What Is Barry Minkow's Fraud?

Barry Minkow started a carpet cleaning business in his garage at the age of 16. One year later, Barry decided that hid business does not bring him much profit and began his fraudulent activities. He was running false credit card charges on clients' cards and check kiting. However, he was able to commit fraud on a large scale, when he gathered enough of a balance sheet built off fraudulent transactions. His major crimes were perpetrated against banks and investors by committing financial statement fraud. Such activities enabled him to obtain cash through bank loans and investment funds. Barry had fixed assets on the balance sheet that were fictitious. However, his major falsification was from grossly overstated revenue from restoration projects. His carpet cleaning company had morphed into a restoration-remediation company seemingly overnight, which greatly increased his revenue without increasing transaction volume. In order to validate the contracts, he set up two shadow companies whose sole purpose were to provide proof that the contracts
George Greenspan, the sole practitioner who performed the audit, was making telephone calls and also performed confirmatory work regarding renting sites. However, by that time the renting site was willing to participate in Minkow’s fraudulent schemes. In addition, independent auditors have much fewer resources in terms of money to travel and, more importantly, time. Greespan was working on the engagement alone. He was reviewing paper documents manually, not soft files that auditors are able to manipulate and do analytics very quickly on like they are today. It was, most likely, just too much for one person to handle. I believe that Greespan should not be liable for the work performed. In addition, the first year of an audit contains a lot of simply learning the