Ethical, Fraud, and Legal Issues for Accountants

Conduct research and answer the questions below in your own words in a maximum 3-page report. Identify the Facts; Identify Ethical Dilemma and Ethical Reasoning Theories; Identify Stakeholders and Obligations; Identify Core (professional) Values/Virtues; Identify Operational and Accounting Issues; Identify Alternative Options; Identify Consequences of Options; and Choose an alternative course of action and defend option selected from an ethical reasoning perspective (i.e. rights, justice, virtue) after considering the consequences.

Part A - Fraud

Since Bernard L. Madoff was accused of running a $50 billion Ponzi scheme in 2008, the S.E.C. has been more aggressive in Ponzi scheme prosecutions. In a recent case, the S.E.C. revealed that Jeff Carpoff, 50, ran a Ponzi scheme with his wife that sold nonexistent solar generators to investors. He received the maximum sentence after he and his wife, Paulette Carpoff, 47, pleaded guilty in January 2020 to a scheme that involved selling investors mobile solar generators, at least half of which didnt exist, according to the U.S. Attorneys Office for the Eastern District of California. According to the United States Department of Justice, the conspirators in the case carried out "an accounting and lease revenue fraud using Ponzi-like circular payments".

Questions:

1. Discuss how Jeff Carpoff carried out the Ponzi scheme with his wife?

2. Identify and explain the Ponzi scheme "red flags" in this case.