Interview with Michael Kessler, FACFEI, DABFA, DABFE, Cr.FA, CICA.
(Officials and employees)
Forensic scientists (Interviews)
|Publication:||Name: The Forensic Examiner Publisher: American College of Forensic Examiners Audience: Professional Format: Magazine/Journal Subject: Health; Law; Science and technology Copyright: COPYRIGHT 2009 American College of Forensic Examiners ISSN: 1084-5569|
|Issue:||Date: Summer, 2009 Source Volume: 18 Source Issue: 2|
|Topic:||Event Code: 540 Executive changes & profiles|
|Product:||Product Code: 8930000 Accounting & Auditing Services NAICS Code: 54121 Accounting, Tax Preparation, Bookkeeping, and Payroll Services SIC Code: 8721 Accounting, auditing, & bookkeeping|
|Organization:||Company Name: Kessler International|
|Persons:||Named Person: Kessler, Michael|
|Geographic:||Geographic Scope: United States Geographic Code: 1USA United States|
Michael Kessler is a Certified Forensic Accountant, Fellow of ACFEI, Diplomate of the American Board of Forensic Examiners, and the Chair of the American Board of Forensic Accounting. He is also the founder of Kessler International, which offers clients a variety of forensic and investigative services.
What led you to uncover the alleged Ponzi scheme called Agape World in Hauppauge?
I began investigating Agape World last year in an effort to help a client understand his investment risk for a multi-million dollar investment. [O]ur investigation into the company's president and the companies he operated raised many red flags. Finally, the background information we developed on the company shells revealed their questionable lifestyles, further painting a picture of fraud rather than legitimacy.
When were you convinced that Agape World wasn't just another investment company?
Almost immediately. While the exorbitant high rate-of-return might be enough to make anyone question the legitimacy of Agape World, my investigation of the founder Nicholas Cosmo and his brokers confirmed my suspicions and revealed all the textbook criteria of a classic Ponzi scheme... [T]he contractual documentation appeared to have been written either by a poor lawyer or someone who had no knowledge of the law. The other literature given out by Agape World and its brokers was also found to be misleading and ultimately it was determined that an audit of the investments or the firm was never performed. Finally, the fact that the company, the president, and the brokers were all unlicensed clearly indicated that something was seriously wrong with the operation.
What was the most surprising thing to you about this case?
I'm surprised that so many investors did not take the time to do proper due diligence before making an investment. It was obvious that the brokers had no comprehension of finance or previous experience with an investment firm. They were unlicensed, and our investigation also revealed that several of them had previous criminal records, including Cosmo, who served time in jail for a similar offense. Additionally, I was surprised by law enforcement's lack of concern. I finally referred it to the FBI in Hauppauge, and they, along with the US Postal Inspectors, did the tedious job of collecting the evidence needed to bring Mr. Casino to justice.
What makes people vulnerable to get-rich-quick frauds?
Typically people get involved in these schemes out of greed or desperation. In an economy like we have today, you can multiply those factors tenfold. The majority of the victims of Agape World were blue collar and middle class families, many of them struggling to make ends meet or just trying to save money for their future. Investing in Agape World seemed too good to be true, but desperation overrode common sense.
How will the U.S. Attorney General's office and the FBI find the money that appears to be missing?
Long and tedious tracing of bank account transactions will have to be performed following the trail of money. By now most of it is probably gone, and the assets that are left will never make the victims whole.
what kind of frauds are companies dealing with these days and how can they try to prevent them?
We are seeing major increases in accounting fraud, employee embezzlement, and the use of the computer to steal information. The simplest way to deal with these is by having preventative measures in place beforehand. Our forensic accountants and computer forensic examiners are routinely retained to assist companies dealing with these types of problems and to put into place preventative programs for the future.
Tell me a little bit about Kessler International and what the company does.
Kessler International has been in business for over 21 years, and we specialize in corporate investigations, forensic accounting, brand protection, computer forensics, and e-discovery, among other disciplines.
Agape World lasted almost ten years. What do you think caused it to foil now?
Ponzi schemes rely on a continual flow of investors in order to keep running. Eventually, it becomes harder to find investors, and the Ponzi scheme collapses. After our investigation, my client refused to reinvest a sizable investment, and the cards began to nimble. I began issuing press releases regarding Ponzi schemes. Additionally, the Bernard Madoff Ponzi scheme was all over the news, and this made investors scrutinize Agape World a little more closely than they had done before.
What other notable cases has Kessler International investigated?
To Kessler International, every case is notable and important to us and our clients. Some of the more notable cases I can discuss involve public entities. We have helped recoup millions of dollars for a school district that was cheated during a construction project, revealed fraud and abuse in the Clark County (Las Vegas) building and fire department complaint process, and documented financial weaknesses for the Prime Minister of a Caribbean Island.
How will the Cr.FA designation add to the existing credentials of forensic accountants?
Forensic Accounting has become a very competitive and crowded industry with many practitioners having no or little knowledge of the requirements and practices of the profession... The fact that [Cr.FA] designees have demonstrated commitment, experience, and knowledge of the industry by testing and are mandated to participate in continuing education for the purposes of maintaining their credentials, anyone hiring a Cr.FA can rest assured they have the requisite knowledge to competently complete the engagement. The Cr.FA designation is the pinnacle achievement forensic accountants can achieve and use to demonstrate their abilities to potential clients and their peers.
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