Here is the former CFO of Crazy Eddie talking about how he was able to maintain a large-scale fraud for years.
Now a public speaker on fraud, his advice is “Don’t trust, and always verify.”
As criminals we learned that the most effective way to commit our crimes was with a smile. In the Godfather movie Michael Corleone said, “Keep your friend close, but your enemies closer.”
As a criminal I followed Michael Corleone’s philosophy all too well. We corrupted our auditor’s professional skepticism by giving them extraordinarily rich consulting work in addition to their audit engagements. Today, at least under Sarbanes-Oxley accounting firms cannot engage in consulting work for the clients they audit.
Our auditors felt too comfortable with us as “good, respectable human beings with high integrity.” We would socialize with our auditors by having so-called “three martini lunches” and we would invite them to attend Antar family functions. They believed we were pillars in our community as we gave large amounts of money to charity and were involved in a number of good community causes.
If anyone has ever seen the movie “The Devil’s Advocate” starring Al Pacino they would know that the devil’s favorite sin in vanity. The white collar criminal is equivalent to the devil. We took advantage of the vanity of our auditors.