1) In the years that the Crazy Eddie story occurred, a large amount of retail transactions were conducted by cash or check, whereas today these retail sales would primarily be paid by debit or credit card. Also, during the Crazy Eddie years, internet shopping was not available. Explain why the Crazy Eddie story would be unlikely today. 2) Consider the difference between asset misappropriation crimes and financial statement fraud. List at least 6 different fraud schemes conducted at the Crazy Eddie business and identify whether each one is either asset misappropriation, financial statement fraud, or other fraud types. 3) Identify by year ranges three different time periods when the Crazy Eddie primary fraud strategy changed. A) What was the primary fraud strategy for each period you have identified. B) List whether the company was public (traded on a stock exchange) or private during each of the three periods you have identified. C) Describe the strategy employed when the “skim” was reduced each year, and how did this strategy increase the initial offering price at which the stock could be sold? 4) For each of the primary fraud periods you identified in question 3 above, who were the primary victims of the crimes? You may list more than one type of victim for each period. 5) Relist several of the fraud schemes you have identified above, and for each one, what were the symptoms that could have been detected for each fraud scheme. Why did auditors not detect this fraud earlier?
1) In the years that the Crazy Eddie story occurred, a large amount of retail transactions were conducted by cash or check, whereas today these retail sales would primarily be paid by debit or credit card. Also, during the Crazy Eddie years, internet shopping was not available. Explain why the Crazy Eddie story would be unlikely today.
2) Consider the difference between asset misappropriation crimes and financial statement fraud. List at least 6 different fraud schemes conducted at the Crazy Eddie business and identify whether each one is either asset misappropriation, financial statement fraud, or other fraud types.
3) Identify by year ranges three different time periods when the Crazy Eddie primary fraud strategy changed. A) What was the primary fraud strategy for each period you have identified. B) List whether the company was public (traded on a stock exchange) or private during each of the three periods you have identified. C) Describe the strategy employed when the “skim” was reduced each year, and how did this strategy increase the initial offering price at which the stock could be sold?
4) For each of the primary fraud periods you identified in question 3 above, who were the primary victims of the crimes? You may list more than one type of victim for each period.
5) Relist several of the fraud schemes you have identified above, and for each one, what were the symptoms that could have been detected for each fraud scheme. Why did auditors not detect this fraud earlier?
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