Archives for fraud



CSI: Art Edition

Forensic scientist Nicholas Petraco, who analyzed ashes in our podcast “The Troubled Cremation of Stevie the Cat,” is currently embroiled in a debate about a Jackson Pollock painting. From The New York Times:

On one side stands Francis V. O’Connor, a stately Old World-style connoisseur with a Vandyke beard and curled mustache, who believes erudition and a practiced eye are essential to judging authenticity. Mr. O’Connor, a co-editor of the definitive Pollock catalog and a member of the now-disbanded Pollock-Krasner Foundation authentication committee, said “Red, Black and Silver” does not look like a Pollock.

“I don’t think there’s a Pollock expert in world that would look at that painting and agree it was a Pollock,” Mr. O’Connor said at a symposium this month.

Read More »



The Troubled Cremation of Stevie the Cat: A New Freakonomics Radio Podcast

If there’s a death in your family and you choose to have your loved one cremated, wouldn’t you expect that the remains that are returned to you belong specifically to your beloved? Of course you would!

Would you expect the same if the dearly departed happens to be the family pet? I suspect the answer is still yes. But in the fast-growing pet-cremation business, how do you know that the remains you’re getting back are indeed from your pet?

That’s the question we ask in our latest podcast, “The Troubled Cremation of Stevie the Cat.” (You can download/subscribe at iTunes, get the RSS feed, or listen via the media player in the post. You can also read the transcript; it includes credits for the music you’ll hear in the episode.)

According to government statistics, there are well over 200 million pets in America, not counting pet fish. (Why government statistics don’t include fish — we don’t know; maybe that’s an episode for another day.) And we spend a lot of money on these pets, about $61 billion a year. One area that is growing very fast: pet “aftercare.” The International Association of Pet Cemeteries and Crematories (IAPCC) tells us that ten years ago, only a handful of places specialized in pet aftercare. Today, there are more than 700 pet funeral homes, crematories and cemeteries. (Or, as Bloomberg Businessweek puts it, “There’s Never Been a Better Time to Be a Dead Pet.”) With so much money being spent, and with death being so fraught with emotion and mystery, might there be some misbehavior going on?   Read More »



Government Employees Gone Wild: A New Freakonomics Radio Podcast

Our latest podcast is called “Government Employees Gone Wild.” (You can download/subscribe at iTunes, get the RSS feed, or listen via the media player in the post. You can also read the transcript below; it includes credits for the music you’ll hear in the episode.)

It’s about a book that I’ve come to love — a most unusual book. What makes it unusual?

1. It is made available online, as a Word document, but is not actually published.

2. It is free (or, more accurately, it’s already been paid for — by U.S. taxpayers).

3. It is published by the U.S. Department of Defense.

This unusual book is called The Encyclopedia of Ethical Failure, and you can get it here (2013 additions here). What is it? It’s an ethics guide for  government employees, full of true stories about epic screw-ups. In the podcast, you’ll hear from the Encyclopedia‘s founding editor (Steve Epstein) and its current editor (Jeff Green). Read More »



The Telltale Signs of Corporate Fraud

A new working paper (abstract; PDF) by Tanja Artiga Gonzalez, Markus Schmid, and David Yermack looks for the telltale signs of corporate fraud. The paper is called “Smokescreen: How Managers Behave When They Have Something To Hide”:

We study financial reporting and corporate governance in 216 U.S. companies accused of price fixing by antitrust authorities.  We document a range of strategies used by these firms when reporting financial results, including frequent earnings smoothing, segment reclassification, and restatements.  In corporate governance, cartel firms favor outside directors who are likely to be inattentive monitors due to their status as foreign or “busy.” When directors resign, they are often not replaced, and new auditors are rarely engaged.  Cartel managers exercise their stock options faster than managers of other firms.  While our results are based only upon firms engaged in price fixing, we expect that they should apply generally to all companies in which managers seek to conceal poor performance or personal wrongdoing.

The authors are wise to note that these findings aren’t necessarily generalizable, and it is also worth wondering if this method could be applied prophylactically to identify fraud. Note: Yermack is the same man who brought us “Tailspotting: How Disclosure, Stock Prices and Volatility Change When CEOs Fly to Their Vacation Homes.”



How to Get a Doctorate in Six Weeks

I assume this is only a coincidence but still, it’s a good one.

Shortly after putting out the first half of our “Freakonomics Goes to College” podcast, which included a segment on the market for fake diplomas from counterfeiters and diploma mills, I got the following piece of spam. It appears to be from a Norwegian e-mail domain: Read More »



FREAK-est Links, Voter-Fraud Edition

1. Russian election fraud analysis now in English; no matter the language, Putin disagrees
2. Using a natural experiment to find voter fraud in Japan (abstract; PDF)
3. And, not quite voter fraud, but: politicians who cut budget deficits don’t necessarily get booted out of office.



Was the Russian Election Fraudulent?

The Times today published a compelling report of first-hand observations of election fraud in Russia’s recent parliamentary elections. There are mounting protests; Secretary of State Hillary Clinton voiced “serious concerns” about the election and called for a “full investigation of electoral fraud and manipulation.”

But what if those first-hand observations were anomalous? What if the outcome for Vladimir Putin‘s United Russia Party, as disappointing as it was for him, truly represents the will of the Russian people? Read More »



Does Fingerprinting Food Stamp Recipients Save Money?

What do New York City and Arizona have in common? No, this is not a trick question; there is one thing: currently, they are the only jurisdictions in the country that require food stamp recipients to register their fingerprints in an electronic database. California and Texas recently lifted their fingerprinting requirements.

Not surprisingly, this has touched off a debate over social utility and costs in New York. Proponents say that the resulting fingerprint database saves the city millions of dollars a year in duplicate fraud. Last year, the Human Resources Administration said it found 1,900 cases of duplicate applications for 2010, with savings of nearly $5.3 million.

Detractors claim this estimate is unproven and that fingerprinting keeps a certain amount of needy people out of the system through intimidation. Read More »