A case involving five banks duped into issuing loans totaling $1.4 million is again highlighting the need for more control and security around private company financial document exchange.
Michael Barrick, an antiques collector, trader and museum operator popularly known as Kentuckyana Jones, pleaded guilty to five counts of bank fraud after forging financial statements to establish the sales of multiple properties, a fraud that stretched over the course of five years.
Barrick had previously gained fame appearing on numerous reality shows, including Storage Wars and Barry’d Treasure, but he is now likely facing a lengthy sentence as each count of bank fraud carries a maximum penalty of thirty years in prison.
According to the plea agreement, schemes identified by prosecutors involved Barrick recruiting associates to purchase business property using falsified documents that substantially inflated assets and income to lenders.
Whenever a loan was in danger of going into default, he would repeat the process, creating further fake documentation to acquire new loans to pay off previous ones.
In one instance, a business partner was recruited by Barrick to obtain a loan in order to buy a wholesale mattress business. The only problem – a McDonalds restaurant was actually located at the address where the purported business was stated.
Once Barrick was eventually unable to pay back any of the borrowed money, these acts finally caught up with him.
The fact that this pattern went undetected on multiple occasions over the course of many years shows how susceptible third-party lending institutions can be to fraud.
That’s why a secure online platform for the exchange of private company financial information, is such a vital need for the accounting profession, their business clients and third-party users. In this case, had the financial institutions required that the financial statements be submitted through a secure platform that verified the financial statements were provided by a valid CPA firm, and that the documents were authentic and unaltered, Barrick would not have been able to get away with such rampant fraud.
To learn how RIVIO Clearinghouse can protect CPA firms, their business clients and third-party users from fraudulent financial document exchange, visit rivio.com.
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