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Kelly Richmond Pope: So, I think behind every good fraud is two things - a whistle-blower and a cultural problem ...
Blake Oliver: Welcome [00:01:00] to The Cloud Accounting Podcast. I'm Blake Oliver.
David Leary: I'm David Leary.
Kelly Richmond Pope: And I'm Kelly Richmond Pope.
David Leary: Kelly, thank you for joining us here at Sage Intacct Advantage. This is day two or three of the conference.
Kelly Richmond Pope: It's day one for me.
Blake Oliver: Yeah, this day two. The Accountant Day was yesterday, I think.
David Leary: All these feel like five-day conferences, these days. Every conference feels like day five. You're always looking for coffee and hot water. But Kelly, thank you for joining us. I just go through all the sessions, and I find one that looks interesting. I know you had a session - "Why Ethics and Culture Matter." [00:01:30]
Kelly Richmond Pope: Yes, it's coming up.
David Leary: Oh, you haven't done it yet.
Kelly Richmond Pope: I haven't done it yet.
Blake Oliver: Oh ...
David Leary: So, if you're listening, go attend the session-
Kelly Richmond Pope: Right!
David Leary: -but we're not broadcasting live, so this is not gonna help you [crosstalk]
Blake Oliver: Yeah, this is gonna be like two weeks later, so we will just assume it was amazing.
Kelly Richmond Pope: Of course!
Blake Oliver: Actually, I've had the privilege of hearing you speak in the past at a different conference, so I'm really looking forward to talking to you today.
Kelly Richmond Pope: Well, thank you.
Blake Oliver: On a similar topic, kind of. I think the last one was on fraud.
Kelly Richmond Pope: Yes.
Blake Oliver: But we [00:02:00] know that fraud, and ethics, and culture are all interrelated subjects, right?
Kelly Richmond Pope: Right because ethics ... Well, fraud is the absence of ethics, so they're all related.
David Leary: And just for our listeners who aren't aware of who you are, you have a documentary on Netflix; you have TED Talks out there. I think your TED Talk has 1.5 million views, I saw? That's impressive. What else do you do? Because you're obviously multi-talented. You're a professor ...
Kelly Richmond Pope: I'm a professor. My training is- that's my home. I'm a teacher. I feel like I'm a teacher. But I [00:02:30] am an associate professor in the School of Accountancy and Management Information Systems at DePaul University in Chicago. I teach managerial accounting, and forensic accounting. I'm a filmmaker; I host a radio show on WGN Radio on Monday nights - a true crime radio show from 10:00 p.m. to 1:00 a.m. in the morning.
Blake Oliver: And you do that live?
Kelly Richmond Pope: I do it live.
Blake Oliver: Wow ...
Kelly Richmond Pope: Yeah.
Blake Oliver: Then, you gotta get up and go to class?
Kelly Richmond Pope: I teach three classes on Monday. My last class ends at 9:15, and I'm in the studio at 10:00. [00:03:00]
Blake Oliver: That's a long day.
Kelly Richmond Pope: It's a long day.
Blake Oliver: So, it's true crime ... Do you cover like financial crimes, and ...?
Kelly Richmond Pope: We cover all kinds of crimes. I have a co-host. His name is whose name is Bill Kresse. He also teaches at Governor State in the Chicagoland area. We cover all kinds of crimes. So, this past week, we had Al Capone's granddaughter on. She had just written a book, so she was just talking about the life of being Al Capone's granddaughter.
Blake Oliver: Wow ...
Kelly Richmond Pope: We then talked about real estate scams and how celebrities are being used to [00:03:30] get people to come to these real estate seminars that end up being just sort of fraudulent. So, we talk about all different kinds of things.
David Leary: Why is ethics and culture so important to you? Because I think you've talked about ... I think your TED Talk is on whistle-blowers, and that's a lot of culture-related ... People don't have the courage to be a whistle-blower because of culture, sometimes, at the company.
Kelly Richmond Pope: Well, I think what we're seeing right now is when we see all of these fraud stories, and we think about them being ethical lapses, it really comes back to culture. [00:04:00] Take Boeing, for example. Boeing is a culture story or an ethical-cultural-deficiency story because you have a pilot who knew something was wrong, reported it, and no one listened, so now, we have deaths. That's a cultural issue as to why we wanna bury that type of information. You think about what's happening with the opiate crisis, where doctors are getting paid to find people to give these prescriptions to. That's a cultural [00:04:30] issue. So, I think behind every good fraud is two things - a whistle-blower, and a cultural problem. That's why it's important to me.
David Leary: In many cases, these frauds, people saw them happening, but the culture just prevented them from-
Kelly Richmond Pope: Absolutely yeah. It's almost like if we can get away with it, we do. That's not good, so I think it's something that we need to talk about. I think people need to evaluate [00:05:00] the culture that they work in and what they contribute to that culture. How it relates to whistle-blowers is how do we embrace a person that is coming forward and saying something? Sometimes, it's hard to wrap your hands around somebody that's doing something different than you are or saying something different than you are.
Blake Oliver: In the case of Boeing, my understanding is that pilots testing the new software, or the new planes in the simulators, detected issues. They reported [00:05:30] them, or they felt- it was like they felt pressure from management not to bring up these issues?
Kelly Richmond Pope: Yeah, culture.
Blake Oliver: What should Boeing be doing, or what should they have done to make that not happen?
Kelly Richmond Pope: Sure. I think that the one thing Boeing could do, or any company, is you have to listen to your first line of defense, and that's your employees; in Boeing's case, it's your pilots. If I look at my organization, which is DePaul, it's gonna be either students or professors. You wanna listen to your first line of defense [00:06:00] because they know.
So, when you silence them, what do you have? You're gonna have a problem because either people aren't gonna say anything, or they're going to just turn a blind eye to things that they see all the time, which is not good. I think that what they should have done is had a better reporting process, where that person or people can be embraced, should be embraced, and not scared to come forward.
Blake Oliver: So, actually celebrate your internal whistle-blowers, [00:06:30] or-
Kelly Richmond Pope: Celebrate might be a strong word. Encourage ...
Blake Oliver: Encourage it.
Kelly Richmond Pope: Well, I guess celebrate's a good word because you wanna know if your airbag isn't working. If your person on the assembly line knows that there's a deficiency, or if they know that you put some type of product that's gonna explode on impact, then you want that person to tell. You don't wanna find out the hard way.
David Leary: You'd think it would be rewarded more because if you're a CEO of a company, you don't want a bunch of Emperor's [00:07:00] New Clothes people telling you how great everything's going, and you're just blind to this real risk that's there.
Kelly Richmond Pope: You say that but actually, sometimes we do. Think about the kind of people that a lot of us surround ourselves by - our friends. Typically, our friends aren't gonna go against you. When you have something that-
Blake Oliver: Well, that's why David and I hang out because he tells me what he's thinking.
Kelly Richmond Pope: But you think about, when you have a controversial issue that you're deciding about, you have two people you can call - the one that you know is gonna always disagree, or the one that you know, that's [00:07:30] going to agree with you. Sometimes, we might choose the one that agrees with us so that we can get the outcome that we wanna have. I think that it's human nature to want what you want, and sometimes, you don't wanna hear that other side, but you need to have both people, both parties in your life to stop you from those bad decisions.
David Leary: So, if you have a management problem, if you wanna call it that- a culture problem, can you change your culture - the behavior?
Kelly Richmond Pope: I think you definitely can change your culture. Now, this is a very broad [00:08:00] question, broad answer, but think about how things change with the new C-suite, how things change with a new employee, new employees, how things change with a new building, how things change with a new logo. So, I definitely think you can change your culture, you just have to want to.
Blake Oliver: Any tips ...? I mean, I know there's no just easy solution to these things, to changing a culture. Is there something ...? What's the best tip you have for doing that - for [00:08:30] a traditional firm, right?
Kelly Richmond Pope: Let's use an example; let's use Theranos, and Elizabeth Holmes.
Blake Oliver: We love that story.
Kelly Richmond Pope: A place that had a very wicked culture. There was only one choice, and that's to follow what everybody was doing. You couldn't be a naysayer. How do you change that culture is just by listening to people. Maybe ask them to report something anonymously, put it in a box, and you read all the comments together, and you address [00:09:00] them either in a newsletter, or a video. You have to be diligent to wanna change your culture - if you notice you have a problem. The first thing is, do you know you have a problem? Sorta like Alcoholics Anonymous - you gotta know you have a problem!
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Blake Oliver: Well, speaking of organizations that may not know they have a problem, the PCAOB ... I have been following some of these stories recently, in The Wall Street Journal.
Kelly Richmond Pope: Sure.
Blake Oliver: It's just a major ... I don't wanna swear on the podcast, but there's a big problem there in that ... Well, first, there was the KPMG [00:10:30] scandal involving inside information going from PCAOB inspectors to KPMG partners telling them which audits are gonna get inspected. The worst ethics violation I've heard of in a long time-
Kelly Richmond Pope: What's interesting about that is, if we talk to anybody walking around here right now and ask them are they ethical, they're all gonna say yes.
Blake Oliver: Right.
Kelly Richmond Pope: But then, when you start giving them various scenarios and ask them to reason through different things, you're gonna see different answers. I think even [00:11:00] with the KPMG-PCAOB situation, they didn't think they did anything wrong. When they were doing it, they're like, "I'm a good person ..." Because we think of fraud, really, in a one-dimensional way. "I don't steal people's money. I'm not murdering anyone. So, I'm a good person." But there's lots of ways you can commit crimes ... Violent crimes are not the only way, but I think that we have convinced ourselves that crime looks a certain way, and, "If I don't do that, then I'm a good person." You can still break rules, and you can still [00:11:30] go to jail.
Blake Oliver: So, what can they do ...? Do you think that it's savable, that the PCAOB can actually become a force for good in the accounting world, or is it just a giant waste of money? Because, up to this point ...
Kelly Richmond Pope: Well, I think with the PCAOB ... That's one bad apple. I don't think the whole thing is over, but I do think that they're gonna have to be more strategic about how they train. You need to give people [00:12:00] some exact scenarios of what an ethical lapse looks like. For example, "If you go and get hired, you can't pull information ..." People need exact definitions, because I think even the way we teach ethics in college, we often teach it from a very theoretical perspective. You really need practical application; practical application.
I had a student who wanted to order something from online. Let's just say it was a book bag, and [00:12:30] their roommate had ordered the book bag, and they were already- they were in the same household. You could get 20 percent off if you were a new customer of this company. The student had already used the discount before, and the roommate had used the discount before. The student said, "Well, I really want this book bag. If I use my dog's name, how would they know?"
Point being, we need exact examples of that's wrong. Just because you won't get caught. doesn't mean that it's not [00:13:00] wrong. But I think that we need to show people examples of what an ethical lapse looks like because we're just so bent on, "I haven't stolen money. I haven't murdered anybody. I'm a good person." When you go to those outliers, it leaves a lot of room for people to say, "Yeah, I'ma hire David, and I'm gonna ... David bring your information over here, and we're gonna use it."
David Leary: I imagine, in the accounting industry, it's kind of ironic, right, because CPAs and accountants who would pride themselves on they were ethical ... Then, every [00:13:30] single person's probably fudged their time sheet.
Kelly Richmond Pope: Oh, sure-
Blake Oliver: Probably.
Kelly Richmond Pope: I mean, yeah, absolutely. Everyone's probably photocopied their kids' birthday invitations on the work computer, at some point ... Let's not say everybody, but at some point, there's something we've done. Some people can stop themselves. Other people can't.
Blake Oliver: Ethics training is all great. We should all do it. But sometimes, the underlying structure, the underlying way things are set up [00:14:00] causes people to behave unethically simply because of the incentives. So, I'm thinking in particular of audit; the audit profession, where there's all this talk about how we need to do better education for auditors so that they actually do their jobs and whatnot. But, when an auditor is selected and hired by their client - that's the way we've got it set up in this country - they're naturally going to act in the best interests of their client more of the time than the general public, like the stakeholders, investors [00:14:30] and whatnot, because there's money on the line, right?
Kelly Richmond Pope: Mm-hmm.
Blake Oliver: Ron Baker likes to say you can't be independent when there's a financial- when you're getting paid. You can't be independent.
Kelly Richmond Pope: Sure.
Blake Oliver: What do you think about changing up the way audit firms are selected?
Kelly Richmond Pope: Well, first, let me go back to your first comment, because I don't think all ethics training is good. I think it's done poorly, for the most part. I think that's our first problem is we're not pushing people to think about [00:15:00] the scenario hard enough. We're treating it like, "Here are the rules; check the box," and that's not how you have to do it. You really have to put a person in a scenario to force them to think about, "Hmm, well, have I done that before?"
That's some of the things that we'll do at the beginning of my session. I have some scenarios. We have to poll, and we get some poll information. Every time I've done this, you see a lot of variability. Now, there is a right answer, but the way we rationalize this answer in a large group sort of changes. That's the first thing. I think [00:15:30] that all ethics training is not good. I think it's- there's a little bit of good and a whole lotta bad.
David Leary: I can say, based on me, after a 20-year career at Intuit, you have to do these trainings every year ... The ethical training, the scenarios were just so far-fetched that they weren't probably representative of 99 percent of the employers.
Kelly Richmond Pope: Sure.
David Leary: It was like some king in some country wants you to build a building in his place ...
Kelly Richmond Pope: It was the outlier.
David Leary: Yeah, it was the outlier, and it wasn't the day-to-day real ethical [00:16:00] questions that probably happen to every single employee.
Kelly Richmond Pope: Right, and that's what you need. You need those type of scenarios to push them to think. For example, the one that we're gonna do today is you took a cab, and the cab driver gives you a receipt, and they ... They give you a blank receipt, and they also give you the actual receipt from the meter-
David Leary: Before you continue, is this gonna be a quiz, like Blake, and I can answer, like yes/no?
Kelly Richmond Pope: You can, sure. Okay, so this is the scenario. I'm putting you guys in a scenario. You ready?
Blake Oliver: Yes.
Kelly Richmond Pope: Okay. [00:16:30] So, you take cab. Forget Uber. Forget Lyft. You take cabs. I still take cabs.
Blake Oliver: There's the first problem ...
Kelly Richmond Pope: Okay, so you take a cab, and at the end, they hand you your receipt, and they give you a blank receipt, because cab drivers do that.
Blake Oliver: Yes.
Kelly Richmond Pope: Sometimes, they'll even say, "How many receipts do you need?" Has that ever happened to you?
Blake Oliver: I've had the blank receipt for sure, yeah.
Kelly Richmond Pope: All right. So, when you go to submit this receipt, you add $2. Is that okay?
Blake Oliver: No, I would not do that.
David Leary: No.
Kelly Richmond Pope: What if you tipped? [00:17:00]
Blake Oliver: I would consider the tip to be part of the fare, yeah.
Kelly Richmond Pope: So, you might add $2.
Blake Oliver: Yeah [crosstalk] if I actually gave him the $2.
David Leary: If I gave the $2, then I'd write that down, yes.
Kelly Richmond Pope: But is it anything wrong which is adding $2. It's just $2. What if you use the blank receipt, and you forgot what the amount was, so you're just rounding. Is that wrong?
Blake Oliver: That's like time sheets, right? Then there's nothing ... Well, I mean, you've gotta choose a number, so you try to be as accurate as you can, right?
Kelly Richmond Pope: So, you added $2. Is that wrong? So, you'd think it was $5.25, but by [00:17:30] the time you added the tip, you don't know ... Maybe-
David Leary: Or even my handwriting. Sometimes, it's like, is that a seven or a nine?
Kelly Richmond Pope: Right.
Blake Oliver: Right.
Kelly Richmond Pope: So, just to make it even, you add $2. Is it wrong?
Blake Oliver: I don't know. Is it wrong? This is the "Is it wrong in the big balance sheet in the sky" sort of way ... Yeah, I guess, but, does it ... Is it material is maybe my question as an accountant. If it's immaterial, then ...
David Leary: That's where I'm thinking ... It's a lame argument - it's victimless; nobody got hurt. I'm [00:18:00] not justifying that, I'm just ...
Kelly Richmond Pope: But just think, we're in this scenario ... I'm pushing a little bit because your first response is wrong. I say, wait a minute ... What if you forgot what the fare was, and you're just trying to guess, and you just you have to submit it ... Are you gonna pay it? You gonna cover the extra $2. I mean, you just added $2. I didn't say you were stealing. I just said you couldn't remember.
Blake Oliver: Did I do it knowingly, or ...?
Kelly Richmond Pope: What was your intent?
Blake Oliver: That's what's hard to know is intent, right?
Kelly Richmond Pope: These are the things that we need to talk about. This [00:18:30] is the way we need to talk about our decision-making because it might not be a big deal for us, the three of us, talking about it, but if you have 300,000 employees doing it, it could definitely be material then. So, I think that we need to be more practical about how we approach the way we reason through decisions.
Blake Oliver: I like that. Yeah, less theoretical, more practical.
Kelly Richmond Pope: Less theoretical, more practical. The problem, I think, with our profession is because we have a code of ethical conduct, we just sort of look at those things and say, "Check, check, check, check, check," but [00:19:00] what are the scenarios that match with those, we don't do. So, we really have to push ourselves to think about what would you do?
Blake Oliver: You know, the only problem, Kelly, with this is that if we push the accounting profession to do this, then they'll want to create a rule for every potential situation, so we'll end up with an accounting ethics handbook that is 400 pages-
Kelly Richmond Pope: That's true.
Blake Oliver: -and has 5,000 rules in it.
Kelly Richmond Pope: That's true. That's true. That was the first thing. The second part of your question was what can we do/what should we do? I don't know. If I knew that, I wouldn't be sitting here on this podcast with you. [00:19:30]
Blake Oliver: I'd love to get your take on this ... One argument is let's change up how auditors get selected. So, instead of having companies select their own auditors, let's have the financial stock exchanges, select the auditors instead. That way, there's less of an incentive for an auditor to overlook something, in order to maintain that client relationship and not lose the engagement.
I guess some [00:20:00] of the evidence cited for this is that, in PCAOB inspections, something like 20 to 50 percent of audits fail inspection. That means that the people who are supposed to be checking these numbers - the auditors - are doing a bad job in one out of five audits, at a minimum. That's just of the ones we've inspected, right?
Kelly Richmond Pope: But think about this ... Think about other professions. We go to the doctor. We pay the doctor to give us bad news. We pay the dentist to give [00:20:30] us bad news. Why do we have to be any different? We incentivize other professions to give us good or bad, so why is this any different?
Blake Oliver: Well, and actually, you brought up the opioid crisis. It's people paying doctors for prescription medicine is what ... The doc doesn't want to lose a patient-
Kelly Richmond Pope: Sure.
Blake Oliver: -so they prescribe the medication.
Kelly Richmond Pope: Yes.
Blake Oliver: And they wanna get paid, so there's a financial relationship that causes that perverse incentive, where the doctor is now prescribing [00:21:00] you more medication than you need. You get addicted. The pill- what do they call them? The pill factories-
Kelly Richmond Pope: Then, the pharmaceutical is giving you a kickback.
Blake Oliver: Right, and ultimately, that's who everyone's going after is the pharmaceutical companies, because they got all the money in the end.
Kelly Richmond Pope: Sure. Sure. I think when you ... The pharmaceutical giving the kickback is the big issue because they're the ones that created the incentive, but I think when you think about patient to doctor, you [00:21:30] do pay your doctor to give you all information. We don't pay our doctor just to give us good information. So, why can't this work the same way?
Blake Oliver: So, here's the difference is that I, as the audit committee ... Well, I guess it depends. So, I'm paying for the audit. You're my CPA. I'm paying you to audit me, but that audit isn't really for me; it's for my investors.
Kelly Richmond Pope: Okay.
Blake Oliver: maybe; but, if I'm a smaller company, maybe I don't have that. I want the audit to come out clean because I'm managing this company. My investors wanna see the truth. So, we have [00:22:00] different interests.
Kelly Richmond Pope: Sure, but then, the question becomes will the regulatory agencies really care that much about the investors' interests? I don't know if we can alleviate the problem. Just be good. Just stop lying. That's just about it. Just stop it, you know? Just stop it.
Blake Oliver: Maybe we should really be punishing these crimes.
Kelly Richmond Pope: Sure.
Blake Oliver: Because I feel like a lot of these auditors get just a slap on the wrist.
Kelly Richmond Pope: Right, and going back to Theranos, if Elizabeth Holmes [00:22:30] gets a slap on the wrist, oh, my goodness! What kind of message is that? Or even Varsity Blues situation with the celebrities lying about their kids playing sports, and they don't even play the sports. If they just get a slap on the wrist, what are we really saying?
Blake Oliver: Yeah, so maybe that's ... I'm one of those people, I'm for drastic changes in the way we do things. But, yeah, maybe if we just actually enforce the rules we've got.
Kelly Richmond Pope: Sure. [00:23:00]
Blake Oliver: That would help, too.
Kelly Richmond Pope: Enforce the rules we have. Follow the rules we have and enforce the rules when they're not followed.
David Leary: Just bringing this back down to a smaller firm, maybe I have a small accounting or bookkeeping firm; I have 10 employees. What's the best way for me to ensure I have this ethical culture there? Is it just me leading by example? Is it ... Are there bigger training programs or groups I could be part of? The one thing I think about it is a big corporation's going to have an ethics hotline, there [00:23:30] an ethics hotline service I could subscribe to? What's options are out there as a firm owner [crosstalk]
Kelly Richmond Pope: I think there are a lot of cost-effective options. For example, you could share an article, like an ethics-related article. There was a really good article in The Wall Street Journal a few weeks ago, and it's in my presentation today. It was about what expense reports tell you about your soul. Did you guys see that?
David Leary: I think we covered it on the podcast.
Kelly Richmond Pope: Did you talk ... It was the Grifter, [00:24:00] the Rookie, the Sidestepper ... They had these different classifications. Share it. Talk about it. Have a brown bag. Doesn't cost you a lot of money to do that. There are TEDTalks. You could share mine. There's things that you can do as a leader that you can share with your employee base that gets the message that you care about how people see ethics and fraud in decision-making. You don't have to be a large company to show that you care [00:24:30] and that you value this. Of course, you wanna lead by example, but it doesn't take a lot to show that this is something that's important to you. There's a good movie, a good docuseries on Netflix. It was called Dirty Money. Alex Gibney's docuseries.
David Leary: Watched some episodes of that, yeah.
Kelly Richmond Pope: Again, send out an email. "Hey, team, I watched this episode. I watched this show. Would love to have a brown bag and talk about what you think about it." I mean, there's ... People just want human connection. There's lots of material [00:25:00] that you can share.
David Leary: You could have your staff listen to this podcast-
Kelly Richmond Pope: You could have your staff listen to this podcast. Something that we do in my class is we listen to the Dropout Podcast. Some of the students read John Carreyrou's book, "Bad Blood," but we also listen to the Dropout Podcast. A couple weeks ago Tyler Shultz's attorney in class talking. There's small ways that you can create a culture that I think we just think we don't have time, but we really do.
Blake Oliver: So, Kelly, you [00:25:30] are a filmmaker.
Kelly Richmond Pope: I'm a filmmaker.
Blake Oliver: Which is so cool, and I feel like I'm on late night because I've got this postcard with your movie poster on it. I'm gonna put it on the table right now, and the camera's gonna zoom in. It's called "All the Queen's Horses."
Kelly Richmond Pope: Yes.
Blake Oliver: The subtitle is, "How could one woman steal $53 million without anyone noticing?"
Kelly Richmond Pope: Yes.
Blake Oliver: What is this film, and where can we watch it? What's it about?
Kelly Richmond Pope: The documentary chronicles [00:26:00] the fraud committed by this woman. She was a city comptroller of Dixon, Illinois. The documentary talks about how she did it. How does one person do that? That's a lot of money.
Blake Oliver: They're a small town, too-
Kelly Richmond Pope: 16,000 people.
Blake Oliver: So, how did nobody notice?
Kelly Richmond Pope: Well, this is the thing. There were red flags that were missed, but it's not that people didn't notice them; they just didn't know what to do about it. There's lots of red flags. I'm sure if we walked to our room in this hotel, we would notice red flags. [00:26:30] What're we gonna do with it? Who're we gonna talk to? We might not know, so we might just keep walking and keep moving. The same thing in Dixon, people noticed things; they just didn't know what to do with it. The documentary is really about how something like this not only can happen in Dixon, but can happen anywhere, whether it's a small company, large company, medium-sized company.
The one thing that I caution people about "All the Queen's Horses," is don't think because it's the government, it can't happen to you. The fraud schemes are the same. The environment's [00:27:00] changed, but the schemes are the same. So, if you read a fraud book from 20 years from now, you're still talking about money laundering. We're still talking about embezzlement. We're still talking about financial statement fraud. We're still talking about the same schemes, just with different players. You can find it on iTunes, but I guess iTunes has gone away now, right? Is Apple doing away with iTunes?
David Leary: We'll find it and put it in the show notes, for sure [crosstalk]
Kelly Richmond Pope: It's YouTube. You can rent it on YouTube, Google Play, Amazon, and then, [00:27:30] probably your local cable, but your local cable's gonna be the most expensive way to watch it.
Blake Oliver: As always.
David Leary: Well, one of the frauds that we've been really covering the last five, six, seven weeks here, on the podcast, about on a weekly basis, is the MyPayrollHR fraud.
Blake Oliver: Have you heard about this one?
Kelly Richmond Pope: Share, please.
Blake Oliver: So, gosh, how do we summarize it? Owner of a payroll company in Clifton Park, New York, basically had a bunch of business entities, was borrowing money on fictitious businesses, and diverted how many [00:28:00] millions of dollars from a payroll-
David Leary: What he did is he changed the ACH file at the last minute and took all ... He withdrew the money from all the employers, and then that goes to an ACH company to distribute the ACH funds to all the employees' bank accounts. He diverted that back to his-
Blake Oliver: Own bank account [crosstalk] He's a payroll processor.
David Leary: So, what happened ... Then, there was a bunch of domino effects of this; a whole bunch of-
Kelly Richmond Pope: How did he have control to do that?
David Leary: Apparently, the ACH system is ... Anybody can just-
Kelly Richmond Pope: Hackable?
David Leary: It's not even hackable. It's like a file-
Blake Oliver: It's like a spreadsheet.
David Leary: -text file ... Somebody just changes it. Then, on [00:28:30] top of that, which is even crazier, is apparently the law firm has to keep their client's escrow funds in an escrow account. Apparently, if you run a payroll company, you can just keep the funds co-mingled with your other funds, which is, from an industry perspective, a little on the crazy side. For a decade, apparently, after they've dug into this now, he's running this fraud for a decade of this kiting between the one company to the other company ... Then, one day, it just became this $36 million fraud, just like that.
Blake Oliver: So, what was your question, David?
David Leary: I don't even know what I was ... I [00:29:00] was gonna give you the next movie idea, but you haven't heard of it, so we'll have to fill you in.
Blake Oliver: I'm one and done. I'll use film as a platform to train and teach. I just finished creating this investigative, immersive experience with my co-creator, Ronnie Jackson, called "Red Flag Mania." It involves- or it includes a short film. It puts you in this scenario, and you have to solve this case. You watch a film; you're given a case box of evidence; you [00:29:30] have to solve the crime; then, there's a big reveal at the end. I'll use film that way, but I'm not doing a film again. I'm one and done. I'm a one-hit wonder, sorta.
David Leary: Kelly, what's the best way for people to get a hold of you?
Kelly Richmond Pope: I'm on all social platforms. I'm on LinkedIn, which, by my name, Kelly Richmond Pope; I'm on Instagram, but that doesn't feel very professional. My Instagram is like pretty pictures, but I don't really have any pretty accounting pictures up there.
Blake Oliver: That's why we haven't done an Instagram yet, for our podcast. It's like what do we take a picture of?
Kelly Richmond Pope: Yeah, it's weird, right? If [00:30:00] you think about, like all the platforms have their place. So, you think about Instagram being very personal and pictures. Facebook feels very personal. When work people want your Facebook, I'm like, "Un-uh ... No. I don't want that relationship with you. I want you on LinkedIn" Then, Twitter- Twitter, and LinkedIn seem similar to me, except the Twitterverse is just very crowded. But social channels are just @KellyRPope. Then, LinkedIn is just my name - Kelly Richmond Pope.
Blake Oliver: Thank you for [00:30:30] your time today, Kelly.
Kelly Richmond Pope: Thanks for having me. It was fun.
