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Anatomy Of A Fraud Essay

3274 words - 14 pages

Anatomy of a Fraud Project
Abraham Kennard: The False Profit

Alisan James
Forensic Accounting
November 25, 2013
Dr. N. Sharma

The goals and objectives of a fraud investigation are to think critically and creatively to be able to prepare and organize ideas to uncover a suspected fraud. Crook, hustler, swindler, fraudster and con artist are all used interchangeably to describe someone who will spare no expense to deliberately and intentionally achieve an advantage over another by false statements and suppression of truth. Fraud is elevated to another level when the con artist aims and targets investments scams towards members of a specific group, particularly religious ...view middle of the document...

He used his mesmerizing personality and preaching the Word to gain the interests of fellow colleagues to invest in his fraudulent investment company, Network International Investment Corp., Inc., (NIIC), headquartered in Wildwood, Georgia. Many viewed this as an opportunity in that it is difficult for African-American preachers to obtain bank loans, while the initial investment or “membership” began at a mere $3,000 with up to a $500,000 non-refundable grant return and forgivable loans. Kennard was able to recruit other pastors and other influential leaders to speak, hold meetings and influence others on his behalf, unknowingly assisting with his ponzi scheme. His lavish lifestyle and alleged wealthy connections intrigued many and over the course of 2 years, he was able to eventually embezzle close to $9 million.
Application of Fraud Triangle/Fraud Theory
A ponzi scheme, defined by Wikipedia, “is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors.” A ponzi scheme can then turn into a pyramid scheme when older investors recruit new investors for a direct monetary reward. In the case of Abraham Kennard, his initial ponzi scheme quickly became a pyramid scheme, as he was able to enlist his fellow colleagues to initiate other investors. Evidence that was used in the trial revealed that at some point before the successful fraud scheme occurred, Kennard advertised in a Chattanooga, Tennessee newspaper, seeking investors to invest in his bogus company, NIIC (Deceived, 2013). This attempt was unsuccessful; “It wasn’t until he put a religious theme behind his scam that it worked,” (Deceived, 2013). In 1999, Kennard filed for bankruptcy and once again in early 2000, he began to target ethnic religious leaders to invest in his company and ideas to build Christian Retreats worldwide, also called the Church Project (Deceived, 2013).
The fraud triangle is comprised of three elements and includes pressure, opportunity and rationalization. In relation to this case, it is known that Kennard filed for bankruptcy, at least once. He also had a criminal background and had served three years in prison for robbery and check fraud in 1986 (SEC Complaint, 2002). Kennard viewed struggling, black church’s difficulty in obtaining bank loans as a weakness, along with their strong faith in God as an opportunity to execute this scam. On the other hand, the victims of this scheme were persuaded by Kennard’s promise to pay a return of up to $500,000 for each $3,000 investment backed by sources such as “profit-making corporations, federal government grants, other Christian institutions and profits from a series of world-wide Christian-based resorts to be built and run by” another corporation of Kennard’s, Church Kingdom (SEC Civil Action, 2002).
After Kennard was formally and criminally charged with various crimes relating to the scam, Kennard chose...

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