On March 3rd 2009, the Fraud Examination Team, a department of the Bureau of Fraud Examination, received a call from Anton Valukas, chairman of the Chicago law firm Jenner & Block LLP. In early 2009, a bankruptcy court in New York assigned Valukas to investigate and report on the causes of Lehman Brothers Holdings Inc (LBHI)[1]’s 2008 bankruptcy. During this investigation, Valukas came across “Repo 105” and “Repo 108” transactions that Lehman used from 2001 to 2008. A “repo” or repurchase agreement is a form of short-term borrowing, whereby one party agrees to temporarily “sell” securities to another party at a specified price, while also committing to repurchase them at a future date, and at a usually higher preset price by the same buyer. While “repo” transactions are legal and are frequently used by investment banks as a means of obtaining short-term financing, Valukas stated that given the period of the fiscal year when these transactions were mostly conducted, as well as how Lehman recorded these transactions, he believed that Lehman solely utilized “Repo 105” and “Repo 108” to manipulate financial data and to make the firm’s true financial condition appear better than it actually was. The Fraud Examination Team performed a fraud examination based on the initial predication by bankruptcy examiner, Anton Valukas. The fraud examination consisted of conducting an audit and administering voice stress analysis and polygraph tests to former Lehman executives. 1. The use of at least two (2) methods of investigations that differs from those of the actual fraud case. (Assuming that you are the investigator) that you would have used.
On March 3rd 2009, the Fraud Examination Team, a department of the Bureau of Fraud Examination, received a call from Anton Valukas, chairman of the Chicago law firm Jenner & Block LLP. In early 2009, a bankruptcy court in New York assigned Valukas to investigate and report on the causes of Lehman Brothers Holdings Inc (LBHI)[1]’s 2008 bankruptcy. During this investigation, Valukas came across “Repo 105” and “Repo 108” transactions that Lehman used from 2001 to 2008. A “repo” or repurchase agreement is a form of short-term borrowing, whereby one party agrees to temporarily “sell” securities to another party at a specified price, while also committing to repurchase them at a future date, and at a usually higher preset price by the same buyer. While “repo” transactions are legal and are frequently used by investment banks as a means of obtaining short-term financing, Valukas stated that given the period of the fiscal year when these transactions were mostly conducted, as well as how Lehman recorded these transactions, he believed that Lehman solely utilized “Repo 105” and “Repo 108” to manipulate financial data and to make the firm’s true financial condition appear better than it actually was.
The Fraud Examination Team performed a fraud examination based on the initial predication by bankruptcy examiner, Anton Valukas. The fraud examination consisted of conducting an audit and administering voice stress analysis and polygraph tests to former Lehman executives.
1. The use of at least two (2) methods of investigations that differs from those of the actual fraud case. (Assuming that you are the investigator) that you would have used.
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