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FUND OF FUNDS CASE

FUND OF FUNDS CASE. GROUP 5 Kathryn Tejeda Marie Franco Deborah Plana Michael Medina. CASE FACTS. FRAUD DEFINITION : DECEPTION DELIBERATELY PRACTICED IN ORDER TO SECURE UNFAIR OR UNLAWFUL GAIN ESTABLISHMENT OF IOS (FUND OF FUNDS WITHIN) - CREATED IN 1956 BY BERNIE CORNFELD.

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FUND OF FUNDS CASE

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  1. FUND OF FUNDS CASE GROUP 5 Kathryn Tejeda Marie Franco Deborah Plana Michael Medina

  2. CASE FACTS • FRAUD DEFINITION: DECEPTION DELIBERATELY PRACTICED IN ORDER TO SECURE UNFAIR OR UNLAWFUL GAIN • ESTABLISHMENT OF IOS (FUND OF FUNDS WITHIN) - CREATED IN 1956 BY BERNIE CORNFELD

  3. CASE FACTS • WORLD WAR II US TROOPS HAD HUGE AMOUNTS TO INVEST, BUT JUST A FEW INVESTMENT OPPORTUNITIES • 11 SPECIALIZED MUTUAL FUNDS WERE CREATED FOR THE U.S. MILITARY TO INVEST $25.00 ON A MONTHLY BASIS

  4. CASE FACTS

  5. COURT’S DECISION • ARTHUR ANDERSON’S AUDIT REPORT PURPOSEFULLY FAILED TO DISCLOSE KING RESOURCES’ FRAUDULENT INVESTMENT TRANSACTIONS

  6. COURT’S DECISION • COURT RULED IN FAVOR OF THE PLANTIFF, THE FUND OF FUNDS’ BANKRUPTCY TRUSTEE • COURT STATED THAT ARTHUR ANDERSON’S AUDIT REPORT FAILED TO DISCLOSE QUESTIONABLE FINANCIAL TRANSACTIONS

  7. GROUP OPINION • ANDERSEN SHOULD NOT HAVE AUDITED BOTH CLIENTS (FUND OF FUND AND KING RESOURCES). • WHEN FACED WITH QUESTIONABLE TRANSACTIONS, THE AUDIT FIRM SHOULD HAVE WITHDRAWN FROM AT LEAST ONE OF THE ENGAGEMENTS.

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