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Accounting Fraud

Your Most Trusted Employee Is Your Biggest Fraud Risk

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If you’re an accountant cramming in your last CPE credits while reading this, Caleb Newquist has a message for you: “Have fun. You’re in for something.”

The host of Oh My Fraud just wrapped up 2025 with 26 episodes of financial fraud stories that share one depressing pattern: they were completely preventable. In episode 101, Caleb and co-producer Zach Frank sat down to recap a year that started with co-host Greg Kyte’s departure and continued with tales of embezzlement, gambling addictions, and presidential pardons.

The biggest takeaway? The person most likely to steal from you isn’t some sophisticated hacker. It’s the assistant who sets up your bank accounts, the business manager you’ve trusted for years, or the administrator who’s been ordering computers for decades.

When Your Interpreter Controls Your Bank Account

The year’s most talked-about fraud case involved baseball superstar Shohei Ohtani and his interpreter, Ippei Mizuhara. The setup was almost embarrassingly simple. Ippei handled everything when setting up Ohtani’s bank account during spring training in Arizona: the setup, the passcodes, and the access. Ohtani himself couldn’t access his own money. Neither could his business manager.

“Don’t let your assistant set up your account for you,” Zach emphasized during the recap. The only person who could touch that money was the interpreter who eventually stole from it.

The DOJ charging documents revealed desperate text messages between Ippei and his bookie. When the bookie suggested Ippei might be covering for Ohtani, Ippei insisted, “No, this was all me.” He made phone calls to the bank pretending to be Ohtani, claiming he was buying cars while actually funneling money to cover massive gambling debts.

Ippei is now serving time at Allenwood in Pennsylvania, after which he’ll be deported. Lionsgate TV and Stars are developing a series about the scandal, because apparently financial disasters go great with a side of popcorn.

The Business Manager Who Managed Beyoncé (Before the Fraud)

Episode 81 was the podcast’s most popular of the year, featuring an interview with Jonathan Todd Schwartz. Before stealing $7 million from Alanis Morissette, Schwartz managed finances for Beyoncé and Gwyneth Paltrow, back before they became the cultural forces they are today.

“Everyone loves hearing from the person who committed the crime and hearing why and how they committed the crime,” Zach noted. Schwartz’s story connected directly to another recurring theme of 2025: the devastating combination of gambling and drug addictions creating pressure that makes theft seem like the only solution.

Both the Ohtani and Morissette cases featured one person with total financial control and zero independent oversight. They’re failures of basic internal controls that any first-year accounting student could spot.

When Yale Lost $40 Million in Computers (And Nobody Noticed)

If celebrity cases seem distant from everyday fraud risk, consider Yale Medical School. An administrator within the finance function stole approximately $40 million in computer equipment over several years by simply keeping purchases under $10,000 to avoid triggering review thresholds.

“Forty million dollars should replace every computer at that entire school,” Zach pointed out. “Not just the medical school, like all of Yale.”

The university’s multi-billion dollar endowment meant these losses barely registered as statistical noise. As Caleb noted, Yale wasn’t exactly a sympathetic victim, “but that doesn’t mean you should steal $40 million worth of computers and sell them on the black market.”

The solution was painfully obvious. Omri from Routable (the podcast’s sponsor) summed it up in an earlier bonus episode: “A procurement process probably solves that problem.” Not revolutionary thinking; just basic purchasing controls that require someone other than the person ordering equipment to also receive and verify it.

The Columbus Zoo Plays Hardball

The Columbus Zoo case from episode 79 showed what happens when organizations decide to fight back. After executives were convicted of misspending and stealing funds, the zoo didn’t stop at criminal prosecution. They sued three executives to foreclose on their homes, determined to recover restitution.

The case came to light thanks to investigative reporting by the Columbus Dispatch, a reminder that journalism often serves as the last line of defense when internal controls fail. It’s a pattern that repeated throughout 2025: local reporters doing the unglamorous work of following paper trails and asking tough questions.

The Mental Gymnastics Olympics

Understanding how fraud happens mechanically is one thing. Understanding why people convince themselves it’s okay is another entirely.

Carlos Watson’s Ozy Media case pushed rationalization to its limits. Watson, who was convicted of fraud but subsequently pardoned by President Trump (with his restitution expunged), reportedly did “whatever it took” to make his business succeed. The SEC decided not to pursue further civil litigation after the pardon.

“The mental gymnastics that guy must have been going through in order to rationalize what he was doing,” Caleb observed. “Weird, but impressive.”

The Spotify streaming fraud case included another common justification: “Who am I really stealing from?” Perpetrators faking streams saw themselves taking from faceless tech giants rather than individual artists. The same logic appeared in cases involving fake invoices to Google and Facebook.

Where Are They Now? The 2025 Updates

Beyond the new cases, the year brought updates on ongoing sagas:

  • Mair Smyth, the con artist featured in Johnathan Walton’s episode was sentenced to four years in UK prison for mortgage fraud. Walton helped Northern Ireland authorities locate her. He flew to the UK for the trial but remains frustrated by what he sees as a light sentence for a career criminal.
  • First NBC Bank. A listener from New Orleans shared a local rumor that the bank’s massive Directors & Officers insurance policy allowed CEO Ashton Ryan to draw out his legal proceedings for seven years before finally being sentenced. He’s now in a prison infirmary.
  • Miriam Baer, the podcast’s first guest of 2025, left Brooklyn Law School to become Dean and President at California Western School of Law in San Diego.
  • The Rare Book Find. Caleb tracked down a copy of Australian con man Johann Friedrich Hohenberger’s ghost-written autobiography at a Maryland rare book store. When he apologized for taking months to complete the purchase, the seller reassured him, “In the rare books business, this was actually fast.”

What 2025 Taught Us (Again)

The year’s cases delivered a maddeningly consistent message: basic controls work, but only if you actually use them. Whether it’s a baseball star’s interpreter, a rock legend’s business manager, or a university administrator, the pattern never changes.

“The classics constantly get covered because people are going to constantly fall for them and commit those crimes,” Zach summarized. Ponzi schemes, embezzlement, and wire fraud are not going anywhere.

For accounting professionals, it’s crucial to maintain skepticism about single-person financial control. It’s not paranoia; it’s professional responsibility. Those boring internal controls you learned about in school are boring because they work.

Want the full conversation, including discussions about whether crypto is just one giant Ponzi scheme, why procurement departments exist, and how the hosts feel about having to do it all over again in 2026, listen to episode 101 of Oh My Fraud.

Because if you’re going to learn about fraud, you might as well learn from people who can make you laugh about it, even if the punchline involves prison sentences and presidential pardons.

The Auditors, Lawyers, and Bankers Who Watched a Fraud Unfold and Kept Billing Hours

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Two men stood at an LAX mailbox, passing an envelope between them like a hot potato.

“I don’t want to mail it. You mail it.”

“I don’t want to mail it. You mail it.”

Hours earlier, they’d flown from Chicago with no plan. Their mission was to intercept a confirmation letter before lawyers could verify lease terms with a customer. They’d arrived at the customer’s Los Angeles office just as a courier walked in ahead of them. While one man distracted the customer with lunch options, the other snuck into a nearby room, forged a signature, and faxed it back to the law firm.

Now they just had to mail the original back and catch their flight home. The envelope slipped from their hands and fell to the ground. They checked their watches—the flight was boarding. Without another word, they picked it up together and dropped it into the mailbox.

This scene captures exactly where OPM Leasing Services ended up. In a recent episode of Oh My Fraud, host Caleb Newquist traces how two childhood friends built one of America’s largest computer leasing companies, only to watch it collapse into a fraud worth more than $190 million.

Two Friends, One Dangerous Bet

Mordecai “Morty” Weissman and Myron Goodman went way back. Same Brooklyn yeshiva. Same college. By 1969, they were brothers-in-law when Myron married the sister of Morty’s wife. So when they started a business together in 1970 above a candy store in Brooklyn, it probably felt natural.

They called it OPM Leasing Services. The name supposedly stood for “Other People’s Machines.” But as Caleb points out, the interpretation that stuck was more cynical and ultimately more accurate: “Other People’s Money.”

In the early 1970s, if you were in the computer business at the enterprise level, there was one company that mattered: IBM. As Caleb puts it, “they were the only game in town.” These days, IBM is what he calls “the Norma Desmond of tech companies”—iconic but past its prime. Back then, they were creating the future.

OPM’s business model seemed straightforward. Borrow money to buy IBM mainframes. Lease them to corporations. Use the lease payments to service the loans and pocket the difference.

But Morty and Myron had a clever angle. While competitors wrote three- or four-year leases, OPM offered seven-year terms. The result was lower monthly payments that customers loved. As Caleb observes, “there’s never a shortage of price-conscious customers out there.”

The catch was that OPM required “hell or high water” clauses—lease payments had to be made no matter what. To sweeten the deal, customers could sublease computers back to OPM after three years, and OPM would re-lease them to someone else. If those payments didn’t cover the original amounts, OPM would eat the difference.

The entire model rested on one huge gamble: that IBM wouldn’t release better computers for seven years.

When Technology Refuses to Stand Still

Throughout most of the 1970s, the gamble seemed to pay off. OPM grew to 250 employees across 11 offices, including plush Manhattan headquarters. Their customer list read like a Who’s Who of American business: AT&T, Revlon, Polaroid, Merrill Lynch, Xerox, American Express, General Motors. Their biggest customer was the aerospace and defense giant Rockwell International.

Morty and Myron lived well. They settled into estates in Lawrence, Long Island. Myron decorated what the New York Times called his “baronial estate” with a disco and a small movie theater. He pledged $10 million to Yeshiva University and became its youngest trustee ever.

Competitors remained skeptical. Edward Czerny, president of the nation’s second-largest leasing company, said OPM was “going 180 degrees against what the industry was doing.” But as Caleb notes, skeptics don’t always get it right. People were skeptical of Amazon losing money for a decade. They thought automobiles would never replace horses.

Then came 1978.

IBM launched its Series 3000 computers, which were faster, smaller, and cheaper than anything on the market. Every big business wanted one, including OPM’s customers. As the New York Times reported, customers immediately started turning in their old computers. OPM had to accept “knock down rentals” for obsolete equipment, resulting in shortfalls of up to $40,000 per month on individual deals.

That same year, Morty and Myron purchased First National Bank of Jefferson Parish, Louisiana. Why would two computer leasing guys from New York buy a bank in Louisiana? As Caleb dryly notes, owning a bank might come in handy “for one reason or another, like for a check kiting scheme.”

The Desperate Descent

Check kiting exploits the “float,” or the days it takes checks to clear. You write checks between accounts with insufficient funds, timing deposits to create the appearance of money that doesn’t exist. Caleb calls it “the financial equivalent of the spinning plate routine.”

Those plates stayed airborne for six months before bank officials caught on. In March 1980, OPM pleaded guilty to 22 felonies and paid a $110,000 fine. “Virtually no one outside of Morty and Myron heard anything about it,” Caleb notes.

But the desperation only grew. Single computers became collateral for multiple loans at different banks, and they fabricated lease documents. In one example, OPM claimed monthly lease payments of $54,500 when the actual amount was $463. Documents described four IBM computers worth $3.1 million in Texas, when Rockwell’s records showed three pieces of equipment worth $20,000 in Los Angeles.

Judge Charles Haight Jr. later revealed the forgery technique. “Mr. Goodman would crouch under a glass table with a flashlight, and Mr. Weissman would trace the forged signatures.”

Warning signs accumulated. Business Week questioned OPM’s practices in 1978. Goldman Sachs resigned as their investment bank. But customers wanted to keep believing. When Edward Czerny showed the Business Week article to customers, he said, “most of them didn’t care.”

Everything unraveled in February 1981 when a routine inquiry discovered “rather poor forgeries” of a Rockwell executive’s signature. Within a month, lenders sued, alleging fraud exceeding $100 million. The final tally would reach $190 million from 19 lenders.

The Professionals Who Should Have Said No

The bankruptcy examiner’s report revealed a network of enablers who chose client relationships over professional responsibilities.

Lehman Brothers knew about the check kiting but never reported it. They continued representing OPM to lenders in “the best possible light,” downplaying concerns when convenient.

Fox and Company, the audit firm, “yielded to pressure to certify materially false and misleading financial statements.” In 1976, they initially drafted statements showing large losses. Myron Goodman told the audit partner to “get back to the grindstone and try to figure out a way to show a profit.” Because the firm was being paid by the guy yelling at them, that’s exactly what they did, using what the report called “questionable accounting techniques.”

Singer Hutner Levine and Seeman, OPM’s law firm, took the brunt of the blame. Partner Andrew Reinhard, Myron’s close friend, allegedly knew about the fraud as early as 1978. The report called him “a reluctant but knowing accomplice,” though he was never charged.

The story of John Clifton, OPM’s internal accountant, shows how badly the system failed. Clifton found evidence of bogus Rockwell leases, consulted a lawyer, turned the information over to Singer Hutner Levine & Seeman, and quit, hoping they’d handle it. His letter arrived while Myron Goodman happened to be at the firm’s offices making a “partial confession of unspecified past wrongdoing.” Goodman intercepted the letter, and the specifics stayed hidden.

Singer Hutner Levine & Seeman continued working for OPM, closing more than $70 million in fraudulent loans before finally resigning in September 1980. The bankruptcy report said they’d gotten “the worst possible advice about its ethical obligations.”

The Reckoning and the Lessons

OPM filed for bankruptcy in March 1981. By December, five executives had pleaded guilty to defrauding lenders. A year later, Morty and Myron pled guilty and received 10 and 12 years, respectively.

Judge Haight didn’t hold back. OPM was “basically insolvent” almost from the start and “survived by means of just fraud and bribery.” The frauds were “without parallel in the history of this court.”

Caleb draws several lessons from the wreckage:

  • Unorthodox business models deserve scrutiny. They’re not automatically fraudulent. After all, plenty of skeptics have been wrong. But when a company’s entire advantage rests on assumptions that defy common sense, like technology standing still for seven years, that’s worth examining.
  • Desperation breeds fraud. “Fraud is often a temporary solution to a problem,” Caleb observes. People convince themselves it’s just this once, they’ll pay it back, everything will be fine. “It’s almost never fine.”
  • “Too good to be true” still applies. OPM’s customers got deals nobody else could match. Even when Business Week raised questions, “most of them didn’t care.” People don’t want to stop believing they’re getting a great deal.
  • Professional enablers make large-scale fraud possible. Banks, auditors, and lawyers “didn’t say no to their client. They were conflicted in many ways and allowed things to go on for too long.”

And finally, Caleb calls the check kiting “the dumbest fraud on Earth.” There’s only one way it ends. Either you stop and face the consequences, or “money falls out of the sky.” The sky rarely cooperates.

For accounting professionals, the pressure to find creative solutions hasn’t changed since 1978. When clients pay your fees and threaten to fire you if they don’t like your answers, the temptation is real. The OPM case reminds us that professional independence is the only thing standing between aggressive accounting and criminal fraud.

“If your plan B is kiting checks, then plan A might need some work,” Caleb concludes: 

Listen to the full episode for more details about this spectacular fraud, including the thorny attorney-client privilege issues that emerged from Singer Hutner Levine & Seeman’s conduct. It’s a story that proves some lessons in fraud never get old; they just get more expensive.

Your Voice Assistant Works Today Thanks to Fraudsters Who Destroyed a $10 Billion Company

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February 1998. Bill Gates, the richest man in the world, walks up the steps of a Brussels government building. He turns to wave at someone behind him, smiling as he faces forward again. Then it happens: a cream pie hits him square in the face. Then another. And another.

Just days earlier, Microsoft had invested $45 million in Belgian speech recognition company Lernout & Hauspie. The pie-throwing activist who orchestrated this pastry protest later described his feelings as “the exhilaration of victory, exquisite pleasure.” But the real mess Microsoft had just stepped into would prove far stickier than whipped cream.

In this episode of Oh My Fraud, host Caleb Newquist unravels one of tech history’s most fascinating fraud cases. It’s a story where revolutionary innovation and elaborate deception became so intertwined that even today, the technology you speak to through Siri carries the DNA of a spectacular Belgian scandal.

Two Guys, One Vision: Kill the Keyboard

In late 1987, two West Flanders natives started what seemed like an impossible mission: eliminating the computer keyboard. Jo Lernout, the visionary salesman, was a former teacher turned MBA who’d worked his way through sales positions at Merck and Wang Laboratories. Paul Hauspie was the detail-oriented worker type who’d inherited his father’s accounting firm but spent his spare time developing software.

Together, they founded Lernout & Hauspie Speech Products (L&H) in Ypres. While we take voice assistants for granted today, in the late 1980s, the idea that computers could be operated by voice alone was revolutionary.

The technology was groundbreaking. By 1997, their products could recognize more words than a standard collegiate dictionary. The system could even handle tricky sentences like “Please write a letter right now to Mrs. Wright. Tell her that two is too many to buy.” For the late 1990s, this was nothing short of miraculous.

But like many startups, the early years were brutal. Lernout and Hauspie proved resourceful in securing financing to keep the lights on, including from local residents and the Flanders government. But year after year, they plowed money into research and development while making virtually no revenue.

When Your Hometown Believes in You (Maybe Too Much)

The company’s roots ran deep into West Flanders soil. One account described it as “a company set up by West Flanders natives with West Flanders capital and a West Flanders mentality: work hard and smart, take well-calculated risks.”

Lernout and Hauspie genuinely wanted their success to benefit their home region. They helped create the Flanders Language Valley, convincing the government to make Ypres a tax haven for tech companies. Research grants flooded the area, spawning new businesses.

In 1994, when L&H needed more funding, they tapped into the locals with something called automatic convertible bonds. These were essentially IOUs that would turn into stock if the company ever went public. Through sheer personal will and persuasion, Lernout and Hauspie raised money from 600 small Flemish investors, each contributing an average of $33,000. These weren’t venture capitalists; they were farmers, grocers, and small traders betting their savings on their hometown heroes.

The duo even approached a local pig farmer for investment. After hearing their pitch, he produced a half-eaten bank savings certificate worth about $60,000 that he’d salvaged after it was accidentally fed to his pigs. The farmer said if the bank would accept the damaged certificate, he’d let them invest the funds. After much convincing, the bank took it.

The technology started attracting serious attention. AT&T invested $10 million in 1993. Intel put in $30 million. Then came Microsoft with $45 million in early 1998, with their chief technology officer declaring they were “taking a big leap forward in transforming that vision into a reality.”

The company went public on the Nasdaq in November 1995 at $12.50 per share, despite skepticism from analysts who worried the technology was still too primitive. But beneath this genuine innovation and community support, troubling signs were already emerging.

The Art of Moving Money in Circles

As L&H struggled to generate revenue, it constructed an increasingly complex web of related-party transactions to maintain the illusion of explosive growth.

The centerpiece was the Flanders Language Valley Fund (FLV), co-founded and advised by L&H’s founders. This venture fund took a 49% stake in the Belgian unit of Quarterdeck Corporation, which just happened to be L&H’s largest customer, accounting for 30% of its revenue.

The new CEO of Quarterdeck was Gaston Bastien, a Belgian executive infamous for rushing Apple’s Newton operating system to market to avoid losing a wine cellar bet. The result was faulty handwriting recognition that disappointed consumers. Now he was running L&H’s biggest customer, which was partially owned by a fund controlled by L&H’s founders.

L&H also created something called Dictation Consortium to keep expensive R&D costs off its books while somehow claiming $26.6 million in revenue from this entity in 1996 and 1997. Who owned 61% of Dictation Consortium? The FLV fund. The other investors, according to Lernout, were “five or six people who were anonymous because they were rolled up into companies that were organized in Luxembourg and the British Virgin Islands.”

Even Microsoft threw $3 million into the FLV fund alongside their $45 million L&H investment, apparently missing these red flags entirely.

The Asian Revenue Miracle That Wasn’t

The real magic happened in Asia. In 1999, Bastien (now L&H’s CEO) claimed Asian sales had exploded to more than $150 million versus just $10 million the year before. Korean revenue jumped from $97,000 to $58.9 million in a single quarter—a mind-boggling 60,000% increase. Singapore contributed $80.3 million in 1999 after generating less than $300,000 the previous year.

But here’s where it gets weird. Singapore sales then mysteriously plummeted to $501,000 in the first quarter of 2000. Bastien had perfectly reasonable explanations for everything, of course. The company had sold licenses in Singapore that couldn’t be sold again. Korea had opened up thanks to an acquisition. Everything was great.

When Wall Street Journal reporters investigated these miraculous Asian numbers in August 2000, they uncovered a house of cards. Some companies that L&H identified as Korean customers said they did no business with the company at all. Others said their purchases were much smaller than L&H claimed. Only one customer would go on record confirming the numbers were accurate.

One major customer, Hung-chang Lin, supposedly doing between $5 million and $10 million in business with L&H, had a CEO who didn’t even know about the joint venture that was allegedly purchasing the products. When confronted about the discrepancies, L&H’s contact at Hung-chang admitted they had lied about everything.

The scheme involved creating sales agreements that let “customers” defer paying licensing fees until they made money from L&H’s products. The company booked these as sales anyway, then made deals with banks where the banks would take over the receivables in exchange for cash. L&H claimed these were sales of receivables, but they were essentially disguised loans.

The $100 Million That Vanished

The drama reached its peak in November 2000 when new CEO John Duerden flew to Korea to retrieve $100 million the company desperately needed to avoid bankruptcy. After waiting an hour, Duerden was grilling the Korean unit head about the missing money when three men kicked open the door, shouting and gesticulating before dragging the unit head out of the room.

Duerden fled the country, later telling the Journal, “The only thing I know for certain is that the money is not in the bank accounts.”

The end came officially on November 9, 2000, when L&H announced it would restate its financial filings due to “errors and irregularities.” The company admitted its third-quarter revenue would be about $40 million less than reported. Lernout and Hauspie resigned as executive co-chairmen, though they kept 30% of the voting rights. Weeks later, the company filed for bankruptcy. The stock that had soared to $72.50 in March 2000 (a 2,500% increase from its IPO price) was worthless. Ten billion dollars in market value had evaporated.

Justice came slowly. In September 2010, a full decade after the collapse, Lernout, Hauspie, and Bastien were found guilty in Belgium. Lernout and Hauspie each received five-year sentences with two years suspended. In December 2021, a Belgian court awarded 4,000 shareholders €655 million—but as one news source noted, “the compensation ruling is largely symbolic as the six former board members don’t have the financial means with which to pay it.”

The Technology Lives On (Under New Management)

Lernout maintains to this day, “The technology was real and great.” And he’s not wrong.

After ScanSoft acquired L&H’s assets from bankruptcy in 2001, the speech recognition technology began a remarkable journey. ScanSoft merged with Nuance Communications in 2005. By 2013, Nuance’s natural language processing algorithms, which were built on L&H’s foundation,  powered Apple’s Siri. In spring 2021, Microsoft acquired Nuance for $19.7 billion.

The same technology that L&H claimed would revolutionize computing actually did—just not under their ownership. The speech recognition in your phone and the voice assistant in your home all carry the DNA of a company that destroyed itself through fraud despite having a product that actually worked.

Lessons for the Number Crunchers

For accounting professionals, the L&H case offers a masterclass in red flags:

  • Circular related-party transactions: When a company’s venture fund invests in its own customers, the revenue isn’t real
  • Explosive geographic revenue shifts: A 60,000% increase should trigger every skeptical bone in an auditor’s body
  • Anonymous investors in tax havens: Luxembourg and the British Virgin Islands aren’t known for transparency
  • Revenue recognition without cash: Booking sales to customers who don’t have to pay isn’t revenue; it’s fiction

As Newquist emphasizes, “It isn’t enough just to have a great product or just great tech. If you cook the books, it doesn’t matter how good your product is. Bad numbers are bad numbers, and people get real upset about bad numbers.”

The L&H story proves that no amount of revolutionary technology can overcome the fundamental truth of financial reporting: when you cook the books, everyone gets burned except, ironically, the technology itself, which lives on in every voice command you give your phone today.

Listen to the full Oh My Fraud episode to hear Newquist’s complete investigation into this cautionary tale. CPAs can earn free NASBA-approved CPE credits through the Earmark app while learning these crucial fraud detection lessons. And remember, if you win a wine cellar on a bet, make that idiot pay up.

Two Stories That Expose How Accounting Credentials Get Weaponized for Fraud

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What happens when professionals look the other way? In this episode of The Accounting Podcast, Blake Oliver and David Leary dive into two jaw-dropping cases that show what happens when accounting credentials get tangled up with crime and fraud.

First, they discuss a Wall Street Journal investigation into Jeffrey Epstein’s inner circle that somehow flew under the radar until recently. Then there’s the startup founder who allegedly blew through $2.2 million in investor money on her wedding while pretending to be a CPA. Both stories raise serious questions about trust and accountability.

Epstein’s Financial Fixers

“Epstein wasn’t a one man operation,” Blake reads from the Wall Street Journal investigation. The convicted sex offender had help from his CPA, Richard Kahn, and lawyer, Darren Indyke, who kept his financial machine running for years.

The story starts with a letter Kahn wrote in 2016. He described a “very healthy marriage” between two women, saying he’d personally witnessed their passion for each other during meetings. He even had it notarized. But the marriage was fake. Epstein had pressured an American woman he’d abused into marrying an Eastern European woman to help with immigration papers. Kahn’s letter gave the scheme legitimacy.

David was baffled. “Has any other CPA on the planet been asked to write letters like this before for an immigration proceeding?”

Good question. This wasn’t normal accounting work.

Kahn became Epstein’s in-house accountant in 2005 after Epstein tried out three candidates from a recruiting firm. By 2008, Kahn and another accountant had set up HBR Associates, a firm with only one client: Jeffrey Epstein. Their office was a one-bedroom apartment in Epstein’s building, right across the hall from lawyer Indyke’s office.

Both men provided way more than typical professional services. They managed payments to women in Epstein’s orbit, covering doctor’s visits and rent. When banks cut Epstein off, they found new places to open accounts. They withdrew cash in amounts under $10,000 to avoid reporting requirements.

The money tells its own story. Between 2011 and 2019, Epstein paid Indyke over $16 million and Kahn more than $10 million.

“That’s a lot of money,” Blake notes. “That’s more money than you would expect to receive for those kinds of services.”

Both men claim they didn’t know about Epstein’s crimes. They say they never witnessed abuse and no one reported it to them. But neither was questioned by federal authorities during the Epstein-Maxwell investigation.

“That is insane to me,” David says. “How do you not question the CPA and the lawyer? That’s the inner circle.”

“This is the sort of thing that makes me think the conspiracy theorists are right,” Blake responds. “It just doesn’t compute.”

Now, Kahn and Indyke control Epstein’s estate as co-executors, managing assets worth over $100 million. They’re also beneficiaries of a trust that will collect whatever’s left after all claims are settled—potentially tens of millions each.

The Fake CPA’s $13 Million Con

The second story hits closer to home for the accounting profession. Shiloh Luckey founded a startup called ComplYant App, Inc. in 2019, positioning it as a tax compliance app for small businesses. She raised $13 million from venture capitalists, including a firm co-founded by David Sacks, cohost of the All-In podcast.

Luckey told investors the company was earning $250,000 in monthly recurring revenue. The actual number was $250. Not thousands. Just $250. The company averaged fewer than four new subscribers per month despite having about 50 employees.

Luckey allegedly represented herself as a CPA even though she wasn’t one. And according to the FBI and SEC, she spent $2.2 million of investor money on personal stuff, including a Caribbean wedding, a house, Super Bowl tickets, and luxury trips to Aspen, Miami Beach, Turks and Caicos, and Lisbon.

When ComplYant shut down in 2023, those 50 employees lost their jobs. They waited seven weeks for final paychecks and discovered their 401(k) contributions were missing.

The kicker? Luckey is currently on TikTok giving financial advice to nearly 24,000 followers. She’s even launched a new startup called HabitLoop, described as a digital financial assistant.

Other News From the Episode

The hosts also covered several other developments in accounting and finance, including:

  • Cannabis businesses can finally deduct regular business expenses now that marijuana is being reclassified as a Schedule 3 drug. Previously, they faced effective tax rates of 60-80% because they couldn’t deduct basic costs like rent and payroll.
  • Trump announced a new Tech Force that will hire 1,000 people to build AI infrastructure for the federal government, working with companies like Microsoft and Amazon.
  • Intuit partnered with Circle to integrate stablecoin payments into QuickBooks, potentially cutting out traditional banking rails for payments.
  • The IRS Criminal Investigations unit identified over $10 billion in financial crimes this year, including $4.5 billion in tax fraud.
  • A lawyer is suing the IRS to recognize her golden retriever as a tax dependent, arguing the dog meets every requirement except being human.

The Bigger Picture

What’s striking about both main stories is how they expose vulnerabilities in the accounting profession’s trust-based system. In one case, a real CPA operated at the center of a criminal enterprise while claiming ignorance. In the other, someone falsely claimed CPA credentials to defraud investors.

As Blake pointed out about the Epstein investigation: “It just doesn’t compute.”

These stories are reminders that the accounting profession’s credibility can be weaponized, either by those who hold credentials and choose to look the other way, or by those who fake credentials to exploit the trust that comes with them.

Listen to the complete episode of The Accounting Podcast for more, including details about AI-powered invoice fraud and why white-collar workers are getting nervous about their job prospects.

Ancient Fraudsters Wrote the Playbook Modern White-Collar Criminals Still Follow

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Picture a man frantically sawing through the bottom of his own ship in the middle of the Mediterranean Sea. Passengers rush below deck to find him red-handed, hole half-cut, wood shavings floating in the rising water. A chase ensues. The would-be fraudster, cornered and desperate, hurls himself into the ocean rather than face justice.

This isn’t a Netflix true crime series; it’s a 2,300-year-old insurance fraud that went spectacularly wrong.

In the latest episode of Oh My Fraud, host Caleb Newquist takes listeners on a journey through time to explore some of history’s earliest recorded financial frauds. Fresh from his European travels (with a particular fondness for Budapest’s goulash and Vienna’s coffeehouse culture), Caleb digs into ancient schemes that prove creative accounting isn’t a modern invention.

When Rome Literally Auctioned Off the Throne

The Year of Five Emperors in 193 reads like a corporate governance nightmare. It started with Emperor Commodus getting assassinated on New Year’s Eve 192 and creating what Caleb calls “quite an exciting start to the year 193.”

His successor, Pertinax, took the throne with big plans to reform Rome’s finances, which Commodus had left in ruins. Think of him as the turnaround CEO brought in after a spending spree. His first move was cutting the donativum, the cash gifts emperors traditionally paid to the Praetorian Guard when taking power.

Bad idea. The Praetorian Guard, Rome’s elite military unit responsible for protecting the emperor, didn’t appreciate their bonus getting slashed. When Pertinax’s follow-up offers still fell short, around 300 guards stormed the palace. After what Caleb imagines as “a very brief conversation,” they assassinated him. His entire reign: 87 days.

What happened next defies belief. The Praetorian Guard auctioned off the throne to the highest bidder. Marcus Didius Julianus won and became emperor, essentially purchasing the Roman Empire like buying a company at auction. But word quickly spread about how he got the throne. Three influential generals rebelled and claimed it for themselves. Within 66 days, Julianus was assassinated, ending one of the shortest reigns in Roman history.

The parallels to modern corporate fraud are hard to miss. We’ve seen executives obtain positions through financial manipulation and insider dealing. The donativum system itself mirrors modern bonus structures that create dangerous dependencies. When those bonuses get cut, whether in ancient Rome or on Wall Street, the backlash can destroy companies and careers.

The World’s First Insurance Fraud Goes Sideways

If the Roman story shows political corruption at its worst, ancient Greece produced the world’s first recorded insurance scam in 360 BCE. Meet Hegestratos, a sea merchant with a plan that was elegant in its simplicity and spectacular in its failure.

To understand the scheme, you need to understand bottomry loans. Back then, sea travel was genuinely terrifying. Ships sank all the time. Bottomry allowed merchants to borrow money using their ship and cargo as collateral. If the vessel reached its destination, the merchant sold the cargo, repaid the loan with interest, and kept the profit. If the ship sank, the lender ate the loss. It was proto-insurance built on trust that merchants wouldn’t deliberately sink their own vessels.

Hegestratos saw opportunity where others saw protection. He and his coconspirator Zenothemis took out a bottomry loan for a grain shipment from Syracuse to Athens. But instead of using the money properly, they immediately sent it to Massalia (modern-day Marseille). They planned to sail for a few days, scuttle the ship, claim tragic loss at sea, and keep both the loan money and the grain.

Two or three days into the voyage, Hegestratos decided it was showtime. He snuck below deck and began cutting a hole in the ship’s hull. Meanwhile, Zenothemis stayed topside, supposedly creating a diversion.

But as Caleb hilariously reimagines it, Zenothemis was terrible at his job. Picture him “fake coughing every time there’s a loud noise from down below” while other passengers, who already didn’t like him, grew suspicious. The cutting was loud. The diversion was pathetic. Soon, passengers rushed below to find Hegestratos literally caught red-handed.

What followed was pure slapstick. Caleb envisions it as “one of those Keystone Cops chase scenes with Yakety Sax playing behind it.” Hegestratos flees through the ship, passengers in hot pursuit, ending with the fraudster hurling himself into the Mediterranean. As the ancient orator Demosthenes recorded, “Thus miserable as he was, he met a miserable end as he deserved, suffering the fate which he proposed to bring about for others.”

You’d think watching your partner drown would inspire some soul-searching. Not Zenothemis. With remarkable audacity, he tried to continue the fraud. He actually asked the crew to sink the ship anyway, arguing that “all hope was lost.”

When that failed and they limped to shore at Cephallenia, there was a dispute. Protus, the “supercargo” responsible for the grain reaching Athens, wanted to continue there. Zenothemis insisted they go to Massalia, claiming connections to the deceased fraudster and the original lenders. The local magistrates sided with Protus. They ordered the ship to Athens, where Zenothemis filed lawsuits claiming ownership of the grain.

The Mystery Ending That Still Bugs Historians

The frustrating part of this story is we don’t know how it ended. The original documents were “mutilated,” leaving only 32 paragraphs that “yielded no satisfactory sense” about the final verdict.

This uncertainty has sparked debate for centuries. John M. Zane’s 1925 Michigan Law Review analysis offers a twist: maybe Zenothemis wasn’t a coconspirator but another victim. Zane points out that Zenothemis had no access to the redirected money, no legitimate claim to sell the cargo, and nothing to gain from the ship sinking. Maybe he desired to return to Massalia because he genuinely wanted to collect insurance to repay his lender friends.

Zane even suggests that if it went to trial, the rich lenders probably lost because Athenian juries were populist and unsympathetic to wealthy plaintiffs, a dynamic that sounds familiar to anyone following modern white-collar crime prosecutions.

Whether Zenothemis was a fraudster or a fool, the case establishes a principle fundamental to financial law: fraudulent contracts are void. This ancient precedent echoes through centuries of case law and continues protecting victims today.

Ancient Schemes, Modern Lessons

As Caleb notes, there are no new frauds, just new fraudsters. The schemes evolved from bottomry loans to blockchain, from cutting holes in ships to cutting corners in compliance, but the patterns remain:

  • Exploiting trust. Bottomry loans worked because people trusted merchants wouldn’t sink their own ships, just as modern systems assume executives won’t tank their own companies
  • The coconspirator problem. Hegestratos learned fatally that complex fraud needs help, yet every additional conspirator multiplies detection risk
  • Documentation dilemmas. Even in 360 BCE, fraudsters needed false paperwork and had to manage competing claims
  • Greed override. Both cases show how easy money overrides rational risk assessment

Caleb’s observation about creating diversions particularly resonates: “You cannot have any weak links in your conspiracy. Don’t think you can just let some hack create a half-assed diversion for you.” His reimagining of Zenothemis’s pathetic distraction attempts—fake coughing to cover ship-cutting sounds—reminds us that fraud often fails not in conception but in execution.

For CPAs and fraud examiners, these aren’t just historical curiosities; they’re training exercises in pattern recognition. The executive inflating revenues for bonuses follows Julianus’s playbook. The insurance fraudster staging accidents mirrors Hegestratos’s scheme. Understanding these patterns helps professionals spot red flags before they become scandals.

The Timeless Blueprint of Financial Deception

From emperors buying their positions to merchants attempting insurance fraud, these ancient cases reveal that financial deception is as old as commerce itself. The schemes involved ships instead of spreadsheets, cargo instead of cryptocurrency, but the underlying patterns of exploiting trust, creating false documentation, and letting greed override judgment haven’t changed.

For today’s accounting professionals, these historical frauds serve as cautionary tales and educational tools. That executive oddly eager to bypass controls? They’re following Julianus’s playbook. That unusual insurance claim with convenient timing? It echoes Hegestratos’s bottomry loan scheme. The vendor insisting on redirecting payments? They’re pulling a move as old as Massalia.

What makes these ancient frauds valuable is their stripped-down simplicity. Without modern financial instruments and digital smokescreens, we see the raw mechanics of deception. The Praetorian Guard’s throne auction isn’t fundamentally different from a board being bought off; it’s just more honest about the transaction.

Listen to the full episode of Oh My Fraud to hear Caleb bring these ancient frauds to life with his signature blend of historical detail and irreverent humor. Because sometimes the best way to understand today’s financial crimes is to study the fraudsters who wrote the original playbook over two millennia ago.