Need a discussion response for the following:

The summary of this case is that a publicly traded company called Account Receivable Services LLC fraudulently presented itself to be an experience company with medical account receivables. Its produced inaccurate reports with regard to its collection rates, asset (receivable) value, purchase price and sale cost; in order to attract investors to invest in the company. The fraud scheme involved a network of companies (third partied) who received illegal payments/kick-backs for their role in the scheme. The scheme defrauded investors of roughly $275M, over a 2 year-period starting from 2006-2008. The senior officers ultimately plead guilty in 2012 and in 2013 respectively.

Ponzi schemes like this should be been caught during the audit process. The SEC requires for public companies to be audited at least once per year. The financial statements must be audited by an independent third party. Purchase prices and expenses must be validate to the account level and reconciled to all reports including the cash flow. Finally, there should have been an internal audit department that perform independent reviews of the financial statement and reconcile amounts for accuracy.

Reference: Two Indicted in $275 Million Investment Fraud Scheme Involving the Sale of Medical Accounts Receivable to Hedge Funds 2013 Press Releases Baltimore https://archives.fbi.gov/archives/baltimore/press-releases/2013/two-indicted-in-275-million-investment-fraud-scheme-involving-the-sale-of-medical-accounts-receivable-to-hedge-funds-and-other-investors District of MarylandReference: Two Indicted in $275 Million Investment Fraud Scheme Involving the Sale of Medical Accounts Receivable to Hedge Funds and Other Investors U.S. Attorneys Office September 05, 2013 (410) 209-4800