Entrepreneurial Crime Research Paper – Daniel Metz and Charles B. Carey Jr Scheme to Defraud

Entrepreneurial crime refers to punishable acts committed by personscharged with governance within corporations with the aid of the resources and power derived from the firm to achieve personal gain (Coleman, Tombs & Whyte, 2005).

Background of the Crime

On August 12, 2014,Integra LifeSciences Corporation of Plainsboro’s regional manager, and a product specialist who were responsible for selling the company’s medical devices to various hospitals were charged with scheming to defraud their client hospitals of over 800,000, U.S dollars.The accused,Daniel Metz, of Fairfield, and Charles B. Carey Jr., of Clark, both pleaded guilty before a U.S. District Judge, Joel A. Pisanosuit (The United States Attorney office, 2015).

Integra LifeSciences Corporation is a supplier of orthopedic merchandises such as devices and implants various parts of the human body including the spine, feet, hands and ankle among others. Daniel Metz joined the company in July 2005 as a specialist and was later became the Company’s northeast regional manager, a position he held until his employment was terminated in April 2013.As a regional manager, Daniel supervised 16 product experts and junior sales representatives in Massachusetts, Pennsylvania, New York, and New Jersey. Charles was among the product specialists who reported to Daniel. He worked under Daniel from January 2009 till his resignation in April 2011. As a product specialist, Charles was responsible of marketing the company’s products to surgeons and they were routinely present in surgeries where they would bring relevant Integra products with themsuit (The United States Attorney office, 2015). The company would then bill the medical centers for the merchandises the surgeons used. The product specialists and their superiors would bepaid a commission for the products sold.

Read also Reducing Risk of Fraud, Errors and Misstatements in Business through Implementing of Proper Internal Controls

Daniel confessedthat when he was a product specialist, he used to several methods to overcharge medical centers among them being charging for a largerproduct quantities or charging a center for a product that was more expensive that the one that was used. The aim of these fraudulent actions was to increase his commission and improves employment evaluations.According to Charles, when Daniel became a manager, he taught these fraudulent practices and some of the products developers who were answerable to David,

Metz and Carey pleaded guilty of conspiracy to commit wire fraud, a crime whose penalty includes a maximum of twenty years in prison and a fine of two hundred and fifty thousand dollars, or an amount double that of the gross loss or gain from the offense.In addition, Metz and Carey agreed to forfeitureof one hundred thousand dollars and seventy seven thousand dollars, respectively, which is the amount of money each personally made from the fraud scheme.Integra reimbursed the defrauded hospitals for the fraudulent claims. The sentencing was scheduled for a later date.FBI special agents were credited under the specific direction of the Special Agent in Charge for the investigation that was leading to the guilty pleas. In addition the Special Agent in Chargeacknowledged detectives of the County Prosecutor’s Office for their assistances to the investigationsuit (The United States Attorney office, 2015).

Discuss how the psychological characteristics of individuals and accounting opportunities for omission(s) may have contributed to the commission of the entrepreneurial crime you researched.

White-collar crime is exceptionally hard to understand, since most perpetrators appear to have the fiscal means and the background that would help them avoid such a fate. However, both mental health and legal professionals suggest that people who commit entrepreneurial crimes tend to have similar character trait known as antisocial personality disorders. They are usually have an exaggerated sense of self-worth,are guarded, and are pathological liars. They also tend to posses incapacity to take accountability for their actions. Like most with other criminals, white-collar criminals usually start out with small crimes and once they dodge discovery, their egosswelland thus the need to graduate to biggerones in order to maintain the thrill(Coleman, Tombs & Whyte, 2005).The criminals’ tell people exactly what they want to hear and their charming nature helps them evade discovery.

According to the accused, they were able to overcharge customers without the company’s system detecting the errors of accounting. This means that the system allowed the perpetrators omit some of the transaction details hence making it easy for them to cover up the crime. If the system was sensitive, the crime would have been picked up well in time to avoid any substantial impact on both the organization and its clients (Coleman, Tombs & Whyte, 2005).

Analyze the cost of Sarbanes-Oxley in regulating the white-collar crime you researched and evaluate its impact on the free market.

The cost of the Sarbanes-Oxley (SOX) act is an important aspect of regulating white-collar crimes. There are numerous academic researches and opinions that try to determine the costs and benefits of SOX act. All these researches have conclusions that differ significantly thus making it difficult to reach to a standard deduction. This difference in conclusions and opinions is mainly due to the difficulty that exists in isolating the effect of SOX act from other variables that affect the stock market prices. However, the net private is represented by an econometric estimate of the loss in total market value around the significant legislative events. Precisely, it is calculated by subtracting the perceived benefits from the total cost incurred. Ivy Xiying Zhang estimated that the net private costs would amount to 1.4 trillion. This is mainly because even though the act is working towards the achievement of its main objective, curbing fraud, there still exists significant shortcomings that make it possible for perpetrators such as David and Charles to continue defrauding the public. (Carney, 2006). Most people argue that the act is too expensive and adds unwarranted burden to businesses while others believe that the act is not stringent enough.

Compare and contrast the adjudication of the white-collar crime you researched as a criminal action versus a civil action.

Daniel Metz and Charles Carey convicted in a criminal action would be sentenced up to 20 years in imprisonment. However, when the case was to be settled civilly, Daniel Metz was sentenced to nine months in prison and nine months of home confinement, three years of supervised release and a $100000 fine while Charles Carey also agreed to a $77000 penalty fee.

Determine whether agencies that are vested with statutory powers of investigation and imposition of penalties should choose a non-adversarial approach to regulation, as well as how your determination would have impacted the crime you researched.

The U.S. Attorney Fishman certified special agents of the FBI investigated the case. The investigation team was directed by Special Agent in Charge Aaron T. Ford who was assisted by detectives of the Morris County Prosecutor’s Office.  Jacob T. Elberg, Chief of the U.S. Attorney’s Office’s Health Care and Government Fraud Unit, in Newark, represented the government throughout the suit (The United States Attorney office, 2015). Being a health care fraud offense, the investigations and prosecutions process was overseen by the U.S. Attorney Paul J. Fishman.

Although the agencies vested with statutory powers of investigation and imposition of penalties did so satisfactory, there is a number of things that could be learnt from the experience. In future, there the regulatory agencies should do more to share ideas and innovations and analyze and compare supervisory performance more openly in terms that will allow clear demonstration of the impact of the regulations to the stakeholders (Flowers, 1995).

The investigation took an adversarial system approach that once a problem is raised; the members of staff are automatically placed in a defensive position. Daniel and Charles were required to justify their actions using all the appropriate complaints procedures and the entire investigation has to follow a procedural system. In such a system, the focus is then on process and not on resolving the problem and it is easy to put too much emphasis on the requirements of the process and thus lose focus of the original issue that was to be addressed. Adopting a Non-adversarial approach could help maintain focus on the issues being investigated hence helping reach the desired outcome more efficiently and save councils valuable resources.

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