BRENTWOOD, Tenn., July 23, 2012 /PRNewswire/ -- Within 24 hours of a regulatory mandate to use electronic confirmation service Confirmation.com, here, PFGBest, a commodity brokerage unit of Peregrine Financial Group, Inc., was exposed as a multi-year $215 million fraud.
"PFGBest is a sadly common example of how easily bank and account information can be falsified to evade detection of accounting frauds," said Brian Fox, founder and chief marketing officer of Confirmation.com. "CEO Russell Wasendorf resisted using our service for months, presumably because he knew that as soon as electronic confirmation went into effect, he would be exposed. We have seen this pattern several times since launching the service in 2000 – resistance to our system is a red flag indicating fraud."
In this case, thousands of commodity futures investors had their accounts frozen while regulators attempt to identify the actual location of the funds.
Press reports indicate that the NFA is moving to mandate use of the system by all of their regulated brokerages.
"This is a textbook case of how easy it is to use false mailing addresses and fax machines to conceal massive theft and fraud," Fox added, referring to the way Wasendorf faxed forged confirmation documents and provided auditors with what they presumed was a bank's address but has now been reported as being controlled by Wasendorf to avoid detection. "Universal use of our system will deter frauds of this scale in the future."
Auditors and financial institutions in more than 100 countries use Confirmation.com because the propensity for fraud and the magnitude of those frauds on a global scale are both increasing. By verifying the authenticity of each user, the company's cloud-based solution not only improves the quality of audits, it brings greater investor confidence into the financial statements.
"This event, while tragic for its victims, is a tremendous validation of our service and an indictment on the outdated paper confirmation process," said Chris Schellhorn, CEO of Confirmation.com. "Numerous companies and financial institutions have already called us to get established on our system and reassure their investors and customers that their accounts are secure and transparent."
Schellhorn and Fox added that they have seen a significant surge in business inquiries, which happened concurrently with a planned expansion of the service to overseas markets including Turkey, Australia and South Africa.
Confirmation.com is the creator and world's leading provider of secure electronic audit confirmation services. It processes over $1 trillion in confirmation information annually for a majority of public companies, as well as private companies, non-profits and government agencies. In addition to its bank confirmation solution, the company provides solutions for more than 30 different types of audit confirmations including accounts receivable confirmations. Confirmation.com is the Preferred Provider of Electronic Confirmations for the AICPA Trusted Business Advisor™ Solutions Program and is endorsed by the American Bankers Association. Confirmation.com has also received numerous awards including being a multi-year alumnus on the Inc. 500 list for 2010 and 2011. Thousands of In-Network responding banks and companies including 19 of the Top 20 banks in the U.S. and over 10,000 accounting firms, internal audit departments and regulatory agencies in more than 100 countries trust Confirmation.com for their audit confirmation needs. For more information, visit Confirmation.com.