0:07

Welcome to this special bonus collaboration

0:09

event episode. We have brought in

0:11

different parts of your mark. So

0:14

I'm David from the accounting podcast.

0:16

We brought in Caleb Newquist from

0:18

the oh my fraud podcast and

0:20

our great producer, Zach, who

0:22

as some of you may have

0:24

heard us reference him on recording before,

0:27

but Zach is actually in the

0:29

television academy. Zach is a Hollywood guy.

0:31

He's a producer. He's a connection.

0:33

So the three of us are going

0:35

to take a look at the

0:37

accountant. Talk about it so all

0:39

of you listeners can get CPE for this through

0:41

the earmark app. And the account

0:43

is great because it's an action

0:45

movie on one hand, but there's all these

0:47

little accounting things that happen during this movie.

0:49

And that's what we're going to deep dive

0:51

into. So welcome, Caleb, to the show. And

0:53

Zach, first time I've recorded a show with

0:55

you. Yeah, thank you. And also, you

0:57

know, this is a good timing because the

0:59

Accountant 2 is coming out on April 25th,

1:01

which is very soon. So, you know, hopefully

1:03

listeners can go listen to this, go catch the new

1:05

movie. All right,

1:08

yeah. The Accountant is

1:10

a 2016 thriller, action

1:12

thriller. And the

1:14

log line is, as a math savant

1:16

uncooks the books for a new

1:18

client, the Treasury Department closes in on

1:20

his activities and the body count

1:23

starts to rise. Now, right away, I

1:25

have a beef with this outline,

1:27

or I have a beef with

1:29

this logline because the conflation of

1:32

math and accounting is as old

1:34

as time, I think. And so

1:36

it's hilarious that maybe one of

1:38

the consulting producers on this movie

1:40

let him get away with it.

1:42

But nevertheless, nevertheless, as

1:44

David mentioned, there's lots of accounting, there's a

1:46

lot of accountant service in this film.

1:49

a lot of like, little

1:51

dialogue, little Easter eggs for the accountants, and

1:53

we're gonna talk about them, and it's

1:55

gonna be fun, and the movie is good.

1:57

And it starred Ben

2:00

Affleck, of course, as Christian

2:02

Wolf, that's the main character. Anna

2:05

Kendrick has a supporting role, J

2:08

.K. Simmons, John Bernthal.

2:11

It's really cast is great. a really great

2:13

cast. Yeah, Jeffrey Tambor has a small part,

2:15

Gene Smart, if you guys like hacks. Gene

2:18

Smart has a small part too. So yeah,

2:20

really fun cast. My favorite way I heard

2:22

this movie described was Rain Man meets John

2:24

Wick. And I think that is perfect. Fun

2:27

fact. Fun fact, Rain Man was

2:29

the first R -rated movie I saw. I

2:31

know Zach saw his first R -rated movie,

2:33

I think when he was like six weeks

2:35

old. But that's beside the point. There you

2:37

go. That's beside the point. So

2:39

I think the way that this episode is

2:41

gonna go is we're gonna play some scenes

2:43

from the movie that have to deal with

2:46

accounting. We're gonna do it chronologically. And

2:48

then we're break down the scene what we

2:50

think is realistic what's not realistic and at

2:52

the end we'll have some lessons learned and

2:54

stuff like that So actually this first scene

2:56

is a I think the first time we

2:58

see Ben Affleck as an adult in the

3:00

film And he's helping an older couple that's

3:02

a farming couple with their taxes. They're struggling.

3:04

He's going to give them some tax advice.

3:09

So again, a fair warning. I

3:11

am not an accountant. In fact,

3:14

no one here is an accountant,

3:16

but Caleb is a former accountant.

3:18

But as far as I know,

3:20

that is very good tax advice.

3:22

I don't think we played the

3:24

part, but Ben Affleck even makes

3:27

sure like that this space that

3:29

they use for the home -based business

3:31

is only used for that. It's

3:33

not used for any other purposes

3:35

because that wouldn't be allowed to

3:37

be ridden off as a tax

3:40

deductible otherwise. He makes

3:42

it very clear. And then I

3:44

think he even mentions, David, you brought this up,

3:46

he mentions his car. The truck.

3:48

Dolores, when you order supplies, do you

3:50

order online? I don't. I just zip

3:52

on over to the beat store. Zip.

3:54

I drive. The

3:57

truck. The

3:59

company truck. And then

4:01

there's that one funny scene where he's

4:03

when he's talking about the square

4:05

feet and he's like he's just gesturing

4:07

Your kitchen your kitchen's big your

4:09

kitchen's bigger than that your kitchen's bigger

4:11

than that yeah now Is that

4:13

okay as an as if you have

4:15

a tax client? Can you I

4:17

mean look give him a thumbs up

4:19

like that I mean I haven't

4:21

been a practicing accountant for many many

4:24

years So this is definitely not

4:26

tax advice or legal advice of any

4:28

kind but It's something that I

4:30

think happens in the real world, yes.

4:33

Very real, I would say that's very

4:35

realistic. And the other thing we

4:38

see in that scene is his computer screen for

4:40

a split moment and we see the name of

4:42

his accounting firm. Ah, yes. Which

4:44

is ZZZ accounting, which is just like...

4:46

It's almost like somebody just created the

4:48

default spreadsheet for the movie scene and

4:50

never changed that part out. And they

4:52

just ran with it for the movie.

4:54

Right, right. Yeah, they just had it

4:56

as a placeholder and then they never

4:59

got around to giving it an actual

5:01

name. You know, another thing

5:03

I think the scene demonstrates is it shows us

5:05

that Ben Affleck actually cares for his clients.

5:07

You know, he has some empathy for them. He's

5:09

like trying to help out these people, which

5:11

I know a lot of Calamans are actually trying

5:13

to help their clients. They want to like

5:15

do what's best for them. So yeah, it's nice

5:18

for that. So next we're introduced to JK

5:20

Simmons character who works at the Treasury and with

5:22

FinCEN. So David, I know you love FinCEN,

5:24

don't you? Yeah, so he

5:26

basically blackmails a Analyst for the

5:28

Treasury. She's not an agent yet

5:30

and blackmailers are becoming an agent

5:32

to track down the accountant But

5:34

I thought it was funny that

5:36

all the business cards and things

5:38

said Treasury but up behind him

5:40

I think there was a sign

5:42

that said FinCEN and I just

5:44

thought how unrealistic because in 2016

5:46

there were priority making plans on

5:48

starting BOI and canceling BOI so

5:50

much that it's just not very

5:52

realistic. They would, FinCEN would

5:54

be chasing down the accountant. So

5:57

for any of our listeners who may be

5:59

unfamiliar about who FinCEN is or what they

6:01

do, and from their own website,

6:03

FinCEN is a bureau of the U .S. Department

6:05

of the Treasury. FinCEN's mission is

6:07

to safeguard the financial system

6:09

from illicit activity, counter money laundering,

6:11

and the financing of terrorism

6:13

and promote national security through strategic

6:15

use of financial authorities and

6:17

the collection analysis and dissemination of

6:20

financial intelligence. Yep. All

6:22

right. So then we find out Christian

6:24

Wolf, Ben Affleck has like a handler,

6:26

you know, accountants, you know, it's like

6:28

having secretary, they can't get their own,

6:30

they can't handle their own work. So

6:32

his handler tells them like, I don't

6:35

want you doing dangerous stuff. Oh, yes.

6:37

We find out from J .K. Simmons

6:39

that Ben Affleck's character Christian Wolf Basically,

6:41

he's an accountant for the worst type

6:43

of people when Mexican drug cartels have

6:45

money missing or when the mafia or

6:47

when terrorists in different places have money

6:50

go missing. He's the person they call

6:52

in, but his handler wants him to

6:54

do some safer work. So she has

6:56

got him a job at a company

6:58

called Living Robotics. Living Robotics. And he's

7:00

there because there's been some abnormalities detected

7:02

in their books from a junior accountant.

7:05

He's going to go look into it

7:07

and figure out what's going on. So

7:09

here's him requesting what he needs to

7:11

do his forensic accounting work. I think

7:13

if you saw our books, you'd run

7:15

for the hills. We

7:17

have an incredibly complicated accounting system.

7:19

Depreciation schedules on hundreds of different

7:22

items, full -time and contract employees, Department

7:24

of Defense classified accounts, numerical shitstorm.

7:26

I'll need to see all those

7:28

books for the past 10 years.

7:31

Bank statements, complete list of clients and vendors,

7:33

hard copies printed out in my eyes

7:35

only, all the information's right here. Okay, well,

7:37

well, look, this all came to my

7:39

attention only last week. Now, a junior cost

7:41

accountant stuck her nose where it didn't

7:43

belong and obviously had no idea what she

7:45

was looking at. Lamar is overreacting. There's

7:47

no missing money. How long have you been

7:49

CFO of this company, sir? 15

7:52

years. I need the books for

7:54

the past 15, please. So in

7:56

that scene Ben athlete is talking to the CFO

7:58

of the company who's like trying to warn

8:00

him how complicated it all is We also hear

8:02

like we said that a junior accountant played

8:04

by Anna Kendrick is the one who found this

8:06

in the first place and I'd say that

8:08

that's pretty realistic from what I know Requesting ten

8:10

years of books is an insane and requesting

8:12

all the specific things he wants to look through

8:14

for a forensic accounting situation That definitely be

8:16

what's what they would want like you know at

8:18

least to start with I guess the unrealistic

8:20

part would be it would not be one man

8:22

doing this at all No,

8:26

I think that's what the log line,

8:28

you got the math savant. Yeah,

8:30

I think the other thing that's kind of

8:32

funny about that scene is the CFO, maybe

8:35

if it was an auditor, maybe he

8:37

wouldn't be so blunt about the state of

8:39

their accounting, but he's like, it's

8:42

not really bragging rights about

8:44

how complicated your accounting system is.

8:46

I don't think there's any

8:48

CFO out there just wants everyone

8:50

to know it's like, our

8:53

books are It's a

8:55

disaster. He's

8:57

like, oh, you'll run for the hills. But

8:59

it was like intimidation of the potential auditor,

9:02

which probably happens. I imagine companies

9:04

intimidate auditors and then think

9:06

very lowly of a junior auditor.

9:09

Well, in this case, but he's a consultant. He's

9:12

being engaged to

9:14

find a leak in

9:16

the books. And

9:18

it's weird that a

9:20

CFO Don't know like

9:22

the CFO role or the CFO dialogue

9:24

was a little bit. I don't know

9:26

I had mixed feelings about it But

9:29

in any case you are right like

9:31

there is there is there are definitely

9:33

clients who will try to like downplay

9:35

things that they think are nothing and

9:37

We'll try to you know, maybe not

9:39

maybe this is a little bit cynical

9:41

but to distract somebody from from something

9:43

that they don't think it's important. Yeah,

9:45

so we're never made clear exactly if

9:47

he knows about the fraud going on,

9:49

but we assume he's been with the

9:51

business since like it's founded. He points

9:54

out or something like he's known, you

9:56

know, we probably involved in this fraud.

9:58

And also, you know, this reminds me.

10:00

of an actual interview that you did, Caleb, back with

10:02

Nathan Mulder, who committed a fraud, and he was

10:05

an accountant, but he was able to direct the auditors

10:07

wherever he wanted. He told, he was like, what

10:09

about the auditors? And when they came in, he said

10:11

they were young junior accountants who didn't know what

10:13

they were doing. He would be like, look at this,

10:15

not over here, look at this. He was able

10:17

to direct exactly what he wanted them to see. So

10:19

it's kind of surprising that Anna Kendrick, I guess,

10:21

in this movie was said fast enough that she was

10:23

able to get them to hire an outside person. Something

10:26

else, just to point out, this company, the reason

10:29

they want to audit is because it's about to go

10:31

public. And that reminds me of,

10:33

you know, after Enron, Sarbanes -Oxley went into effect.

10:35

So, you know, would this audit qualify for that?

10:37

Most likely we don't know all the details

10:39

of this, like, engagement, but most likely this would

10:41

qualify all the requirements for Sarbanes -Oxley, which is

10:43

what companies that want to go public need

10:45

to comply with and go through before they're allowed

10:47

to do that. Well, he'd have

10:49

to be a CPA, right? It's not even clear

10:51

that he's a CPA in the whole movie.

10:54

Oh, no, his nameplate in his office. It

10:56

says accountant. It does not say

10:58

CPA. So he can't sign off on

11:00

an audit. Yeah, technically not. And

11:02

it's apparent that the AICPA probably didn't

11:04

give the producers the right to

11:06

use CPA on a name plan. I

11:09

didn't even think about that. Oh,

11:11

yeah. So

11:14

then it's the total stereotypical junior accountant

11:16

scenario, kind of the next scene. It's

11:18

the next morning. And they

11:20

delivered all these things that the

11:22

accountant's requested. The scene

11:24

starts with Anna Kendrick sleeping at the

11:26

desk all night, which is like

11:29

a stereotypical junior accountant scenario that could

11:31

exist. And then Christian Wolf, then

11:33

after comes in and he like starts

11:35

writing things on walls, starts organizing

11:37

stuff. And then, you know, he's a

11:39

little bit fan office for sure. At

11:42

lunch he tries the bond. Anna Kendrick talks about

11:44

like why she became an accountant. And here's a

11:46

little bit about that. I like the

11:48

balance of it. You

11:51

know, I like finding things that Aren't

11:53

obvious. Plus,

11:56

my dad was an accountant. He

12:00

actually, you know,

12:02

he had the whole shtick.

12:05

The, you know, the little amortization

12:07

book in the green eye

12:09

shade. The, like, dorky

12:11

pocket protector. I have

12:13

a pocket protector. That's a nice

12:15

one. I mean, his was dorky.

12:17

That's, yours is nice. And

12:20

then my favorite part was when

12:22

she talks about... much University of

12:24

Chicago and accounting is fun for

12:26

her. So I studied accounting at

12:28

the University of Chicago where fun

12:30

goes to die. Real fun. Real

12:32

advertising for the accounting where fun

12:34

goes to die. She's talking about

12:36

the University of Chicago, I think

12:38

so, but she's talking about... Maybe

12:40

accounting. Maybe accounting specifically at the

12:42

University of Chicago is where fun

12:44

goes to die. It isn't clear.

12:47

So the next scene is basically Directly after

12:49

that for the accounting side is there's

12:51

like a beautiful mind montage, you know, Ben

12:53

Affleck Russell Crowe was the difference He's

12:55

just writing numbers all along the wall. He's

12:57

whispering things themselves and like we're just

12:59

you know It's basically the most exciting Accounting

13:02

like numbers crunching scene you can make

13:04

so I'll give them credit on that How

13:06

can you make numbers crunching excited? It's

13:08

got like violin like exciting pretty music. It's

13:10

even Well, he reminds me of you

13:12

know, and he's also he's also every time

13:14

that the one of his Whiteboard markers

13:16

runs out of ink He like cans it

13:19

right in the trash can like he

13:21

just makes every single one of them There's

13:23

red and there's black and there's like

13:25

and there's like by the time he's done

13:27

There's like a dozen of them in

13:29

the trash and you're just like oh, yeah,

13:31

that is kind of exciting So Anna

13:33

Kendrick's character says that she crossed

13:35

all the files and organized them by

13:37

year and alphabetically. Do you think they actually

13:40

helped him or does he even need

13:42

the information organized to process this data? Can

13:44

you just take it randomly and just

13:46

do it all in his head? I

13:49

mean, I am not an

13:51

expert on, you know, on

13:53

people with autism and or

13:55

high functioning autism, especially. But

13:58

I think it makes little difference. Maybe

14:00

it saved him an hour. Let's say it

14:02

took her all night, but it saved

14:04

him an hour. And the

14:06

issue with the movie that's kind of

14:08

crazy is the public's impression of

14:10

an audit is this. Somebody looks at

14:12

everything and figures out something's wrong

14:14

in the fraud. But we live in

14:16

a world where all these audits

14:18

happen every time we turn around. Blake

14:21

and I talk about this in

14:23

the accounting podcast all the time. Well,

14:25

here's another fraud that happened that

14:27

the auditors never found. That's right. And

14:29

this doesn't help. This doesn't help.

14:31

public perception of what an audit actually

14:33

is versus what we think it

14:35

is. the auditing

14:37

profession, especially the big,

14:39

big auditors, they like to

14:41

talk about an expectations gap. They call

14:43

it the expectations gap. And it's their go

14:45

-to talking points when this comes up, which

14:47

is, it's like, well, the public thinks

14:49

we do one thing, but in reality, we

14:51

do this thing, and we're gonna do

14:54

this thing. We're not gonna do what people

14:56

think we do. And so, yeah, no,

14:58

you're right. But now somebody made a movie

15:00

that's watched by hundreds of millions of

15:02

people. That shows what you do in theory.

15:06

So basically we see that whole montage. Was

15:08

that like a few days? Is it a

15:10

week? How much time is he spending on this?

15:12

Nope. He cracks the case in a single

15:14

next. Yeah, one night. Friend years of books and

15:16

here's him describing exactly what he found and

15:19

that Anna Kendrick was right. The anomaly that she

15:21

found was correct and like there's an actual

15:23

issue with the books. Come in. Come in. Come

15:25

in. You have to see this. Look at

15:27

this. It's going to blow

15:29

you away. I mean it'll just jump

15:31

right out of that shoe. Living

15:33

robotics 10 years ago earnings before

15:35

interest tax depreciation 14 million four

15:37

hundred ninety five thousand seven hundred

15:39

nineteen dollars nine years ago earnings

15:41

before tax and depreciation Revenues go

15:43

up profits go down down no

15:45

large capital expenditures dragging profits down

15:47

no spike in raw materials or

15:49

labor costs Year eight profits and

15:51

revenue both go up, but not

15:53

in a commensurate fashion X no

15:55

longer equals Y six five four

15:57

three you're making money, but there's

15:59

a leak okay So basically, he

16:01

describes, like, he finds $60 million

16:03

that are missing that should be

16:05

there. Now, he doesn't know exactly

16:07

where it's gone or what's going

16:09

on with it, but that's what

16:11

he's found to start. That's

16:14

the next accounting scene that we see. During

16:16

this time, we're also introduced

16:19

to a random, I don't

16:21

know what to call them, a thug

16:23

intimidation, a contractor, a mercenary. What are

16:25

you to call John Bertenthal's character in

16:27

this? He's a mercenary, for sure. Okay,

16:29

so would you just a mercenary you're

16:31

shorting their stock? Simultaneously spreading

16:33

false rumors regarding the health of the

16:35

company the resulting decline in the stock

16:37

price It's made you your millions, but

16:39

it's been at my client's expense and

16:41

they have been forced to cut hundreds

16:43

of jobs Simon These are third -generation

16:46

metal workers people with families pensions are

16:48

being rendered worthless because of you so

16:50

you get some this car of a

16:52

some type of hedge fund manager And

16:54

he is doing short selling on

16:56

a company from lying about them. And

16:59

he's, yeah, so he's a shitty guy.

17:01

He's a liar. He's a, I don't

17:03

know. He looks like the typical sleazeball

17:05

type of guy. Well, he's got

17:07

a British accent. So like you kind of think,

17:09

oh, he's very sophisticated. That too.

17:11

I have kidnapped insurance. You obviously know

17:13

that. And John Burnthal tells them

17:15

like, you know, you're taking away jobs because we

17:18

had the price went down. So we had to fire

17:20

400 people and their savings accounts are getting drained.

17:22

So like, you're going to fix this. And the guys

17:24

are sponsoring like, what company are you talking about?

17:26

I do this with all these companies. We

17:28

short dozens of companies. He's like, oh, do

17:30

you lie about dozens of companies? So

17:32

I should point out that like, obviously, shorting stocks is

17:34

nothing illegal with shorting stocks. You could assume that the

17:36

price is going to go down and try to short

17:39

a stock that's completely fine. You're not going to in

17:41

trouble with it. Obviously, if you're

17:43

the one making the price go down

17:45

by lying, like putting out false information,

17:47

by intimidating people, whatever you're doing, then

17:49

that is the illegal part. And that's

17:51

why John Brunthal is there to teach

17:53

him a lesson. I forget. Is that

17:55

the first time we meet him? Is

17:57

that the first time we meet his

17:59

character? Okay, yeah. So it isn't clear

18:02

necessarily right away that he's a mercenary.

18:04

but he is a very calm, cool,

18:06

collected character and he gets in that

18:08

car and he intimidates the hell out

18:10

of this rich hedge fund guy and

18:12

it's very satisfying. It's a very satisfying

18:14

scene. Oh, I'm an avid reader of

18:16

the journal. I expect cooperation

18:18

to be reflected there. Simon,

18:24

are we good? So

18:26

the next time we see John Bernthal is

18:28

after Christian and Dana. find this fraud they want

18:30

to go tell everyone right like oh we

18:32

found what's missing like we can investigate this further

18:34

and instead they find out that christian has

18:37

let go he's been fired so it's like what

18:39

like i didn't get to finish that's like

18:41

his main thing is upset about like i didn't

18:43

get to finish my work and they like

18:45

they started moving things around he's going through his

18:47

files so they're starting to erase his whiteboard

18:49

and all his like stuff on the walls and

18:51

is similar to his reaction when he lost

18:53

the puzzle piece as a child in the beginning

18:55

of the movie So the first scene that

18:57

we see, yes, the first thing that we're introduced

19:00

that shows him he's like a little bit

19:02

different is he's solving a puzzle. It's

19:04

not even upside down. How would you describe this? Well,

19:07

he's solving it with the back of

19:09

the puzzle. Just by the shapes of

19:11

the pieces, not by any artwork at

19:13

all. By the scenes only. And it's

19:15

a flashback scene for whatever. It's a

19:17

flashback scene as a child. Yeah. So

19:21

throughout this movie, there's some flashbacks that show

19:23

some anomalies like that, that he didn't have a

19:25

good relationship with his father. He was pretty

19:27

strict. That's where he learned how

19:29

to fight. And his father was making

19:31

them get into fights with strangers. That was like

19:33

10 -year -olds. But yeah,

19:35

but anyway. So he finds out that

19:37

he's being let go from this. And then

19:39

we see John Berthol again, when

19:41

he's sitting with the CFO of

19:43

the company, telling him, basically, you

19:45

got two options. Suicide or I'm

19:47

going to kill you. It's weird

19:49

because the CFO, it's dark,

19:51

he's in his house, and he's

19:54

walking around, and he's in his

19:56

pajamas, and then all of a

19:58

sudden, John Bernthal is eating ice

20:00

cream. at his dining

20:02

room table and basically gives him

20:04

the option of committing suicide

20:06

or being murdered. They

20:09

go through the back and forth

20:11

a little bit and it's clear

20:14

what's gonna happen. I

20:16

guess I won't spoil that part, but

20:18

it's clear what's gonna happen to him.

20:21

But it's strange because we don't necessarily

20:23

put together at this point like

20:26

why John Bernthal's character is even there.

20:28

Like how did that even, how

20:30

did, why did he show up there,

20:33

right? There's nothing that tells us why he

20:35

ended there. You just wrote, oh, that's the guy

20:37

who intimidated the other guy and that's all

20:39

you know. right. He's like, oh, this is what

20:41

he does. He intimidates financial guys. That's kind

20:43

of all we really know. Great.

20:45

So at the same time though,

20:47

we see that some mercenaries

20:50

show up at the farm where

20:52

Ben Affleck has been staying. to

20:55

do this job. And David,

20:57

I know you like this scene. is my

20:59

most favorite scene in the movie. These bad

21:01

guys go to the farmer's house because they're

21:03

looking for him. And they call him the

21:05

bookkeeper. Where's the bookkeeper? It's just

21:07

this typical thing that's gone on forever. Accountants versus

21:09

bookkeepers. Accountants don't want to be called a bookkeeper.

21:12

And the fact that they put that in the

21:14

movie is just amazing. That they call them the

21:16

bookkeeper instead of the accountant. I thought that was

21:18

hilarious. Call the bookkeeper. Yeah.

21:21

So basically, Ben Affleck has

21:23

a I think it's a 50 caliber sniper

21:25

rifle. Oh my god. And he just starts

21:27

taking out, I think there's three mercenaries. The

21:29

first one he takes out in the house,

21:31

they take the farmer's hostage, he gets them

21:33

on like the truck, whatever. Christian Wolfenhaf, like

21:36

he realizes like, oh no, this one he

21:38

puts it together. Like they wanted me to

21:40

get off this case for a reason. They're

21:42

coming after us. That means they must be

21:44

coming after Anna Kendrick's character Dana. So he

21:46

goes in, he goes to her apartment where

21:48

of course there's multiple mercenaries there as well.

21:50

He kills them, I think he kills five

21:53

people in one apartment, including outside and in

21:55

it, and then he saves her, and

21:57

he takes her to a hotel as they can

21:59

lay low. This is when

22:01

he discovers what they're doing and the reason

22:03

that they're committing the fraud. And

22:05

he compares it to another fraud that actually, oh,

22:07

my fraud covered, but let me play the

22:09

scene first. Crazy Eddie in the pan

22:12

of my pump. Crazy

22:14

Eddie Anton in the pan of my pump. Have

22:16

you ever heard of... What? Crazy

22:18

Eddie Antar, he owned a string of electronic

22:20

stores in New York City in the 80s.

22:22

Crazy Eddie Antar, he started stealing almost as

22:24

soon as he opened business. Okay, I'm not

22:27

following. He deposited money in Tel Aviv and

22:29

then he cycled it through Panama and put

22:31

it back into his stores. Okay, why? Why

22:33

take it out and put it back? Well,

22:35

initially he was just stealing in garden variety

22:37

tax evasion, but then he came up with

22:39

a better idea. You see, by

22:41

taking his own money, stealing it and

22:43

putting it back on his books. It was

22:45

raining cash. He took the company

22:48

public at $8 a share. A year later,

22:50

it was trading at $75. Rita's

22:53

taking living robotics public. So

22:56

we interviewed a journalist who wrote

22:58

a book about Crazy Eddie. His

23:00

name is Gary Weiss. And

23:03

he chronicles basically

23:05

the entire story

23:07

of Crazy Eddie.

23:09

Episode 16. And

23:11

it was, it is true that

23:13

it was basically, they were taking money

23:15

from the business pretty much right away. And

23:18

long story short, it became a

23:20

public company and they made lots

23:22

of money. But this Panama pump

23:25

portion of the scam, they ran

23:27

all kinds of scams. But this

23:29

one in specifically is they took

23:31

profits from their US based business.

23:33

They moved them to Israel. And

23:35

then they opened fake accounts in

23:37

Panama. They moved that money

23:39

from Israel to Panama, and

23:41

then they moved the... money

23:44

in Panama, they basically made

23:46

false invoices and the money came from Panama

23:48

to inflate their revenue. So this was when

23:50

Crazy Eddie was a public company and the

23:52

Panama pump was one of the schemes they

23:54

were running and that's how, that's the gist

23:57

of it. So basically he makes his revenue,

23:59

they make the revenue seem like it's higher,

24:01

which means like it's doing better as a

24:03

company, which makes people think that the shares

24:05

go up and the price goes up the

24:07

shares and the company is worth more money.

24:09

But it's overvalued, obviously, because they don't want

24:11

you to have that revenue coming in. That's

24:13

a lie. You should definitely check out.

24:16

Yeah, yeah. Definitely check out our conversation

24:18

with Gary Weiss, because we talk about,

24:20

we get into the whole thing, and

24:22

Gary is, I don't know, he's a

24:24

great storyteller. So he has all kinds

24:26

of fun details about that story. So

24:29

after Ben Affleck saves the day and everything, it

24:32

cuts the John Bernthal's character being so

24:34

surprised that an accountant has handled this. So

24:36

I'm going to just share that. It's

24:38

a little funny thing. It's

24:40

one of our accountant's difficult to

24:43

ventilate. Dead.

24:46

Christ, what are you doing? over the head with an

24:48

adding machine. Put me in touch with

24:50

a client. I'll handle

24:52

this accountant myself. Yeah,

24:56

so you know, that's accounting. That's how they

24:58

fight. They hit people over the head with

25:00

an adding machine. Sure. That's what you learn

25:02

in your extra fifth year for getting your

25:04

CPA. That's what they learn. That's really

25:06

teaching these skills, right? David, that's what the fifth year

25:08

of education is for. That's 150

25:10

hours. So what's interesting

25:12

is there's those stereotypes of like,

25:14

this is how they count when we

25:16

kill somebody, but we got introduced

25:18

to his character via his trailer. So

25:20

he has an airstream that he

25:22

has parked in storage. Obviously, it's

25:25

arguably questionably a safe

25:27

house that he can move

25:29

around. we get

25:31

to see what's in his trailer. And it

25:33

brings up a lot of tax questions

25:35

when you actually see it. So he has

25:38

this artwork in his Airstream. He has

25:40

a Remar, a Pollock. Obviously has lots of

25:42

cash, gold bars. He has

25:44

guns. But you start

25:46

wondering, is this a tax shelter? Why

25:48

does he have these expensive assets? Does

25:50

he need to flip them? And

25:52

then you see the guns, and this really starts

25:54

changing your perception of an accountant, of who he

25:56

is as a character. Like

26:01

I get the cash and gold, like if he's got

26:03

to move something fast, but the artwork never really made

26:05

a lot of sense to me. Like what's your thought

26:07

on that, Caleb? Is it just an asset he can

26:09

move later on? It seems like you can't sell that

26:11

very fast. No, it's not

26:13

very liquid, but those

26:15

are, if I remember him talking about

26:17

it, he liked, those were pieces

26:19

of art that he liked and he

26:21

was able to take them as

26:23

form of payment. So remember, he's got

26:25

these. big, bad, dangerous clients

26:27

that are super, super rich, right? And

26:29

maybe they don't, and maybe to

26:31

keep things like, maybe not

26:34

to draw attention, you

26:36

know, a Pollock, that Pollock, I didn't,

26:38

I intended to look it up because I

26:40

wanted to know the value of it.

26:42

But that painting is worth millions and millions

26:44

of dollars. So instead of getting a

26:46

deposit that would attract attention its bank account,

26:48

I'll just take this painting and not

26:50

have to pay for taxes on it. Yeah,

26:52

and there's a scene early on with

26:54

this handler where she is trying to convince

26:56

him to sell that Pollock, and he

26:59

refuses to do it because he either needs

27:01

the liquidity or something, and he likes

27:03

the painting so much that he doesn't want

27:05

to sell it, but he does want

27:07

to, he's like, I'll sell the Renoir, and

27:09

the Renoir is also a very, it's

27:11

a woman, it's called Woman with a Parasol,

27:13

I did look that one up, but also a

27:15

very valuable painting, and he's willing to sell

27:17

that, but he's not at the Jackson Pollock one

27:19

right now. Oh yeah, how much is it? 2006

27:22

it sold for a hundred

27:24

and forty million. Yeah, see

27:26

there you go It's an

27:28

it's an insanely valuable painting

27:30

And so yeah to have

27:32

something like that Sure, it

27:35

might the art world so

27:37

I'll plug another episode of

27:39

oh my fraud here there

27:41

we did a an episode

27:43

about a Ponzi scheme that

27:45

occurred in the kind of

27:47

the the elite art world

27:49

and And

27:52

it's also a fascinating story, but the

27:54

art world is kind of, it is kind

27:57

of like, there's kind of like CD

27:59

deals kind of going on all the time.

28:01

There's kind of these underhanded things going

28:03

on all the time. And so when you're

28:05

dealing with artwork like that, and you're

28:07

dealing with the amount of money, that

28:09

those pieces are worth, then

28:12

yeah, it's one of those things where

28:14

he's like, yeah, he kind of knows

28:16

what he's dealing with. He's kind of

28:18

in these gray areas. So

28:20

getting rid of the painting when he

28:22

ultimately would have to, that

28:24

would be sketchy

28:26

too. So art was also

28:28

a great way for money laundering and

28:31

for like embezzlement in general, right? Because

28:33

the valuation of them could be... different

28:35

than the price you're paying for them

28:37

or what you're storing money that way.

28:39

You don't have to, you know, depending

28:41

on, should obviously report anything you buy,

28:44

people don't always report artwork.

28:47

Actually, that leaves us a great

28:49

transition to when the agent investigating

28:51

Christian Wolf with J .K. Simmons, Cynthia

28:53

Dyer Robinson, he's investigating, you know, Van

28:55

Appelik, she realizes that she's trying to

28:58

find who's the accountant. And

29:00

the way she finds this is

29:02

through three different businesses that are

29:04

doing some basically money laundering. And

29:06

I'm going to play that clip

29:08

for everyone here. 75

29:14

grand, that's chop change. Agreed.

29:16

But, Abraham, another

29:18

$287 ,765 through

29:20

Kim's nails. $445

29:23

,112 through Great Mandarin Chinese,

29:25

and you'll love this. $505

29:28

,909 through Paul's

29:30

laundromat. He's playing

29:32

with us. He can't clean that kind of money

29:34

through an accounting firm. The paper trail's too heavy,

29:36

so he's laundering it through cash businesses. All of

29:38

those are in the same strip mall south of

29:41

Chicago. Z, Z, Z. I mean,

29:43

he doesn't care about the traffic. It's a front.

29:45

All right. So if anyone's unfamiliar with money laundering, basically

29:47

what that is doing is trying to take dirty

29:50

money, illegal money, and somehow making it seem like it

29:52

came from a legal source. So a way that

29:54

this often happens in a famous example is in Breaking

29:56

Bad. Walter White has a drug business. He's making

29:58

tons of money from selling meth. He opens a car

30:00

wash so you can pretend that a bunch of

30:02

money is coming through that car wash. And then, you

30:04

know, when he does his taxes for it and

30:06

he receives that money, it's clean, so to say. You

30:08

know, you pretend like it was a legitimate business

30:10

that it came from. And now it's clean money. Actually,

30:13

funny enough, another example of that is

30:15

Ozark. And the writers of Ozark actually were

30:17

the two writers on this movie, The

30:19

Accountant. So you can see a little bit

30:21

of a parallel with that. That's a

30:23

nice trivia tidbit to have here. And

30:26

specifically, he owned all the businesses in

30:28

this strip mall. He had Paul's Laundry

30:30

Mat, he had Kim's Nails, a Chinese

30:32

restaurant, and ZZZ Accounting on the same

30:34

strip mall, all owned by him. Yep.

30:37

So he was able to flip. you know,

30:39

you had a million dollars of income, but

30:41

you can't pretend. I thought, actually, here's a

30:43

funny thing. I was a little shocked about

30:45

this. An accountant can make a million dollars

30:47

a year as a business. Why'd they say

30:50

that was way too much for him? He

30:52

had to pretend like it was, it was

30:54

four different businesses. What's wrong with making a

30:56

million dollars a year as a, you know,

30:58

in the suburb of Illinois? Like I was

31:00

like, what's with that? Yeah, it felt like

31:02

an accountant that's only making 75 grand a

31:04

year is... Yeah, not insulting a little bit

31:07

insulting. Yeah, yeah Great, so I mean that's

31:09

most I will be completely honest that is

31:11

mostly counting in this movie We will get

31:13

to the rest we go get some more

31:15

of it at the end and like recover

31:17

some themes But at this point it is

31:19

a shoot them up revenge movie basically that's

31:21

for the rest of the 40 minutes of

31:24

the movie or whatever it should be 30

31:26

I'll say So basically

31:28

the next thing we find out is Christian Wolf

31:30

wants to go talk to the sister of the

31:32

CEO of the company, John Lithgow, and like, you

31:34

know, try to get information on that because he

31:36

even knows that the CFO has died. I don't

31:38

know if we ever get her title. Do

31:41

you ever know exactly what her job at the company was?

31:43

She's talked to him multiple times when he's doing his audit.

31:45

I don't know if we ever know where to title the

31:47

company is. He goes to talk to her. She's dead too.

31:49

They're cleaning house. So the only person

31:51

left is the CEO, John Lithgow. This

31:53

leads to him having security. He's

31:55

hired John Bernthal to like, you

31:58

know, protect him. They have 15

32:00

mercenaries, I don't know. It's a

32:02

certain amount, certain amount of mercenaries.

32:05

It leads to Ben Affleck. Yeah, Ben Affleck,

32:07

you know, he's... for this apparently like

32:09

I said that's maybe this is also what

32:11

the 150 hours are for he's gonna

32:13

get the military training in yeah yeah and

32:15

he takes them all out he takes

32:17

literally all of them out uh he ends

32:20

up seeing this when we learn there's

32:22

a twist you know we've had flashbacks and

32:24

they're alluding to a pretty hard but

32:26

the other mercenary John Bernthal was playing and

32:28

Ben Affleck's character their brothers they grew

32:30

up with the same strict dad and somehow

32:32

their paths have been crossed I think

32:35

he says it's been 10 years is what

32:37

John Burns also says to him. You

32:39

know, they fight a little bit, but basically

32:41

they decide, you know, they're not going to kill

32:43

each other, which, you know, just to show

32:45

the theme, even though he's their mercenaries, they decide

32:47

not to kill each other when the CEO

32:49

of the company had his own sister killed to

32:51

cover up fraud. So it shows a little

32:53

bit like who's the real like good person here,

32:55

right? Even the killing people left and right. And

32:58

I guess the last part that

33:00

accounting is really shown here is

33:03

John Lithgow's character tries to rationalize

33:05

like what he's doing and

33:07

like call out Ben Affleck and

33:09

We get into this when

33:11

we at the end we need

33:14

some lessons learned, but I

33:16

just want to play this scene

33:18

first Do you consider what

33:20

you do important mr. Wolf to

33:22

someone other than yourself? I

33:24

mean what I do is Living

33:26

robotics public offering would have

33:28

been worth billions Money to be

33:30

used for neuro prosthetics nanotechnology

33:32

you Why

33:34

in God's name did I ever hire

33:36

you? To leak proof your books. Dana

33:39

found a mistake and you wanted to be sure

33:41

was safe to go public. And

33:44

now you want to kill her. I'm fond

33:46

of Dana. But I restore

33:48

lives, not Dana. Me! Men, women,

33:50

children. I give them hope. Make

33:52

them whole. Do you

33:54

even know what that's like? Yes, I

33:56

do. I

34:01

think it's hilarious. I

34:03

think it's hilarious that he, part

34:05

of that rationalization is that

34:07

he restores lives. And

34:09

so he's going to commit

34:11

murder in order to continue

34:14

restoring lives. That's how

34:16

important this is. Anyway, John Lithgow is great.

34:18

He's so good. So that's basically the

34:20

end of the movie. The last

34:22

little, you know, we got a couple end

34:24

bits, basically J .K. Simmons completes the transition for

34:26

the new agent taking over his role. And

34:28

in the meantime, they are investigating him, like

34:30

finding, like, you know, she finds out where

34:32

he works, they find his house, but nothing

34:34

really comes from it. Also,

34:37

we learned the background, basically,

34:39

why Ben Affleck is

34:41

involved with helping these people

34:43

catch criminals in the

34:45

first place is because... Revenge

34:47

for his mentor when he was in jail

34:49

who taught him how to do this type

34:52

of accounting He was killed originally by a

34:54

mafia person and Ben athlete got revenge on

34:56

him and then ever since then has been

34:58

giving information to J K Simmons to help

35:00

him take down the bad guys. Yep That's

35:02

just some background of it. And the last

35:04

thing is speaking of like, you know payment

35:06

so Anna Kendrick As I guess,

35:08

a gift, as a payment, whatever Ben Affleck

35:11

gives her, the Jackson Pollock that we just

35:13

said is worth $2 ,640 million. Now, what

35:15

could she possibly do with that? We see

35:17

her hanging it. No, no frame or anything

35:19

like that. No, you know, just hanging it

35:21

on her wall. But I don't

35:23

even know, like, if you're trying to even

35:25

get that as a gift, I don't even

35:27

know what you could possibly do with it.

35:29

You can't. You can't sell it. the beauty,

35:32

well, remember, she wanted to be an artist.

35:34

So for her to have the art is

35:36

way better than to sell it for a

35:38

bunch of money, in her case. Like if

35:40

you're a rich person who collects that kind

35:42

of stuff all the time, then no, it's

35:44

a game. But for her, no. Does she

35:46

have a tax hit for receiving it? Or

35:48

when she sells it, is that the tax

35:50

hit? No, you would

35:52

not. Well, yeah, but

35:54

if it's a gift, I

35:57

mean, I don't know. Again, my

35:59

tax accounting chops are very rusty. It's been

36:01

a very long time since I did that

36:03

kind of work. But if that's a gift,

36:06

that painting is worth way more

36:08

than whatever the gift exemptions

36:10

are. So I don't

36:12

know. But maybe because they're

36:14

not related, then maybe that

36:16

means it's fine. I don't

36:18

know. But if she were

36:20

to ultimately sell it one

36:22

day, she paid zero for

36:24

it. And so she has

36:26

100 % you know, capital

36:29

gains tax on this piece

36:31

of very valuable art. Anyway,

36:33

I'm sure there's someone out there that

36:35

can correct all the mistakes that I made.

36:37

In fact, you said we're $140 million,

36:39

it's the last option. In 2006, it was

36:41

sold for $140 million. So

36:44

just say, let's say the account is worth

36:46

a billion dollars. $100 million. He just

36:48

gave 10 % of his net worth away.

36:50

But how much is he worth to just

36:52

gift away $140 million painting? That's a

36:55

great transition because he also learned that the

36:57

whole money that he receives in cash

36:59

that he launders anyway through the small businesses,

37:01

he gives all of that away to

37:03

charity as well to an autism school. He

37:06

finances that school. He finances that school.

37:08

That's right. Yeah. And they kind of, and

37:10

there's one final twist at the end

37:12

that I don't know if we want to

37:14

share. I mean, it's been

37:16

almost 10 years, but they do, they do

37:18

have this kind of final scene at

37:20

the school, and that's the school where Christian,

37:24

he didn't, did he ultimately end up going? Or he -

37:26

I'm not sure if they just they make that clear?

37:28

They don't make it clear, no, they don't make it

37:30

clear if he ever went. You know,

37:32

also they have the movie, there's some weird

37:34

stimulation things they try to like, do to

37:36

themselves, like to get used to like, different

37:38

stimuli, like loud music flashing

37:40

lights, hitting himself on the legs. Well,

37:43

no, no, no, you know what he's doing there,

37:45

right? with that big, with that like big wooden

37:47

kind of like, it's kind of like a preparing

37:49

for his job at the big four? Is

37:52

that it? When he's smacking himself

37:54

with a wood doll? Yeah, the,

37:56

yeah, the, yeah. Pain,

37:59

endurance is pain. But no, what he's

38:01

doing is he's like. He's making sure that

38:03

the blood flow in it, because he

38:05

sits so much, because he's an accountant. He's

38:08

making sure he doesn't get blood clots

38:10

in his lower leg. You just need

38:12

some compression socks. That's all you gotta

38:14

get. Yeah, I mean, that would be

38:16

the easier way to do it. But

38:18

there must be something to the loud

38:20

music and getting his blood circulation smooth

38:22

down part of his routine. It is

38:24

rare for an accountant. His

38:26

best tools are his calculator and his

38:28

flashbangs. So you know the splashing lights. That's

38:32

practicing for those flashbangs he uses

38:34

in that final scene, pretty epically.

38:37

All right, so I think now we can transition to basically,

38:39

there's a lot of accounting in here, a lot of

38:41

stuff that they get right, a lot of stuff they don't

38:43

quite touch on, but I think it's worth us bringing

38:45

up. So one of the things that I brought

38:47

up earlier, a little bit I want to get into is the fraud

38:49

triangle. So personally, you

38:51

know, Caleb, if you want to explain

38:53

the three elements of the fraud triangle, then I'll get

38:56

into it actually. Okay, yeah, so there's three elements

38:58

to a fraud triangle. There

39:00

is opportunity, okay?

39:02

You have to have the opportunity to

39:04

commit a fraud. You have to have

39:06

usually pressure, and that's

39:08

kind of, that's, sometimes that's

39:10

the motive, sometimes it's

39:12

not. And then there's rationalization.

39:14

So as I explained

39:16

on a recent episode, most

39:18

people know that fraud

39:20

is wrong. But when you're

39:22

committing a fraud, the

39:24

psychology of it is, is that you

39:27

convince yourself that even though you know

39:29

this is wrong, you have a good

39:31

reason for doing it. And it might

39:33

be something as simple as, oh, I'm

39:35

gonna pay the money back. I'm just

39:37

borrowing it. And somehow that Well

39:39

yeah, so we're - Right, precisely help all these

39:41

people. Yeah, so for this case, so yeah, so

39:43

let's get into the actual ones for this case,

39:45

right? So John Lithgow, you know, there's

39:47

always - When you have the fraud triangle,

39:49

it could be the individual or the company,

39:51

sometimes both. They don't really go into if

39:54

there's anything going on with individual, but with

39:56

the company, Robotics, we definitely know that there

39:58

is. So we know that his opportunity, while

40:00

he's the CEO of the company, he could

40:02

obviously do embezzlement in this company pretty easily.

40:04

It doesn't seem like their internal controls are

40:06

stopping him at all from doing that. To

40:08

be fair, we don't ever get, we never know exactly who

40:10

did the embezzlement. We don't know if it was the CFO

40:12

who did it. We don't know if it was John Lutka

40:15

himself, if he had some other henchmen below him do it,

40:17

but. You know, that was obviously there. Now,

40:19

the rationalization is for sure that he

40:21

sees it as like, I could make

40:23

more money from pretending our revenues up.

40:25

I could make more money in the

40:27

public offering and I could help more

40:29

people. He even has that line. I

40:31

played it for you earlier and he

40:33

tells Ben Affleck, like, I save lives.

40:35

I help people, like I, you know,

40:37

do all that. So - Altruistic fraud. Yeah,

40:39

right? I mean, we just covered another

40:41

one where it really was altruistic though.

40:43

Caleb, your episode recently on the Australia's

40:45

Greatest Conman. It

40:47

was altruistic fraud. And

40:49

that's kind of like his pressure incentive

40:51

and rationalization. They kind of go

40:53

together. His company could have gone public

40:55

and it would have been fine. But the

40:57

pressure was I wanted to do even better. So

41:00

it kind of goes together, the

41:02

pressure and the rationalization in this

41:04

one in my mind. You could

41:07

argue that the accountant himself was

41:09

living in the fraud triangle. He

41:11

was playing financial shenanigans, legal, not

41:13

legal, hiding money. with these

41:15

paintings and things like that. And

41:17

he obviously justifies it, because he

41:19

takes all the income and he

41:21

donates it to that school for

41:23

autism. He justifies, his

41:25

murdering comes from a place of justification

41:27

and will if he calls it that.

41:29

And then he has the pressure of,

41:31

you can't ever get caught. So

41:33

in a way like, you could argue like the accountant

41:35

himself is living in the fraud triangle at all times.

41:38

No, that's a good point. And I mean, you're

41:40

right, it is. Yeah,

41:43

giving the money to the school, that's

41:45

a perfect example of somebody who's

41:47

just like in their mind, they're like,

41:50

yeah, but I'm not keeping any

41:52

of the money. I have an airstream

41:54

and I can, you know, if

41:56

I can leave in 12 minutes, then

41:58

I need to escape because I

42:00

have very dangerous clients and his clients

42:02

are dangerous people. So in his

42:04

mind, he's like, well, they're dangerous people.

42:06

So if I'm killing people that

42:08

work for these dangerous people, then that's

42:10

fine. Yeah, there's all kinds of

42:12

rationalization going on with the accountant. That's

42:14

true. I think they show a

42:16

lot of moral ambiguity for him, like

42:18

multiple times. The fact that,

42:20

like, he gives the money away,

42:22

but he also obviously is killing people. He's also

42:24

taking it, even with his brother, John Bernthal,

42:26

the same thing. Like, we see him first helping

42:28

someone good, right? Like the guy who's, you

42:30

know, the hedge fund manager, but later he's killing

42:32

people because he's hired to do it, basically,

42:34

right? There's no other reason. I also

42:37

mentioned, like, funny enough that,

42:39

like, It seems like they have

42:41

a little bit stronger of a moral compass in terms of,

42:43

well, we're not going to kill a family. Yeah,

42:45

right. That's a line we won't

42:47

cross even. Right. And John Lithgow was willing

42:49

to cross that. But yeah, I agree that there's

42:51

tons of like pressure and stuff from rationalization

42:53

from Christian Wolf, Ben Affleck's character happening all the

42:56

time with this because that's just how else

42:58

you're going to live with yourself if you're not.

43:00

And he's working for terrorists. He's working for

43:02

cartels. I guess also if you want to get

43:04

into like. Is he, are they getting

43:06

them or not? It seems like a lot of

43:08

times now he's giving them to FinCen and investigators

43:10

like catch them in these crimes. But we don't

43:12

know if that's always the case with everyone he

43:14

works with. I feel like you would pretty quickly

43:16

realize not to work with him if that was

43:18

the case. Like, oh, everyone who works with this

43:21

guy ends up getting arrested. Maybe like we shouldn't

43:23

hire through this recommend. Yeah, it's

43:25

not really clear. Is he being a

43:27

whistleblower just on this case or is

43:29

he constantly filing, sending stuff over to

43:31

the treasury in FinCen? So that's another

43:33

good part to talk about whistleblowers. So

43:35

I don't have the numbers off hand,

43:37

but I can tell you that the

43:39

majority of fraud and the majority of

43:41

any fraud that we've, you know, from

43:43

every report is caught by whistleblowers. Not

43:46

by audits, by tips and whistleblowers.

43:48

Yeah. So not by audits, not by

43:50

like doing anything else, like investigating

43:52

it, but whistleblowers and tips are going

43:54

to catch the majority of frauds

43:56

that are caught across this country in

43:58

every day life and every big

44:00

company, small companies. It doesn't matter because

44:02

yeah. Someone sees something, say something,

44:04

that old adage. Caleb actually

44:06

interviewed two whistleblower lawyers back on an older episode

44:08

of On My Fraud. So if you're interested in

44:11

learning more about what they're looking for, that was

44:13

more for big corporations like this would have been

44:15

for SCC, usually. But we

44:17

also interviewed a whistleblower, Tony Menendez,

44:19

who is a whistleblower at Halliburton. His

44:22

case was kind of a saga.

44:24

It was like 14 years or something.

44:26

I can't remember now, but go

44:28

check out the. interview with Tony Menendez,

44:30

a really, really great perspective from

44:32

a whistleblower. So the next

44:34

accounting concept I think we should go over

44:36

is like, yeah, forensic audit. And again,

44:38

that was our accountant right now. Caleb is the only

44:40

one who was a former accountant. And

44:42

as far as I know, like for my

44:44

research, I lit up in this, everything

44:46

he did seems pretty on par, like asking

44:48

for the history of it, asking to

44:50

go through like all the payroll, the payments

44:53

in it. I'll play the scene right

44:55

here where John Linkal even describes like all

44:57

the different revenue streams that they have.

44:59

Are you aware of living robotics three income

45:01

streams? Consumer electronics,

45:03

next generation prosthetics, unmanned

45:05

military applications. Prosthetics division

45:07

showed tremendous growth over the last

45:09

10 years. It seems to have

45:11

matured. Consumer products is your highest

45:13

source of revenue followed closely by

45:16

defense department contracts and prosthetics in

45:18

two and three. You are well

45:20

informed. You got a note.

45:22

about pattern recognition and how that's a

45:24

real forensic skill. Now, we all can't

45:26

be the accountant. We all can't just

45:28

in an evening just start drawing whiteboards

45:30

and markers and go through everything. But

45:32

this makes me wonder, as AI comes

45:34

on, you could build an AI accountant

45:36

at his level. And you

45:39

could run this in a night and

45:41

detect anomalies in one evening. I

45:43

wanted to look this up because

45:45

we've talked about this on a

45:47

couple of past On My Fried episodes,

45:49

but it's Benford's Law, right? Benford's

45:51

Law is a mathematical concept that's used

45:54

in forensic auditing and fraud detection. And

45:57

I remember when I was doing

45:59

research, I don't remember the

46:01

episode, but I remember when I was

46:03

researching Benford's Law, I asked chat

46:05

GPT's like, explain Benford's Law to me

46:07

like I'm a, you know, like

46:09

I'm a grade school kid and it

46:11

did a terrific job, of course.

46:13

And, but you could, you could absolutely

46:15

prompt an LLM to take that

46:17

concept, the concept of Benford's law or

46:20

any other concepts or methods that

46:22

are used for detection and you could

46:24

coach that, you could prompt and

46:26

coach that LLM into having those skills

46:28

and being able to examine a

46:30

spreadsheet or whatever and find anomalies. Based

46:32

on based on those methods based

46:34

on those concepts. Yeah, so basically just

46:36

to quickly explain more what David

46:38

mentioned than you mentioned It's like the

46:40

fact that random numbers when people

46:42

are trying to generate random numbers like

46:44

pretend that they're coming up with

46:46

random numbers. They're not random There's a

46:48

lot of signs, patterns in those

46:50

numbers. People think they're being random, but

46:53

know, if you see a one

46:55

five times in a row, they automatically

46:57

go, oh, I have to change

46:59

that. That would never happen. They don't

47:01

realize like that's as likely as

47:03

happening as like a, you know, a

47:05

seven, four, two, four, one, whatever.

47:07

Like, you know, every number is completely

47:09

independent and generated. So most the

47:11

time people make up patterns for that.

47:13

You notice anything? Second

47:17

number in each of the three. Yeah. Most

47:20

people when generating random numbers tend

47:22

to rely subconsciously on certain patterns. You

47:24

know, another thing that you just mentioned, David, it reminds

47:26

me of something that Blake has mentioned a lot on

47:29

the accounting podcast with AI. It's like

47:31

with these AI agents, eventually you want to take a sample for

47:33

audits. Right now, when you audit something, most of the time

47:35

you're taking a sample of data, you can't look at all the

47:37

data because you're never going to have enough time to do

47:39

that. But with the help of AI, eventually, you

47:41

can go through every single interaction or

47:43

transaction, every single payment, every single thing that

47:45

you've ever done to find the fraud. And

47:48

to some extent, that's what he did.

47:50

He had the capacity to do that, which

47:52

I can actually do. You have

47:54

to take a team of people and still

47:56

doing samples. And maybe this

47:58

is the future of audit. Like maybe we

48:00

saw the future of audit. It will

48:03

be one machine looking at every single thing

48:05

in an evening and come back the

48:07

next day and it'll be, come here. It's

48:09

so funny that you say that,

48:11

David, because that's one of the first

48:14

things that I remember thinking when

48:16

people, because... Yeah, the

48:18

way audit has worked

48:20

historically is you can't

48:22

literally test the entire

48:24

population of transactions at

48:26

any business, but with

48:28

the speed of technology

48:30

and AI, that

48:33

all of a sudden isn't

48:35

so far fetched. And I

48:37

think that's really kind of

48:39

a cool thing to think

48:41

about is the possibilities of,

48:43

well, how can we use

48:45

technology to get a not

48:47

just a sample, but how can we

48:50

test all the transactions? And the

48:52

other thing that I've thought

48:54

about off and on over the

48:56

years is, does that mean

48:58

that auditors then could make an

49:00

assessment whether a company is

49:02

free of fraud or not? Or

49:05

could they... some kind

49:07

of an assessment where they

49:09

have a certain percentage of confidence

49:11

that the corporate, that the

49:13

company's books is free of fraud.

49:16

So yeah, a lot of interesting possibilities

49:18

when - He didn't ask for samples,

49:20

he asked for everything. No, I

49:22

know, I know. Right,

49:24

right. I guess the

49:26

only other thing that we talked

49:28

about a little bit, but I'll just

49:30

say it again. is that

49:33

the movie doesn't show exactly how you sold the

49:35

money, or they were there embezzling, but obviously

49:37

some type of lack of internal controls must have

49:39

been going on. Segregation of duties,

49:41

very important things to have in any company,

49:43

especially the bigger the company. It's the basic way

49:45

to stop fraud. If you want to stop

49:47

fraud, it's the easiest way. That's one of the

49:49

easiest ways you could do it, is just

49:51

have segregation of duties and internal controls placed. What

49:53

was the thing Greg always used to say,

49:56

his favorite line, transparency is like the, if you

49:58

want like... not to happen, transparency. Yeah, transparency

50:00

is like as close to a silver bullet as

50:02

you can have. But I think the other

50:04

thing, the other thing that

50:06

we talk about sometimes that was in

50:08

play here is like management override is

50:10

always a huge risk, right? So you've

50:12

got, you've got John Lithgow's character who

50:14

basically, again, it wasn't made

50:16

clear. Did he have his CFO buddy?

50:19

take the money or did he and like and then

50:21

pump it back in so they could inflate the

50:23

revenues or is it something that he was doing himself

50:25

or like how it's like i'm fifty fifty the

50:27

cfo and just from the way they described in the

50:29

movie the cfo seems like he's very angry that

50:32

like you know christian will open up this character is

50:34

brought in to do this but i don't think

50:36

angry because he's like this is my work and i

50:38

did a great job wherever he's angry because like

50:40

He's about to get busted. Yeah, yeah,

50:42

yeah. And I think what is,

50:44

and I think here's the important,

50:46

here's the qualifier that I will

50:48

put on internal controls. Internal controls

50:50

are very important, awareness of fraud,

50:52

very important. However, management override, there's

50:54

always a risk of management override.

50:56

So you can't fully eliminate the

50:58

risk, but you can put as

51:00

many processes in place to try

51:02

to prevent it from happening. Now,

51:04

in a way, like if you,

51:06

the last scene with John, let's

51:08

go. Ben Affleck replies that it

51:10

was to get your books tight before you're probably

51:12

going to stop the audit. This was

51:14

almost like a pre -audit to see if the

51:16

auditors would have caught this. Right. So then

51:18

the question is, they just hired the wrong guy.

51:21

They just hired an audit and got away

51:23

with it, probably. They hired the wrong guy. So

51:25

let's say this. This is a lesson that's

51:27

not a good lesson. We're going to teach people

51:29

to commit fraud here a little bit. Sorry.

51:31

Don't do it. Don't do it. But if you're

51:33

going to hire someone to do your audit,

51:35

don't hire the guy that's recommended for how like

51:37

you know the guy with math degrees from

51:39

MIT and like you know there's a scene where

51:41

they're talking about like who he helped before

51:43

this and how they got his name and like

51:46

the guy they're describing like he ran the

51:48

other companies a genius like he has a math

51:50

degree from this company that's right cow tech

51:52

he went to this company and christian he says

51:54

you're the smartest guy he's ever met or

51:56

whatever so why are you gonna hire that guy

51:58

to run the books when you know there's

52:00

fraud going on do not bring in do not

52:02

bring in a skilled auditor mr. Hikani holds

52:04

advanced degrees in mathematics from Cambridge And

52:07

Caltech, why does a man

52:09

like that need you? I

52:12

think the premise was, if

52:14

we get it by this guy, we'll for sure get

52:16

it by the regular auditors in the street and go

52:18

public. Maybe. I think that's what this was. Maybe. They

52:20

just went with a too smarter guy. Oh, also, there's

52:22

a line where basically, why did they decide to kill

52:24

them? And like, why did they decide to go that

52:26

route? And John let the alley goes, I just knew

52:29

he went, from looking him in the eyes, I knew

52:31

he wouldn't let this go. Yeah,

52:34

so, you know, that's the only guy could

52:36

read people that well I knew fair Ben Affleck

52:38

does not like letting things go so he

52:40

probably went off But that's a pretty bold and

52:42

insane way to take this you know elevate.

52:44

I think what's gonna happen? It's a

52:46

murder after deciding, I just knew he

52:48

wouldn't let this go. I guess he

52:50

already told us about this point. yeah.

52:52

It's like, my best friend's gotta go,

52:54

my sister's gotta go. It's like, the

52:56

junior accountant is definitely going if my

52:58

best friend and my sister are going.

53:00

And there are definite principles, like he

53:02

states he doesn't discuss client business. That's

53:04

right, yeah. And that is a huge

53:06

principle of confidentiality. Absolutely, yeah. That's a

53:08

huge thing accountants need to do. I

53:10

don't discuss client business. The

53:13

very basic, I think it's probably one of

53:15

the guiding principles of CPAs. I don't know,

53:17

Caleb, you can answer this or not. An

53:19

ethics thing, right? He tells somebody

53:21

when he's asked about a client that

53:23

he does not discuss client business, which I

53:25

think is probably an important value to

53:27

have as an accountant. Accountants only

53:29

do that anonymously on Twitter. On

53:31

Twitter, yes. Anonymously on Twitter, that's all

53:33

they want to do. That's okay. Don't

53:35

tell them in person about specific clients, but if

53:38

it's anonymous and on Twitter, talk as much about

53:40

clients as you want. Sorry,

53:43

sorry, go ahead, Caitlin. No,

53:45

I mean, that's, I mean,

53:47

yeah, so accountants, accountants don't

53:49

have, it's not the same

53:51

level, it's not the same

53:53

standard as like physicians or

53:55

lawyers or like clergy, like,

53:58

but they do have, there is a

54:00

standard of confidentiality. And in some

54:02

cases, they've tried to, like when there's

54:04

litigation, accountants have tried

54:07

to claim that very, very

54:09

highest standard, but, For

54:13

the most part, I think they're

54:15

unsuccessful, but there is, but there

54:17

is a standard of confidentiality that

54:19

accountants do hold. And

54:21

yeah, and Christian follows it.

54:23

And I mean, he

54:26

has other motives too, but

54:28

yes, from a professional

54:30

conduct standpoint, he's doing the right

54:32

thing. Perfect all right. Well that

54:34

basically wraps up all the stuff about the accounting any

54:36

overall film things you want to talk about Did you

54:38

like the movie? Let's start. Let's start there David. You

54:40

like the movie? Yeah, I thought

54:42

you had you have to I

54:44

think the theme is like you

54:46

like doing puzzles or whatever that's

54:49

the maybe that's the the tagline

54:51

on the new movie about doing

54:53

puzzles but you feel like you

54:55

have to do this with this

54:57

movie because They don't draw the

54:59

perfect lines of the characters and

55:01

if you think about there's two

55:03

brothers that grew up together They

55:05

both became gun mercenaries and they

55:07

both get hired to either cover

55:09

up or discover financial crimes. It's

55:11

very interesting that these parallel lives

55:13

and their crisscrossing and on who

55:16

they get hired by, it's for

55:18

financial related. frauds and companies and

55:20

short stocks and things like that, which I

55:22

thought was interesting. And then, but then you

55:24

have to really, at the end, the scene's really dark at

55:26

the very end of the movie at the house. And you

55:28

really have to like, even though there's a

55:30

lot of gunfire and action and shooting happening, there's

55:32

still a lot of dialogue that like helps you tie

55:34

a lot together. But the movie is

55:36

like putting together a puzzle. You have to

55:38

really Even even now discussing with this with

55:41

YouTube. There's other pieces. You're starting. Oh, okay. I

55:43

see that's tied together preparing for this I think I

55:45

have to do a lot with the way that

55:47

the scenes are ordered as well like the flashbacks mixed

55:49

with modern mixed with we don't know people's relations

55:51

like okay Well, how's it been out like no John

55:53

Bernthal's character like okay? Who are these two kids

55:55

like the dad the yeah, there's a bunch of scenes

55:57

like that We were just not exactly sure what's

55:59

going on So I'd say you know it's been on

56:01

TV a lot recently with the second one coming

56:04

out So if you watch it a few times, we'll

56:06

make more sense But I don't know if

56:08

that's necessarily a good thing. I don't know if we shoot them up

56:10

if you want to be like, oh, if you see like, it looks

56:12

like it makes sense after the fourth time. Yeah.

56:14

Yeah, you definitely, I mean, I remember

56:16

watching it in the theater for

56:19

the first, I've watched this movie about

56:21

three, three or four times. And

56:23

each time going into it, I'm like,

56:25

Oh, I don't want to like

56:27

this movie. It's like it's this corny

56:29

Can it's this corny kind of

56:31

mash -up of accounting and like yeah

56:33

like Chuck Norris or or or or

56:35

Arnold or whatever like like you

56:37

said to shoot him up Bruce Bruce

56:39

Willis, whatever. It's great. It kind

56:41

of made me think about the old

56:43

diehard movies. But anyway, um John

56:45

Wick meets Rayman's Yeah, right, wow. Each

56:48

time I got to the end of

56:50

the movie, I ended up just liking it

56:52

more than I expected to. And so

56:54

from that standpoint, it's kind of a sleeper,

56:56

because you do kind of think, oh,

56:58

accounting and like, he's got guns and stuff,

57:00

but. But I don't know. And like

57:02

the neurodivergent stuff is really sweet. I like

57:05

that little subplot in the story. They

57:07

do a good job with that. And

57:09

they were kind of commended of how they

57:11

handled that part of the material. So

57:14

all in all, yeah, I think

57:16

the accountant kind of punches above its

57:18

weight in that regard. It's a better movie

57:20

than I expected it to be. 100

57:23

% agree. I think one

57:25

of the main reasons... might be for that

57:27

as well, is I think this is a fantastic

57:29

cast. It's such an impressive cast for what

57:31

this movie is. We already talked about most of

57:33

them, but if we just want to go

57:35

through it really fast, Ben Affleck, Anna Kendrick, J

57:37

.K. Simmons, John Bernthal,

57:39

Jeffrey Tamborn, John Lithgow, Gene

57:42

Smart, Cynthia Dai Robinson,

57:45

like there's just everyone kills it in this. They're

57:47

great. David, you guys are

57:49

hosting, right? Is this gonna

57:51

air or is it in time? It's

57:53

gonna out before, yeah. Okay, yeah. So David,

57:55

you guys are hosting a screening down

57:57

in Scottsdale, right? In Scottsdale. So we are

58:00

going to host an account in two

58:02

screening for accountants for free. We rented theater.

58:04

We have 100 people registered. Popcorn?

58:06

Popcorn? Popcorn? Popcorn. Popcorn

58:09

as well. Oh, good. And we're gonna do the

58:11

whole movie. It should be a lot of fun. And

58:14

thankfully, this movie was

58:16

released after the

58:18

tax deadline. So I'm wondering

58:20

if that was on purpose versus releasing it.

58:22

If they were released at a week

58:24

before April 15th, we couldn't do this party.

58:26

We'd have no accounts attending. Every

58:28

accountant can just shut their office

58:30

and go to this movie on

58:32

Friday when it opens up. So

58:35

I can tell a story about my

58:37

hate of Ben Affleck. Oh my gosh.

58:39

Okay. So for two reasons, and

58:42

you can put this in as like, A sound

58:44

bite at the end. So

58:46

back in the day, when I was into it,

58:48

I created a product called View My Paycheck.

58:50

And I was slowly climbing up in the Google

58:52

rankings and owning the word paycheck. So if

58:54

you search for the word paycheck, I was owning

58:56

the word paycheck. Okay. And then what does

58:58

Ben Affleck come out and do? He creates a

59:00

movie called Paycheck. No. just takes up

59:02

the whole, he just wins the search for the word

59:04

paycheck. six, seven years

59:06

later, eight years later, I start this podcast

59:08

called The Accounting Podcast. And Ben

59:11

Affleck comes to the movie called Accountant and just steals

59:13

all the SEO. I just

59:15

can't win with this guy. That is hilarious. He's

59:17

brutal. Yeah, he's stealing the SEO,

59:19

he's stealing the results. All the

59:21

accounting word SEO turns. You know, David

59:24

also was the original Batman. I

59:28

have a lot of

59:30

SEO struggles. If

59:32

you Google David Leary, For years,

59:34

Google would say, you can't be searching

59:36

for David Leary. You must want

59:38

Dennis Leary. Oh, no. I had to

59:40

create a website that says, I'm

59:42

David Leary, not Dennis Leary, just to

59:44

retrain. Yeah. But

59:46

yes. So Ben Affleck has stolen

59:48

two keyword search words for the

59:50

accounting industry. What a selfish man.

59:54

And on that note, I think we're good. Everyone,

59:56

please subscribe to the accounting podcast. Subscribe to

59:58

Oh My Fraud. Me and Caleb we're occasionally gonna

1:00:00

do these movie ones. We did one on

1:00:02

the informant. we did this one now, and and

1:00:04

we're occasionally do some other ones. If you

1:00:06

guys like movies with accountants and fraud, we're getting

1:00:08

to those. And looking forward

1:00:10

to doing this for the accountant, too. Hopefully

1:00:12

there's accounting stuff. Let's cross our fingers.

1:00:14

All right, enjoy. Thanks, everyone.