Fraud had a marquee year in 2023. Hard to believe, but just in the last 12 months fraudulent activity was exposed at the world’s largest crypto exchanges, the Elizabeth Holmes saga ended at a federal prison camp, cyberattacks continued to grow, and federal investigators uncovered at least $100 billion in Covid-era relief fraud.
And that’s just the tip of the iceberg. It can be hard remembering all the cons, scams, and scandals of the last year, so CFO Brew has gathered some of the biggest fraud stories of 2023 below.
Crypto is king. We’ve got to start the list with crypto. The year in fraud started with a bang as the late 2022 collapse of crypto exchange FTX continued to unspool and billions in customer money disappeared. Prosecutors hit FTX founder Sam Bankman-Fried (SBF) with a superseding indictment in February, adding multiple fraud charges to his earlier indictment. At his October trial, Caroline Ellison, his former girlfriend, Gary Wang, FTX’s co-founder, and Nishad Singh, FTX’s director of engineering, who all pled guilty to fraud, testified that Bankman-Fried had personally directed the misappropriation of customer funds, in a scam a prosecutor called “one of the biggest financial frauds in American history.” SBF was found guilty on seven counts of fraud and conspiracy in November and is awaiting sentencing.
Also in November, Binance founder Changpeng Zhao pled guilty to violating economic sanctions and Bank Secrecy Act provisions on anti-money laundering and stepped down from the company. Binance, the world’s largest crypto exchange, was hit with a $4.3 billion fine for, as Treasury Secretary Janet L. Yellen put it, allowing “money to flow to terrorists, cybercriminals, and child abusers through its platform.”
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Not to be left out, Coinbase joined the party in June when the SEC indicted the crypto company “for operating as an unregistered securities exchange, broker, and clearing agency” and a Coinbase executive was convicted in the “first ever cryptocurrency insider trading case.” Coinbase is vigorously contesting the charges.
Fuzzy math. In April, Charlie Javice, founder of Frank, a student loan software company, was arrested for inflating the number of users on the platform in a sale to JPMorgan Chase. While she claimed Frank had 4.25 million users, the real number was closer to 300,000, according to prosecutors. Javice pled not guilty to the charges and her trial is scheduled for October 2024.
Rolling the dice. In September, hackers hit casino companies MGM Resorts and Caesars Entertainment with ransomware attacks. Bloomberg reported that Caesars paid “tens of millions of dollars” in ransom, but MGM’s CEO “chose not to pay a ransom.”
In October, genetic testing company 23andMe announced that hackers had accessed the personal information of 6.9 million users, including geolocations, birth years, and family trees.
Fudging the numbers? In March, the SEC and the Justice Department indicted three executives at shipbuilder Austal USA, for “orchestrating an accounting fraud scheme” to boost share prices by inflating earnings. The company had to take a $100+ million write-down after the scheme was uncovered. The three are set to go to trial in January 2025.