Fraud Analysis Paper

describe and analyze how the fraud wasexecuted;identify and briefly discuss the role of theparties that were involved as perpetrators, accomplices, victims,tipsters, observers, and so forth (preferably in a chart or illustration)[include Jeffry Picower];assess the motives (or possible motives, if notreported) of each perpetrator;identify controls that might have deterred orprevented the fraud from occurring;discuss any involvement of the SEC;document how the fraud was discovered andinvestigated, including what should have been identified as red flags;discuss the resolution of this case; andcite and reference any articles, other texts,journals, websites, or so forth that you used as a source for the facts inyour paper. NOTE: Avoid Wikipedia, because it is not recognized as acredible, authoritative source.The SEC versus Avon Products, Inc. case was a result of thecompany violating the Foreign Corrupt Practices Act (FCPA) by failing to haveproper internal control in place that would have prevented and detected the 8million dollar payments and gifts that were made to the Chinese government byway of one of Avon Products’ subsidiaries located in China; known as the GuangzhouOffice. The investigation was conducted by Pual Sharratt and Roger Paszamantand supervised by David Frohlich; however, it was because of a whistleblowerwithin the company that it was brought to the attention of upper levelmanagement. The investigation revealed that Avon violated Section 13(b) (2) (A)and 13 (b) (2) (B) of the Securities and Exchange Act of 1934. It was concludedwith a $135 million dollar settlement paid to the Southern District of NewYork. According to the press release from the SEC, Avon’ssubsidiary allegedly made cash, travel, gift, and entertainment payments toChinese government officials in order to obtain a direct selling license sothat Chinese officials could oversee the direct selling regulations. This tookplace approximately from 2004 to 2008; however due to their accountinginaccuracies, these blatant operations may have been transpiring longer. InMarch 2006, these favours resulted in Avon becoming the first company toreceive the first direct selling business license in China. In addition to thebribery committed, the company failed to properly account for the details andpurpose of the payments being made to the Chinese government by erroneouslyrecording the transactions with no information at all or as employee businessexpenses. For this act to transpire, according to the fraud triangle,there must have been a perceived pressure, a perceived opportunity and then rationalizationto concede their deeds. There were a eight individuals; two senior executiveemployees of the Guangzhou office known as Avon Products (China), three senior executiveemployees who were from America, two executive attorneys, and one of theirinternal auditors. China recently lifted their outlawed direct selling laws whenthey joined the World Trade Organisation which was an exceedingly important opportunityfor any international company who needed to export out of China, this type ofpressure to obtain a direct selling license out of China may have been thepressure that commenced the fraud. In providing over eight million dollars ofgifts in cash, meals, entertainment, designer bags snd even non business travelwhich were maliciously Since Avon maintained and issued publicly traded securities, they had to abide by Section 12(b) of the Securities Exchange Act of 1934 (15U.S.C. 78) ehich required them to file periodic reports with the SECAvon has since been conduction internal control audits andhad to report their compliance efforts for an eighteen-month period.  They also, were permanently enjoined fromviolating the provisions of the federal securities laws.Works CitedSEC Press Release “SEC ChargesAvon With FCPA Violation”. (2014, December 17). Retrieved July 17, 2015, fromhttp://www.sec.gov/news/pressrelease/2014-285.html SEC Litigation Complaint. (2014,December 17). Retrieved July 17, 2015, http://www.sec.gov/litigation/complaints/2014/comp-pr2014-285.pdf