There is no doubt that each of executives involved in the fraud scheme should be punished. Discussion now focuses on whether they are equally punished or not. It is obvious that top-level executives such as CEO and CFO who perpetrated the fraud should be more responsible for their unethical behavior and get more severe punishment. Robert Levin is not only a major shareholder of AMRE, but also the company's manager, with the title of Executive Vice President, treasurer, and Chief operating officer. Levin planned the whole thing of the fraud and enable other personnel to help him. As the Chief Executive Officer of AMRE, Steven Bedowitz acquiesced to the plan of overstating deferred advertising costs and inflating inventory.
One of the main reasons which lead executives to made fraud is their greed and self interest. It seems to them that the risk of punishment from committing fraud is low, but the reward can be huge. That is because all of the benefits of cooking the books are private, while the costs are held largely by the company and its…show more content… (Imhoff, 1978) In the case, a key factor that reportedly influenced Smith and Reed’s decisions to accept AMRE’s questionable accounting treatments was their familiarity with Martirossian, a former colleague of theirs in the Dallas office of Price Waterhouse. According to the SEC, Smith and Reed “relied improperly on Martirossian’s unverified representations based upon their prior experience with him and his reputation for integrity within Price Waterhouse.” (Knapp, 2006) Consistent with the requirements of the Sarbanes–Oxley Act, the SEC added a one-year “cooling off” period before a member of the audit engagement team can work for the client in certain key management positions, such as a chief executive officer, controller, chief financial officer, chief accounting officer, or equivalent position. (JC)
