How’s this for a creative scheme? If you are accused of having a banned drug in your bloodstream, create a website that offers an innocent sounding topical cream and then claim that you bought the cream from that site and used it not knowing it contained any bad stuff.
I don’t discuss sports here, but fabricating a website is too good a story to pass up. So here we go…
Giant’s outfielder Melky Cabrera is under a 50 game suspension for using a banned substance.
At the hearing to consider this case, his defense was that he saw a topical cream advertised at a website and bought it. He did not know it had any banned substances in it. That is the reason he tested positive. The unintentional use of a banned substance would be plenty of reason to lift the suspension.
Only one little problem…
The advertisement on the website was fabricated. The website, along with two others, was controlled by a “paid consultant” who was working for Cabrera’s agent.
The consultant bought three websites, reportedly for $10,000. He added a banner headline and a product page for a topical cream. In the hearing, Cabrera said those were the advertisements he had seen, thus resulting in unintentional use.
The scam fell apart quickly. The paid consultant has now been banned from all MLB clubhouses. The suspension is in place. The player is under investigation by the FDA. News reports suggest the DEA and FTC might be interested. I hope so.
Here are some news reports for further details, all from the New York Daily News:
- Exclusive: Daily News uncovers bizarre plot by San Francisco Giants’ Melky Cabrera to use fake website and duck drug suspension
- MLB bans Melky Cabrera associate Juan Nunez, who builds bogus website in plot to help Giants All-Star dodge 50-game testosterone suspension
- Melky Cabera’s phony website scam leads MLB investigators to Dominican Republic
Why is this of interest for auditors?
Auditors need to look at frauds and learn from them. It’s also quite entertaining.
I would have never thought about creating a fake website to support a scheme. Fake documents, yes, but not a website.
Can an auditor be expected to identify fabricated paper documents? No. However, if we are aware of the concept, we can keep our eyes open. If we keep that in the back of our mind, we might actually find a fraud.
Likewise with fabricated websites. Can an auditor be expected to detect one? No. But if we are aware of the concept, we reduce the chances we are deceived.
I’ve actually dealt with fabricated documents before. Granted it was during a fraud investigation so I was on guard for anything unusual. In the course of looking at documents in the area of interest, some of them jumped out at me. Photocopying shadows on a page and text from a dot matrix printer in the middle of a laser-printed document are really obvious when you look at them.
A more recent example is the New Mexico Finance Authority, where an audit opinion visibly looks like a copy of a copy of a copy while the rest of the document looks like first generation copies. That mismatch could be a warning sign something is wrong.
If you’re an auditor, file away in the back of your brain the possibility that a website referenced by your client that is critical to a key audit issue could just possibly, maybe, somehow, be a fabrication.
Oh, and check out the articles I linked above for more entertainment.
Motivation side of the fraud triangle
There are three sides to the fraud triangle: opportunity, motivation, rationalization. If all three are present, look out. I’ve discussed the fraud triangle at length here.
Opportunity would be the many weeks between the accusation surfacing and the suspension hearing along with the availability of the unintended use defense.
There is nothing visible in the public discussions to provide insight on the rationalization that is present.
What’s the motivation? I see a million of them.
This webpage from spotrac lists his salary at $6 million on a one-year contract. It also lists a deduction of $1,630,000 with a note he is suspended for steroid use.
Divide the deduction of $1.6M by a 50 game suspension means his compensation is $32,600 per game.
He is out 1 1/2 million before tax. Avoiding that penalty is an incredible motivation for the scam.
Furthermore, he is on a one-year contract, meaning his performance this year determines whether his income next year is zero or about $6 million.
Hat tip to John Bredehoft for discussing the issue in his post, Creating a fake paper trail in the paperless era.