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    White Collar Crime Case Study

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    1. What aspects of the schemes described in this case were:
    a. Unethical? b. Illegal? c. Fraudulent?

    2. When would a healthy skepticism by senior management, or professional skepticism by an accounting or legal professional have been useful in combating the opportunities faced by Walt?

    3. Was the Hilby caper a victimless crime, and therefore okay?

    4. What ethical issues should have occurred to Walt and MCI in regard to the schemes described?

    5. What governance measures might have protected MCI if they had been in place and enforced?

    6. What is the role of internal auditors in regard to such schemes?

    400 words total (not including questions)

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    Solution Preview

    Step 1
    a. All schemes described in the case were unethical. Some, wee also illegal and others were fraudulent. Unethical, means morally corrupt. Specifically, covering up that accounts receivable were uncollectible, covering up bad debts, restructuring receivables into a promissory note, applying checks from one creditor to the account of another, disappearing an account, recording cash in transit, factoring MCI's accounts receivable, hiding overdue accounts receivable, signing of bank guarantee by Walt committing MCI to a guarantee up to $40 million if Manatee could not collect, and embezzlement of money received from Hilby and other creditors of MCI.
    b. The schemes that were specifically illegal were those that were forbidden by law. These schemes include deliberately applying checks from one creditor to the account of another, balance of one account being shown into the accounts of others, wrongly crediting cash in transit to a problem account, misapplying ...

    Solution Summary

    This posting gives you a step-by-step explanation of Walt Pavlo, white collar crime case study. The response also contains the sources used.