Last week the Department of Justice announced the launch of the remission compensation process to provide recovery to victims of AirBit Club, a purported virtual currency mining and trading company that was a pyramid scheme.
Beginning in late 2015, promoters marketed AirBit Club as a multilevel marketing club. Promoters promised victims that AirBit Club memberships earned passive, guaranteed daily returns on virtual currency mining and trading, and hosted lavish expos and small community presentations aimed at convincing victims to purchase AirBit Club memberships and further promote the scheme. While victims saw “profits” accumulate on their online portal, those representations were false; no virtual currency mining or trading took place.
In August 2020, the U.S. Attorney’s Office for the Southern District of New York announced charges against five defendants, including the AirBit…
MANAGEMENT & CULTURE (THE “TONE AT THE TOP”)
Fraud thrives in “sloppy” environments where leadership ignores the rules.
- The Fraud Triangle: For fraud to occur, three elements must be present: Pressure (the need for money), Rationalization (thinking “I deserve this”), and Opportunity (weak controls). You can only control the Opportunity.
- Whistleblower Hotline: Provide an anonymous way for staff to report “odd behavior.” Most internal frauds are caught via tips, not audits.
- Background Checks: Conduct credit and criminal record checks for all employees in financial or data-sensitive roles.
- Annual Ethics Training: Make sure every staff member knows that the company has a Zero Tolerance policy toward “borrowing” from petty cash or fudging overtime.