Missing Money?

Posted Jan 31, 2023

In November 2022, one of the most popular crypto-exchanges, FTX, collapsed and lost more than $8 billion of customers’ money (Chow). While this still pales in comparison to Bernie’s $65 billion Ponzi scheme (Yang), FTX’s total effect on the crypto currency industry is estimated to be in the neighborhood of $2.2 trillion (Bambrough). 

$2.2 Trillion. With a capital T. Let’s put that into perspective: it would take you over 602 years spending $10 million each day before you reached $2.2 trillion. 

Let’s not forget other memorable frauds committed in 2022 – Biogen agreeing to a $900 million settlement for Medicare Advantage fraud (Liebman), Zelle being plagued with over $213 million worth of fraudulent transactions that the banks claim no responsibility for (Cowley), the Minnesota nonprofit Feeding Our Future’s $250 million fraud against the U.S. Federal Child Nutrition Department (Liebman), and China’s bank scandal in which bank employees colluded with gang members to steal over $5.9 billion from rural Chinese customers (Liebman). 

You don’t have to look far to find examples of corporate fraud. The Association of Certified Fraud Examiners in their “Occupational Fraud 2022: Report To The Nations,” estimates that organizations lose about 5% of their annual revenue to fraud and the numbers are growing (Dorris). In their analysis of 2,110 fraud cases from 133 countries, they calculated median losses of over $400 thousand per occurrence in both the real estate and wholesale trade industries (Dorris).   

You can hang your head in sorrow, or you can do what I do, which is to view this as a wonderful opportunity for our students to help make the world a better place. Otterbein’s Department of Business, Accounting, and Economics educates students on how to prevent and detect fraud in organizations. 

Often, fraud is able to be committed because individual employees have limited understanding about how an organization operates as a whole. Our MBA students delve into understanding the entire organization – marketing, accounting, operations, and organizational behavior to name a few. Ethics are discussed throughout a students’ entire program, and we offer specific courses focused on leadership and accounting fraud.   

Because fraud will always be a part of life, we have the moral responsibility to provide our students with the knowledge and resources to reduce fraud before it becomes a quadrillion-dollar event being reported. 

Kurt W. Lykins, MBA, CPA, CFP® 

MBA Graduate Director 

Works Cited 

Bambrough, Billy. “’Dot-Com Era on Steroids’ – Here’s How Bad the $2.2 Trillion Bitcoin and Crypto FTX Price Crash Could Get.” Forbes, Forbes Magazine, 24 Nov. 2022, https://www.forbes.com/sites/billybambrough/2022/11/23/dot-com-era-on-steroids-heres-how-bad-the-22-trillion-bitcoin-and-crypto-ftx-price-crash-could-get/?sh=2b080fe45cc8. 

Chow, Andrew R. “Where Did FTX’s Money Go? Crypto Investigators Offer New Clues.” Time, Time, 21 Dec. 2022, https://time.com/6243086/ftx-where-did-money-go/. 

Cowley, Stacy, and Lananh Nguyen. “Fraud Is Flourishing on Zelle. the Banks Say It’s Not Their Problem.” The New York Times, The New York Times, 6 Mar. 2022, https://www.nytimes.com/2022/03/06/business/payments-fraud-zelle-banks.html. 

Dorris, Bruce. “ACFE Report to the Nations: 2022 Global Fraud Study.” 2022 ACFE Report to the Nations, Association of Certified Fraud Examiners, 2 Apr. 2023, https://legacy.acfe.com/report-to-the-nations/2022/. 

Gura, David. “5 Major Revelations about the Collapse of Crypto Giant FTX.” NPR, NPR, 23 Nov. 2022, https://www.npr.org/2022/11/23/1138881426/ftx-sam-bankman-fried-bankruptcy-crypto-cryptocurrency-collapse. 

Liebman, Jennifer. “5 Most Scandalous Fraud Cases of 2022.” Fraud Magazine, Association of Certified Fraud Examiners, https://www.fraud-magazine.com/article.aspx?id=4295020061. 

Yang, Stephanie, and Grace Kay. “Bernie Madoff Died in Prison after Carrying out the Largest Ponzi Scheme in History – Here’s How It Worked.” Business Insider, Business Insider, 14 Apr. 2021, https://www.businessinsider.com/how-bernie-madoffs-ponzi-scheme-worked-2014-7.