenue and misstated operating income or loss in each period of 2008.

The SEC alleges that throughout 2008, Eric Ashman, TheStreet’s former Chief Financial Officer, aided and abetted the fraud by improperly and prematurely recognizing revenue based on several of the former subsidiary’s transactions. According to the complaint, Ashman caused TheStreet to recognize revenue when he knew or recklessly disregarded that there was no basis for revenue recognition.

Gregg Alwine and David Barnett, co-presidents of the subsidiary, are alleged to have aided and abetted the fraud by entering into sham transactions, and fabricating and backdating contracts and other documents. In addition, Barnett is charged with leading TheStreet’s auditor to believe that the subsidiary had performed services and thereby earned revenue on a specific transaction when in fact it had not performed those services.

For its part, TheStreet is charged with lacking appropriate internal controls over its subsidiary’s revenue and with violating books and records and reporting provisions of the securities laws.

Source url: SEC