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Fraud (3) - Essay Example

A corporate fraud exceeds the scope of workers stated positions. In most cases, these types of corporate frauds involve a series of individuals in all levels of management of an organization. Fraud can be detrimental to a community, company, or individuals who are normally on the receiving end of fraudulent activities. In addition, the latent negative consequences of fraud in any organization can be strategic, monetary, legal, or operational. The Peregrine Financial Group (PFG) was a brokerage firm that experienced high level of fraud for about 20 years while in business. Based in U.S, the firm also accepted foreign traders in their business that entailed offering access to exchanges in the country. The company utilized the Best Direct Pro as the only interface to conduct business. In July 2012, the firm was closed down amid bankruptcy claims due to fraud. This led to the arrest of the former C.E.O, Russell Wasendorf Sr. who confessed of embezzling large amounts of money from the firm (Associated Press, 2012). The fraud entailed the embezzlement of millions of dollars using forgery. According to the former C.E.O, forged bank statements were used to obtain money from the customer’s accounts. The activities run for twenty years without being detected. Furthermore, the C.E.O organized his exclusive access to the U.S bank accounts held by the company (Associated Press, 2012). ...
The money embezzlement carried out by Russell caused detrimental effects to both the company and him as an individual.

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From the fraudulent activities, he executed in his company the former C.E.O was arrested and sentenced. He also suffered from guilt consciousness that led to attempted suicide. To the organization, all the funds were frozen leading to its collapse. Its entire monetary and operational activities came to a stop by the month July 2012 (Associated Press, 2012). There was a shortfall of the firm’s funds belonging to customers. Consequently, a bankruptcy petition made against the company succeeded. This minimized any chances for the Peregrine Financial Group recovery. The management of Peregrine Financial Group held the responsibility to secure the firm from any fraudulent activity. Therefore, all the involved departments should be part of any decisions made regarding the company’s activities and other monetary operations. In addition, the management should have ensured that any transactions and bank statements received reach the accounts department first then forwarded to the C.E.O. This would have guaranteed transparency in the transactions and financial status of the company (Goldmann, 2010). Consequently, the management would have succeeded in preventing the fraud and protecting the stakeholders’ interests to the company. The management should also have placed a principled voice at the top and regularly engage external auditors in order to scrutinize the documents (Arleen & Kim, 2003). The corporate environment and culture that may have contributed to the fraud in the Peregrine Financial Group Company is the lack of honesty and ethics. Lack of these values hindered effective
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Fraud: Peregrine Financial Group Name Institution Fraud: Peregrine Financial Group The definition of fraud varies from country to country. However, fraudulent actions are described using deception, concealment, omission, or distortion of truth to attain unlawful and inequitable advantage…
Fraud (3)
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