Chapter 7 Vignette Question If you were the auditor, what you would do to avoid this mistake regarding audit evidence. to Falsifying Documents to Hide Fraud CEO Confesses to LEARNIN Over Twenty Years After study be able to 7-1 ci days after his surprise Peregrine Financial G aust pipe into the veh 15 million in customer dating bankruptcy and poust pipe in cus corise Las Vegas wedding, Russell Wasendorf, Chief Executive Officer Group, was found unconscious in his car with a tube running from the vehicle. By weeks end, regulators had discovered that approximately mer money was missing the futures trading firm had filed for Chapter 7 vand its fancy offices were closed. A suicide note was found inside the car he CEO had committed fraud for over 20 years. dar admitted the CEO fraud The (NE Association 0.01 -0.10 -0.20 SOO 1.09 500 20.80 10,000 23.80 100 114.50 1,000 1.04 600 fraud was exposed the National Futures ciation (NFA) sent an team to review Peregrine's oks and pressure Peregrine wo participating in a new online system for verifying counts, which would have Hey made it impossible for Wasendorf to continue the fraud. Wasendorf had fooled the NFA a year earlier after the regulator received a report on a Friday that Peregrine's account for customer balances had less den $10 million. The following Monday, the NFA received a fax purportedly from the bank Indicating the account held more than $200 million; investigation revealed that the fax had been sent by Wasendorf. h the signed note found in his car, Mr. Wasendorf admitted to using basic computer software programs to make "very convincing forgeries" of bank statements and official correspondence from the bank. To prevent other Peregrine employees from learning about the real bank bal- sites, Wasendorf insisted that only he could open mail from the bank. Auditors typically con- sank balances directly with the bank. However, Wasendorf supplied the auditor with the wdress for a post office box that he controlled for the mailing of the confirmations. ough Wasendorf's son was Peregrine's president, Wasendorf claims that he was the sole of the fraud. He indicated that the scheme began out of financial desperation as he obtain capital. He admits to taking less than half of the $215 million investigators and investigators continue to track the missing funds. Some called for leniency ndorf's support for charities, but the judge imposed the maximum 50-year perpetrator of the fraud. He in was unable to obtain capital. daim is missing, and invesus because of Wasendorf's support Sentence. 1) (www dorf Gets 50 Years Jail for Fraud," Reuters arson, and Julie Steinberg
