Cardillo Travel

In: Business and Management

Submitted By japonte78
Words 1924
Pages 8
Cardillo Travel Systems
Jennifer Aponte
Professor Bunney Schmidt
ACC 562
May 24, 2015
Week 7 assignment

Fraud is a major problem for organizations all over as it involves theft and fraudulent financial statements. As the number of individuals involved increases, fraud expands and worsen within a company since there are more people supporting the wrong acts instead of doing what is right. Cardillo Travel Systems was the largest company in the travel agency industry in the 1980’s where it was first listed on the national stock exchange. The CEO of the company was a businessman from Los Angeles, CA named Walter Rognlien and his wife, Esther Lawrence was the President and Chief Operating Officer. These individuals were mainly concerned with doing whatever needed to get done to ensure that the entity’s financial records reflect successful information. As the top executive of Cardillo, Rognlien pressured and manipulated the controller of the company, accountants and 2 partners of public accounting firms. He wanted to conceal the actual nature of a fraudulent entry in the organization’s accounting records which ended up being unsuccessful. Luckily, not all of his employees obeyed his requests to cheat the system and the Touche Ross, the auditing firm hired by Cardillo was very careful to identify the fraudulent activity and Rognlien did not get too far with his scheme. The SEC was eventually notified and Cardillo Travel Systems eventually collapsed in 1986 and the company had to file for bankruptcy. Russell Smith worked for Cardillo as the controller and he was the employee that refused to follow Rognlien’s orders. He asked Smith to sign an affidavit which discussed a large payment of $203,000 Cardillo received from United Airlines. The CEO wanted everyone to sign off on the statement indicating that the payment received was for commission earned by Cardillo…...

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