Is one pollster cooking the books?

Maybe. This would rock the polling industry and how it gets its results published if true. Think about it, groups pay for polls all the time and the media dutifully reports those results comparing them to other results. Those polls might even get aggregated into trend lines at places like Pollster.com.

Statistician Nate Silver of 538 has long had issues with polls from Strategic Vision because they wouldn’t release their methodology, which is pretty much standard within the industry, and now he’s found very possible evidence the company is purely creating polling results out of whole cloth.

Stats aren’t very sexy, and polling is, as they say, an inexact science, but this allegation is very serious and Silver wouldn’t put his budding punditry on the line if he weren’t pretty sure of it’s veracity.

From the second link:

I posed that question largely as a hypothetical yesterday. But today, I pose it much more literally. Certain statistical properties of the results reported by Strategic Vision, LLC suggest, perhaps strongly, the possibility of fraud, although they certainly do not prove it and further investigation will be required.

The specific evidence in question is as follows. I looked at all polling results reported by Strategic Vision LLC since the beginning of 2005; results from 2008 onward are available at their website; other polls were recovered through archive.org. This is a lot of data — well over 100 polls, each of which asked an average of about 15-20 questions.

Like I said, very serious allegations. If you are interested in the gritty details, here’s a link to the original post Silver alluded to in the excerpt, and a follow-up post.

From the “follow-up post” link above:

Bottom line: It is highly unlikely, in my opinion, that the distribution of the results from the Strategic Vision polls are reflective of any sort of ordinary and organic, mathematical process.

That does not necessarily mean that they simply made these numbers up.

10 financial frauds

Interesting article, and yes, Enron comes in at number two.

From the link, here’s the mother of all financial fraud:

1. Charles Ponzi was one of the biggest swindlers in US history, and gave his name to the Ponzi “pyramid” scheme allegedly used by Bernard Madoff on Wall Street. Orchestrated after the First World War, Ponzi’s fraud centred on “international postal reply coupons”, designed to allow mail to be sent internationally. By acquiring these coupons abroad and exchanging them for higher value postage stamps in the US (essentially a form of arbitrage), Ponzi was able to make around a 400 per cent profit. Though this was not illegal, Ponzi advertised for investors to his scheme, promising them fantastic returns. He paid handsome windfalls to a handful of investors, which brought people flocking to his newly-formed Securities Exchange Company [SEC]. People mortgaged their homes and poured their savings into the company, which was accumulating colossal liabilities. Existing investors were paid off with the money of new investors. At the peak of his fraudulent scheme in 1920, Ponzi was making around $250,000 per day, an enormous sum for the time. The authorities slowly came to realise that, in order to cover all the investments made in the SEC, there would have to be 160,000,000 postal coupons in circulation. There were in reality only 27,000. Ponzi was indicted on 86 counts of mail fraud and sentenced to five years in prison in 1920.

I chose this one because Ponzi and Ponzi Schemes are all over the news in regards to the Madoff business.  Figured anyone who wasn’t familiar with the details would enjoy the history.

Blackwater facing auditor questions

Embattled Iraq civilian contractor, Blackwater (read about its misdeeds here) is facing some serious auditing questions after apparently obtaining federal contracts meant for small businesses through creative employee designations. The total of the contracts in dispute is over $100 million.

From the AccountantsWorld (second) link:

The companies could have skirted small business size criteria because they counted many workers as independent contractors, not employees, which allowed them to exceed the 1,500-employee ceiling set in some contracts, according to the auditors.

The inspector general’s office found that Blackwater and the other companies’ sizes and revenues may have ”involved misrepresentations,” and suggested that the agency may want to ”determine whether it is appropriate for Blackwater affiliates to continue receiving small business set-aside contracts.”

When rival firms had challenged the 2006 contract for helicopter services to Presidential Airways on grounds that the company was too large, the airline provided data that 28 Blackwater-affiliated entities had a total of only 715 employees.

But the inspector general found that Blackwater had hired more than a thousand independent contractors and treated them as if they were regular employees, with scheduled shifts, for example, which called the size determination into question. The report also said the Small Business Administration should have ”attempted to reconcile discrepancies” in the data Blackwater provided.

Sarbox is a joke

Can’t we all agree the Sarbanes-Oxley Act is a complete failure?

From the link:

As if business needed one more reason to dislike the Sarbanes-Oxley Act, here’s a doozy: It may actually worsen the impact of financial statement fraud, the very problem it was created to address.

A new report from the Association of Certified Fraud Examiners found that companies that had the controls mandated by Sarbanes-Oxley actually suffered greater losses from financial statement fraud than those that did not have the controls. What’s more, the study found, companies whose management certified financial statements and had independent audit committees actually took longer to detect financial misstatements than companies without those controls.

Remember …

… always stay skeptical.

From the linked article:

Peel police are looking for two suspects after they say more than 40 people were defrauded of $1.2 million by men claiming to be East Indian religious healers.

Investigators believe there may be more victims locally, as well as in Texas and California.

Between July and December 2007, police say victims were lured to a Mississauga home with ads and radio show promotions telling anyone with family, health or financial problems that a man named “Brother Roshan” would pray for them for free.

Victims were told their troubles were caused by curses, and that they could win Lotto 6/49 jackpots by giving “Brother Roshan” money for expensive prayer materials from India.

Once they gave the money, the victims were given lottery numbers and the date on which to play them.

On Dec. 28, a day before the victims were told they’d win, several of them went to the house where they’d met “Brother Roshan” and found it vacant.

And:

A Canada-wide arrest warrant has been issued for Mohammed Umar Ashrafi (a.k.a. Mohammed Roshan Zameer), 43 of India, for defrauding the public and laundering proceeds of crime, and Latafat Ali Khan (a.k.a. Samir Ali or Shair Ali Khan), 36 of India, for defrauding the public.

Anyone with information is asked to call 905-453-2121 ext. 3335 or Crime Stoppers anonymously at 1-800-222-8477.

(Hat tip: James Randi’s 2/15/08 SWIFT)